[Federal Register Volume 60, Number 228 (Tuesday, November 28, 1995)]
[Rules and Regulations]
[Pages 58514-58515]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-28554]



=======================================================================
-----------------------------------------------------------------------

FEDERAL TRADE COMMISSION

16 CFR Part 3


Duration of Existing Competition and Consumer Protection Orders

AGENCY: Federal Trade Commission (FTC).

ACTION: Final rule.

-----------------------------------------------------------------------

SUMMARY: The Commission hereby issues a rule (``Sunset Rule'') that 
terminates existing administrative orders when certain conditions have 
been met, consistent with the Commission's ``Policy Statement Regarding 
Duration of Competition and Consumer Protection Orders'' published in 
the Federal Register on August 16, 1995. Prior to the issuance of this 
rule, the Commission could only set aside the provisions of such orders 
upon petition of the respondent, or pursuant to show-cause proceedings 
initiated sua sponte by the Commission. The rule reduces the 
administrative expense and burden associated with those procedures by 
automatically vacating certain order provisions that no longer serve 
the public interest.

EFFECTIVE DATE: January 2, 1996.

FOR FURTHER INFORMATION CONTACT: Justin Dingfelder, Assistant Director 
for Enforcement, Division of Enforcement, Bureau of Consumer 
Protection, FTC, (202) 326-3017; Roberta Baruch, Deputy Assistant 
Director for Compliance, Bureau of Competition, (202) 326-2861.

SUPPLEMENTARY INFORMATION: On September 1, 1994, the Commission 
published a policy statement that sunsetted Commission competition 
orders under certain conditions.\1\ The Commission requested comment on 
the policy and on whether a similar policy should be applied to 
consumer protection orders.

    \1\ ``Policy Statement With Request for Public Comment Regarding 
Duration of Competition Orders and Request for Public Comment 
Regarding Duration of Consumer Protection Orders,'' 59 FR 45286.
---------------------------------------------------------------------------

    On August 16, 1995, the Commission published a further ``Policy 
Statement Regarding Duration of Competition and Consumer Protection 
Orders'' in the Federal Register. 60 FR 42569. Under this Policy 
Statement, which superseded the Commission's 1994 Policy Statement, the 
Commission will ordinarily sunset future competition and consumer 
protection administrative orders automatically after 20 years, unless 
the Commission or the Department of Justice has filed a complaint (with 
or without an accompanying consent decree) in federal court to enforce 
such order pursuant to Section 5(l) of the Federal Trade Commission Act 
(``FTC Act''). This policy does not extend to federal court orders. The 
Commission also announced its intention to sunset existing 
administrative orders through rulemaking, rather than case-by-case 
determinations, and published a Notice of Proposed Rulemaking regarding 
the ``Duration of Existing Competition and Consumer Protection Orders'' 
in the Federal Register. 60 FR 42481 (August 16, 1995).
    The Commission received 22 comments regarding the proposed rule, 21 
of which support the issuance of the proposed rule. One comment, filed 
by the American Association of Retired Persons (``AARP''), opposes the 
proposed rule.\2\ In addition, three of the 21 comments supporting the 
proposed rule urge the Commission to sunset existing administrative 
orders in less than 20 years.\3\ One of the 21 comments supporting the 
proposed rule urges the Commission to adopt (1) an expedited process 
for reviewing petitions to set aside consumer protection orders that 
are ten years old or older; and (2) a presumption that such petitions 
should be granted unless substantial contrary evidence is submitted on 
the record.\4\

