[Federal Register Volume 63, Number 30 (Friday, February 13, 1998)]
[Rules and Regulations]
[Pages 7526-7528]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-3506]



[[Page 7525]]

_______________________________________________________________________

Part III





Federal Trade Commission





_______________________________________________________________________



16 CFR Part 3



Rules of Practice; Final Rule

  Federal Register / Vol. 63, No. 30 / Friday, February 13, 1998 / 
Rules and Regulations  

[[Page 7526]]


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

FEDERAL TRADE COMMISSION

16 CFR Part 3


Rules of Practice

AGENCY: Federal Trade Commission (FTC).

ACTION: Final rule, with request for public comment.

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

SUMMARY: This document amends Commission Rule 3.11A (16 CFR 3.11A), 
which establishes ``fast-track'' procedures applicable in certain FTC 
adjudicatory proceedings. Under the amended rule, a respondent will 
have the option of electing these procedures in certain cases where the 
procedures have not previously been available. Amendments have also 
been made to improve and clarify notice procedures and other technical 
provisions of the Rule.

EFFECTIVE DATE: February 13, 1998. Public comments will be received 
until March 16, 1998.

ADDRESSES: Send comments to the Office of the Secretary, Federal Trade 
Commission, Room 159-H, Sixth Street and Pennsylvania Avenue, NW., 
Washington, DC 20580.

FOR FURTHER INFORMATION CONTACT: Cynthia Hogue Levy, (202) 326-2158, or 
Alex Tang, (202) 326-2447, Attorneys, Office of General Counsel, FTC, 
Sixth Street and Pennsylvania Avenue, NW., Washington, DC 20580.

SUPPLEMENTARY INFORMATION: On September 26, 1996, the Commission 
published and sought public comment on interim amendments to the rules 
governing the Commission's adjudicatory proceedings, 61 FR 50640. The 
interim amendments included a new Rule 3.11A, which makes expedited 
(``fast-track'') procedures available to respondents in certain 
Commission adjudicatory proceedings challenging conduct that has been 
preliminarily enjoined by a federal court. The public comment period on 
the interim rule amendments ended November 25, 1996. The amendments 
became fully applicable to all proceedings commenced on or after 
January 1, 1997. The one public comment received by the Commission did 
not discuss Rule 3.11A.1
---------------------------------------------------------------------------

    \1\ The Commission will address that comment when it completes 
its full review of the rules' impact.
---------------------------------------------------------------------------

    The Commission has determined that the Rule should make the fast-
track option expressly available in certain circumstances even where no 
preliminary injunction of the challenged conduct has been issued. As 
the Commission observed in its statement accompanying the Rule, the 
Administrative Law Judge presiding over an adjudicatory proceeding may, 
in his or her discretion, treat discovery from the preliminary 
injunction hearing and transcripts of testimony in the preliminary 
injunction proceeding as if the material had been discovered and 
presented in the administrative proceeding. 61 FR at 50641. The 
Commission concludes that, where no preliminary injunction has been 
issued, implementation of an expedited schedule in the administrative 
proceeding nonetheless may be appropriate where the evidentiary record 
from the federal court injunctive proceeding is likely materially to 
facilitate prompt resolution of the adjudicatory proceeding. 
Accordingly, the Commission is amending the Rule to expand the 
availability of the fast-track procedures to cases in which the 
Commission determines that such circumstances exist. The Commission 
believes that this expansion of the Rule is in the public interest 
because it would foster expeditious resolution of allegations of 
possible law violations and reduce uncertainty for the affected 
respondent.
    To accomplish expansion of the Rule, paragraph (b) has been 
bifurcated to address separately the conditions under which the fast-
track option will be available and the mechanics of electing the 
procedure. Amended paragraph (b)(1) provides that a respondent may 
elect fast-track procedures either (i) if a federal court enters 
preliminary injunctive relief against some or all of the conduct 
alleged in the Commission's administrative complaint, or (ii) where no 
such injunction is issued, if the Commission determines that the 
evidentiary record resulting from the court proceeding is likely 
materially to facilitate the resolution of the administrative 
adjudication in accordance with the expedited schedule set forth in the 
Rule. In making the latter determination, the Commission will consider, 
inter alia, whether significant discovery has occurred in the federal 
court proceeding.
    A conforming change has been made in paragraph (a) of the Rule by 
deleting language that preserved the Commission's discretion to take 
``appropriate action'' in cases where ``the preliminary injunction'' is 
vacated. A preliminary injunction will not necessarily have been issued 
in every case where fast-track procedures may now apply. Further, even 
in cases where such an injunction is vacated after fast-track 
proceedings have been initiated, the Commission concludes that such 
proceedings should ordinarily continue to be conducted on an expedited 
basis. The Commission, however, retains its discretion under the Rule 
to extend the 13-month deadline specified for issuance of a final order 
and opinion where, inter alia, adherence to the deadline would result 
in a miscarriage of justice due to circumstances unforeseen at the time 
that the respondent elected fast-track procedures. Sec. 3.11A(c)(3).
    Amended paragraph (b)(2), dealing with timing of the respondent's 
fast-track election, has also been conformed to include a reference to 
the evidentiary record determination made by the Commission under 
paragraph (b)(1)(ii) of the Rule. Further, language in former paragraph 
(b) providing that the fast-track election could be made ``after 
service of the administrative complaint challenging the merger or 
acquisition'' has been modified in paragraph (b)(2) to refer simply to 
service of the ``administrative complaint.'' This amendment makes fast-
track procedures available in any appropriate administrative case, 
including cases under the Commission's authority respecting unfair or 
deceptive acts and cases involving anticompetitive practices other than 
mergers, provided that the Commission has filed a collateral action 
seeking preliminary injunctive relief against conduct alleged in the 
administrative complaint. Thus, Rule 3.11A is not restricted to cases 
involving mergers or acquisitions. As the Commission has previously 
indicated, however, 61 FR at 50641 n.2, fast-track procedures are 
likely as a practical matter to be available most often to respondents 
in cases involving mergers.
    The Commission also notes that respondents may make a fast-track 
election under paragraph (b)(2) of the Rule before the necessary 
conditions specified in paragraph (b)(1) for fast-track treatment have 
been fulfilled. In such cases, the election will become effective only 
if a federal court thereafter issues a preliminary injunction, as 
required by paragraph (b)(1)(i), or the Commission determines that the 
evidentiary record from the federal court injunctive proceeding is 
likely materially to facilitate the expedited resolution of the 
administrative adjudication, as required by paragraph (b)(1)(ii).
    The Rule provisions specifying the procedural deadlines for 
administrative cases in which fast-track scheduling applies are now 
consolidated in paragraph (c). Amended paragraph (c)(1) sets out the 
``triggering events,'' formerly found in paragraph (a), that

[[Page 7527]]

specify the dates upon which the fast-track deadlines are based. The 
triggering events have been expanded to include evidentiary record 
determinations made by the Commission under paragraph (b)(1)(ii). 
Amended paragraph (c)(2), which is the list of deadlines applicable to 
fast-track proceedings before the Administrative Law Judge, formerly 
comprised paragraph (c). Amended paragraph (c)(3) contains the 13-month 
deadline for issuance of a final order and opinion by the Commission 
that previously appeared in paragraph (a). Paragraph (c)(3) also 
contains new language explaining the effect on the 13-month deadline if 
an automatic stay of the adjudicatory proceeding is triggered by a 
motion to dismiss under Rule 3.26. As amended, the Rule explicitly 
provides that the 13-month deadline will be tolled for as long as the 
Rule 3.26 stay remains in effect.
    Several clarifying changes have been made in the Rule. Amended 
paragraph (a) provides that, when the Commission designates a case as 
appropriate for election of fast-track procedures by a respondent 
(subject to the conditions set forth in paragraph (b)(1)), written 
notice of the Commission's designation will be provided. The notice 
will be given to the respondent (or to the potential respondent, if the 
administrative complaint has not yet been issued) at the time that it 
is served with the Commission's complaint for injunctive relief. These 
requirements are designed to forestall questions concerning whether and 
when the agency provided the notice specified in the Rule. The 
Commission continues to believe that certain cases may appear too 
complex at the outset to be designated as appropriate for the fast-
track schedule. 61 FR at 50641. In such instances, the Commission will 
not notify the respondent of an option to elect fast-track procedures. 
This aspect of the Rule remains unchanged.
    The revised Rule also clarifies that a respondent may elect fast-
track procedures in cases where a preliminary injunction has been 
issued in a collateral federal court proceeding even if the injunction 
addresses only part of the conduct alleged in the Commission's 
administrative complaint. The Commission also intends that, under the 
revised Rule, a respondent will have an opportunity to elect fast-track 
procedures if injunctive relief is initially denied by the district 
court but later ordered as the result of judicial review. The amended 
Rule's reference to the court's entry of preliminary injunctive relief 
is intended to be consistent with the usage of the term ``entry'' in 
the Federal Rules of Civil Procedure. See Fed. R. Civ. P. 58, 79. 
Finally, paragraph (d) of the Rule, dealing with discovery procedures 
in fast-track cases, has been deleted, and the text incorporated into 
paragraph (a). Various typographical and stylistic changes have been 
made throughout the Rule.
    Because these amendments relate solely to agency practice, they are 
not subject to the notice-and-comment requirements of the 
Administrative Procedure Act, 5 U.S.C. 553(b)(A), or to the 
requirements of the Regulatory Flexibility Act, 5 U.S.C. 601(2). The 
amendments do not impose information collection requirements under the 
Paperwork Reduction Act. 44 U.S.C. 3501-3520.

List of Subjects in 16 CFR Part 3

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

    For the reasons set forth in the preamble, the Federal Trade 
Commission amends Title 16, Chapter I, Subchapter A of the Code of 
Federal Regulations, as follows:

PART 3--RULES OF PRACTICE FOR ADJUDICATIVE PROCEEDINGS

    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 3.11A is revised to read as follows:


Sec. 3.11A  Fast-track proceedings.