    \2\ AARP opposes the sunsetting of core provisions in consumer 
protection orders (AARP took the same position when it commented on 
the Commission's 1994 Policy Statement). However, if the Commission 
decides to sunset consumer protection orders after 20 years, AARP 
endorses the proposal to extend the duration of any order where the 
government has filed a complaint to enforce the order while it 
remains in force. AARP contends that the proposed rule is unclear as 
to whether the Commission will be able to impose civil penalties as 
well as extend an order's duration by filing a complaint. AARP urges 
the Commission to state unambiguously that civil penalties may be 
imposed for violations of an order, the duration of which is 
extended under the proposed rule.
    The Commission notes that the issuance of the rule will not 
affect the Commission's authority pursuant to Section 5(l) of the 
FTC Act to seek civil penalties for violations of an order that 
remains in effect. Complaints filed in federal court by the 
Commission or the Department of Justice pursuant to Section 5(l) of 
the FTC Act routinely seek civil penalties and will continue to do 
so.
    \3\ Another comment supporting the proposed rule requested that 
the Commission clarify its policy by confirming that the reference 
date for computing the 20 year sunset period is the date of the 
order's initial issuance and not the date of any subsequent 
modification. As the Commission stated in its Policy Statement:
    Unless an order modification expressly changes the duration of 
an order, such modification will not affect the duration of the 
order as determined by this Policy Statement.
    60 FR at 42572 n.9.
    \4\ One of the three comments described above urges the 
Commission to adopt a ten year sunset period for competition orders. 
Another urges the Commission to adopt a ten year sunset period for 
consumer protection orders. The last one urges the Commission to 
consider a sunset period shorter than 20 years. The Policy Statement 
explains why the Commission decided to sunset administrative orders 
after 20 years, 60 FR at 42573, as does the superseded 1994 Policy 
Statement, 59 FR at 45288. Furthermore, the Policy Statement 
explains why the Commission decided to sunset existing orders 
through rulemaking as opposed to the petitioning process:
    The cost of the Commission retaining added discretion as to 
whether it should retain older orders, thereby requiring a case-by-
case analysis with respect to each petition, likely exceeds the 
benefits of retaining older orders in extraordinary circumstances. 
By adopting a policy that does not require the Commission to 
exercise discretion with respect to individual orders, the 
Commission will conserve scarce resources and ensure equitable 
treatment of similarly situated respondents now subject to 
administrative orders.
    60 FR at 42572.

[[Page 58515]]

    None of the comments provide any information or express any views 
that the Commission had not already considered in issuing its Policy 
Statement and the proposed rule. Accordingly, the Commission has 
determined to issue the proposed rule with no changes. The rule 
provides that, in general, all provisions of any existing 
administrative order will automatically sunset 20 years from the date 
that the order was issued.5 The rule establishes an exception, 
however, where a federal court complaint alleging a violation of an 
existing order was filed (with or without an accompanying consent 
decree) within the last 20 years, or where such a complaint is 
subsequently filed with respect to an existing order that has not yet 
expired. In that event, the order will run for another 20 years from 
the date that the most recent complaint was or is filed with the court, 
unless the complaint was or is dismissed, or the court has ruled or 
rules that the respondent did not violate any provision of the order, 
and the dismissal or ruling was or is not appealed (or was or is upheld 
on appeal). The Commission's order will remain in effect while the 
court complaint and any appeal is pending.

    \5\ Orders that are 20 years old or older will sunset on January 
2, 1996. Certain provisions in existing administrative orders will 
expire, or have already expired, according to their own terms, and 
the rule will not affect the duration of those provisions. The rule 
also will not revive any order provision that the Commission has 
previously reopened and set aside. See 16 CFR 2.51 & 3.72. The rule 
will not apply to in camera orders or other procedural or 
interlocutory rulings by an Administrative Law Judge or the 
Commission.
---------------------------------------------------------------------------

    The filing of a court complaint will not affect the duration of an 
order's application to any respondent that is not named as a defendant 
in the complaint. The issuance of this rule does not affect the 
Commission's ability to consider whether a complaint alleging order 
violations has ever been filed against a respondent, and any other 
relevant circumstances, in determining whether to grant or deny a 
subsequent petition by a respondent to reopen and set aside an order on 
the basis of changes in law, fact, or the public interest. See 
Commission Rule 2.51, 16 CFR 2.51.

Regulatory Flexibility Act

    On the basis of information currently available to the Commission, 
it is anticipated that the rule will result in the elimination of a 
substantial number of existing orders that no longer serve the public 
interest. Many of the comments supporting the issuance of the rule 
state that it will reduce costs and stimulate competition. Accordingly, 
the Commission has determined at this time that the Regulatory 
Flexibility Act does not require an initial or final regulatory 
flexibility analysis, because the rule will not have a significant 
impact on a substantial number of small entities within the meaning of 
the Act. 5 U.S.C. Sec. 605. This notice serves as certification to that 
effect for purposes of the Small Business Administration.

Effective Date

    The rule will take effect on January 2, 1996. Petitions to stay, in 
whole or in part, the termination of an order pursuant to the rule 
shall be filed pursuant to Commission Rule 2.51, 16 CFR 2.51. In the 
case of orders that have been in effect for at least 20 years, the rule 
provides respondents with 30 days to file such a petition before the 
order is automatically terminated by the rule. Pending the disposition 
of such a petition, the order will be deemed to remain in effect 
without interruption.

List of Subjects in 16 CFR Part 3

    Administrative practice and procedure, Claims, Equal access to 
justice, Lawyers.

    Accordingly, the Federal Trade Commission amends Title 16, Chapter 
I, Subchapter A, of the Code of Federal Regulations as follows:

PART 3--[AMENDED]

    1. The authority for Part 3 continues to read as follows:

    Authority: Sec. 6, 38 Stat. 721 (15 U.S.C. 46), unless otherwise 
noted.

    2. Section 3.72 is amended by adding a new paragraph 3.72(b)(3) to 
read as follows:


Sec. 3.72  Reopening.

* * * * *
    (b) * * *
    (3) Termination of existing orders. (i) Generally. Notwithstanding 
the foregoing provisions of this rule, and except as provided in 
paragraphs (b)(3) (ii) and (iii) of this section, an order issued by 
the Commission before August 16, 1995, will be deemed, without further 
notice or proceedings, to terminate 20 years from the date on which the 
order was first issued, or on January 2, 1996, whichever is later.
    (ii) Exception. This paragraph applies to the termination of an 
order issued before August 16, 1995, where a complaint alleging a 
violation of the order was or is filed (with or without an accompanying 
consent decree) in federal court by the United States or the Federal 
Trade Commission while the order remains in force, either on or after 
August 16, 1995, or within the 20 years preceding that date. If more 
than one complaint was or is filed while the order remains in force, 
the relevant complaint for purposes of this paragraph will be the 
latest filed complaint. An order subject to this paragraph will 
terminate 20 years from the date on which a court complaint described 
in this paragraph was or is filed, except as provided in the following 
sentence. If the complaint was or is dismissed, or a federal court 
rules or has ruled that the respondent did not violate any provision of 
the order, and the dismissal or ruling was or is not appealed, or was 
or is upheld on appeal, the order will terminate according to paragraph 
(b)(3)(i) of this section as though the complaint was never filed; 
provided, however, that the order will not terminate between the date 
that such complaint is filed and the later of the deadline for 
appealing such dismissal or ruling and the date such dismissal or 
ruling is upheld on appeal. The filing of a complaint described in this 
paragraph will not affect the duration of any order provision that has 
expired, or will expire, by its own terms. The filing of a complaint 
described in this paragraph also will not affect the duration of an 
order's application to any respondent that is not named in the 
complaint.
    (iii) Stay of Termination. Any party to an order may seek to stay, 
in whole or part, the termination of the order as to that party 
pursuant to paragraph (b)(3) (i) or (ii) of this section. Petitions for 
such stays shall be filed in accordance with the procedures set forth 
in Sec. 2.51 of these rules. Such petitions shall be filed on or before 
the date on which the order would be terminated pursuant to paragraph 
(b)(3) (i) or (ii) of this section. Pending the disposition of such a 
petition, the order will be deemed to remain in effect without 
interruption.
    (iv) Orders not terminated. Nothing in Sec. 3.72(b)(3) is intended 
to apply to in camera orders or other procedural or interlocutory 
rulings by an Administrative Law Judge or the Commission.

    By direction of the Commission.
Donald S. Clark,
Secretary.
[FR Doc. 95-28554 Filed 11-27-95; 8:45 am]
BILLING CODE 6750-01-P