    (a) Scope and applicability. This section governs the availability 
of fast-track procedures in administrative cases where the Commission 
files a collateral federal district court complaint that seeks 
preliminary injunctive relief against some or all of the conduct 
alleged in the Commission's administrative complaint. The Commission 
will afford the respondent the opportunity to elect such fast-track 
procedures, subject to the conditions set forth in paragraph (b)(1) of 
this section, in cases that the Commission designates as appropriate. 
In cases so designated, the Commission will provide written notice to 
each respondent at the time that it is served with the Commission's 
federal district court complaint for preliminary injunctive relief. 
Except as modified by this section, the rules contained in subparts A 
through I of part 3 of this chapter will govern fast-track procedures 
in adjudicative proceedings. Discovery will be governed by subpart D of 
this part, and the Administrative Law Judge may exercise his plenary 
authority under Sec. 3.42(c)(6) to establish limitations on the number 
of depositions, witnesses, or any document production.
    (b)(1) Conditions. In cases designated as appropriate by the 
Commission pursuant to paragraph (a) of this section, a respondent may 
elect fast-track procedures:
    (i) if a federal court enters a preliminary injunction against some 
or all of the conduct alleged in the Commission's administrative 
complaint; or,
    (ii) where no such injunction is entered, if the Commission 
determines that the Federal court proceeding has resulted in an 
evidentiary record that is likely materially to facilitate resolution 
of the administrative proceeding in accordance with the expedited 
schedule set forth in this section. The Commission will provide each 
respondent with written notice of any such determination.
    (2) Election. A respondent that determines to elect fast-track 
procedures shall file a notice of such election with the Secretary by 
the latest of: three days after entry of a preliminary injunction as 
described in paragraph (b)(1)(i) of this section; three days after the 
respondent is served with notice of the Commission's determination 
under paragraph (b)(1)(ii) of this section; or three days after the 
respondent is served with the Commission's administrative complaint in 
the adjudicative proceeding. In proceedings involving multiple 
respondents, the fast-track procedures set forth in this section will 
not apply unless the procedures are elected by all respondents.
    (c) Deadlines in fast-track proceedings.
    (1) For purposes of this paragraph, ``triggering event'' means the 
latest of: entry of a preliminary injunction as described in paragraph 
(b)(1)(i) of this section; service on the last respondent of notice of 
the Commission's determination under paragraph (b)(1)(ii) of this 
section; service on the last respondent of the Commission's 
administrative complaint in the adjudicative proceeding; or filing with 
the Secretary by the last respondent of a notice electing fast-track 
procedures.
    (2) Proceedings before the Administrative Law Judge. In fast-track 
proceedings covered by this section:
    (i) The scheduling conference required by Sec. 3.21(b) shall be 
held not later than three days after the triggering event.
    (ii) Respondent's answer shall be filed within 14 days after the 
triggering event.
    (iii) The Administrative Law Judge shall file an initial decision 
within 56 days following the conclusion of the evidentiary hearing. The 
initial decision

[[Page 7528]]

shall be filed no later than 195 days after the triggering event.
    (iv) Any party wishing to appeal an initial decision to the 
Commission shall file a notice of appeal with the Secretary within 
three days after service of the initial decision. The notice shall 
comply with Sec. 3.52(a) in all other respects.
    (v) The appeal shall be in the form of a brief, filed within 21 
days after service of the initial decision, and shall comply with 
Sec. 3.52(b) in all other respects. All issues raised on appeal shall 
be presented in the party's appeal brief.
    (vi) Within 14 days after service of the appeal brief, the appellee 
may file an answering brief, which shall comply with Sec. 3.52(c). 
Cross-appeals, as permitted in Sec. 3.52(c), may not be raised in an 
appellee's answering brief.
    (vii) Within five days after service of the appellee's answering 
brief, the appellant may file a reply brief, in accordance with 
Sec. 3.52(d) in all other respects.
    (3) Proceedings before the Commission. In fast-track proceedings 
covered by this section, the Commission will issue a final order and 
opinion within 13 months after the triggering event. If the 
adjudicative proceeding is stayed pursuant to a motion filed under 
Sec. 3.26, the 13-month deadline will be tolled for as long as the 
proceeding is stayed. The Commission may extend the date for issuance 
of the Commission's final order and opinion in the following 
circumstances: if necessary to permit the Commission to provide 
submitters of in camera material or information with advance notice of 
the Commission's intention to disclose all or portions of such material 
or information in the Commission's final order or opinion; or if the 
Commission determines that adherence to the 13-month deadline would 
result in a miscarriage of justice due to circumstances unforeseen at 
the time of respondent's election of fast-track procedures.

    By direction of the Commission, Commissioner Azcuenaga not 
participating.
Donald S. Clark,
Secretary.
[FR Doc. 98-3506 Filed 2-12-98; 8:45 am]
BILLING CODE 6750-01-P