[Federal Register Volume 74, Number 8 (Tuesday, January 13, 2009)]
[Rules and Regulations]
[Pages 1804-1836]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E9-296]



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Part III





Federal Trade Commission





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16 CFR Parts 3 and 4



Rules of Practice; Final Rule

  Federal Register / Vol. 74, No. 8 / Tuesday, January 13, 2009 / Rules 
and Regulations  

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FEDERAL TRADE COMMISSION

16 CFR Parts 3 and 4


Rules of Practice

AGENCY: Federal Trade Commission (``Commission'' or ``FTC'').

ACTION: Interim final rules with request for comment.

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SUMMARY: The FTC is amending Parts 3 and 4 of its Rules of Practice, 16 
CFR Parts 3 and 4, in order to further expedite its adjudicative 
proceedings, improve the quality of adjudicative decision making, and 
clarify the respective roles of the Administrative Law Judge (``ALJ'') 
and the Commission in Part 3 proceedings.

DATES: These interim final rules are effective on January 13, 2009. 
These amendments will govern all Commission adjudicatory proceedings 
that are commenced after January 13, 2009 The rules that were in effect 
before January 13, 2009 will govern all currently pending Commission 
adjudicatory proceedings. Written comments must be received on or 
before February 12, 2009.

ADDRESSES: Interested parties are invited to submit written comments 
electronically or in paper form. Comments should refer to ``Parts 3 and 
4 Rules of Practice Rulemaking - P072104'' to facilitate the 
organization of comments. Please note that comments will be placed on 
the public record of this proceeding--including on the publicly 
accessible FTC website at (http://www.ftc.gov/os/publiccomments.shtm) 
-- and therefore should not include any sensitive or confidential 
information. In particular, comments should not include any sensitive 
personal information, such as an individual's Social Security number; 
date of birth; driver's license number or other state identification 
number, or foreign country equivalent; passport number; financial 
account number; or credit or debit card number. Comments also should 
not include any sensitive health information, such as medical records 
and other individually identifiable health information. In addition, 
comments should not include any ``[t]rade secret or any commercial or 
financial information which is obtained from any person and which is 
privileged or confidential. * * *,'' as provided in Section 6(f) of the 
Federal Trade Commission Act (``FTC Act''), 15 U.S.C. 46(f), and 
Commission Rule 4.10(a)(2), 16 CFR 4.10(a)(2). Comments containing 
material for which confidential treatment is requested must be filed in 
paper form, must be clearly labeled ``Confidential,'' and must comply 
with Commission Rule 4.9(c).\1\
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    \1\ The comment must be accompanied by an explicit request for 
confidential treatment, including the factual and legal basis for 
the request, and must identify the specific portions of the comment 
to be withheld from the public record. The request will be granted 
or denied by the Commission's General Counsel, consistent with 
applicable law and the public interest. See Commission Rule 4.9(c), 
16 CFR 4.9(c).
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    Because paper mail in the Washington area, and specifically to the 
FTC, is subject to delay due to heightened security screening, please 
consider submitting your comments in electronic form. Comments filed in 
electronic form should be submitted by using the following weblink: 
(https://secure.commentworks.com/ftc-part3rules) (and following the 
instructions on the web-based form). To ensure that the Commission 
considers an electronic comment, you must file it on the web-based form 
at the weblink: (https://secure.commentworks.com/ftc-part3rules). If 
this document appears at (http://www.regulations.gov/search/index.jsp), 
you may also file an electronic comment through that website. The 
Commission will consider all comments that regulations.gov forwards to 
it. You may also visit the FTC website at www.ftc.gov to read this 
document and the news release describing it.
    A comment filed in paper form should include the ``Parts 3 and 4 
Rules of Practice Rulemaking - P072104'' reference both in the text and 
on the envelope, and should be mailed or delivered by courier to the 
following address: Federal Trade Commission, Office of the Secretary, 
Room H-135 (Annex R), 600 Pennsylvania Avenue, NW, Washington, DC 
20580.
    The FTC Act and other laws the Commission administers permit the 
collection of public comments to consider and use in this proceeding as 
appropriate. The Commission will consider all timely and responsive 
public comments that it receives, whether filed in paper or electronic 
form. Comments received will be available to the public on the FTC 
website, to the extent practicable, at (http://www.ftc.gov/os/publiccomments.shtm). As a matter of discretion, the Commission makes 
every effort to remove home contact information for individuals from 
the public comments it receives before placing those comments on the 
FTC website. More information, including routine uses permitted by the 
Privacy Act, may be found in the FTC's privacy policy, at (http://www.ftc.gov/ftc/privacy.shtm).

FOR FURTHER INFORMATION CONTACT: Michael D. Bergman, Attorney, (202) 
326-3184, or Lisa M. Harrison, Attorney, (202) 326-3204, Office of the 
General Counsel, Federal Trade Commission, 600 Pennsylvania Avenue, NW, 
Washington DC 20580.

SUPPLEMENTARY INFORMATION: This discussion contains the following 
sections:

I. Overview of Proposal and Comments Received
II. Section-by-Section Analysis of Interim Final Rule Revisions
III. Invitation to Comment
IV. Interim Final Rule Revisions

I. Overview of Proposal and Comments Received

    In its October 7, 2008, Notice of Proposed Rulemaking 
(``NPRM''),\2\ the Commission invited public comment on proposed 
amendments to its Rules of Practice governing formal adjudicatory 
(``Part 3'') proceedings. This public comment period closed on November 
6, 2008. The Commission observed in the NPRM that it has periodically 
engaged in reform efforts to minimize delay and improve the quality of 
the administrative decisionmaking process in a fair manner fully 
consistent with the Administrative Procedure Act (``APA'')\3\ without 
prejudicing the due process rights of the parties in these proceedings. 
Past reforms and the ones proposed in the NPRM have primarily dealt 
with the long-standing concerns of the courts and the bar that the 
Commission's Part 3 adjudicatory process has been too protracted.\4\
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    \2\ 73 FR 58832 (Oct. 7, 2008).
    \3\ 5 U.S.C. 551 et seq.
    \4\ See, e.g., FTC v. Freeman Hosp., 911 F. Supp. 1213, 1228 n.8 
(W.D. Mo. 1995) (``The average time from the issuance of a complaint 
by the FTC to an initial decision by an administrative law judge 
averaged nearly three years in 1988. Moreover, additional time will 
be required if that initial decision is appealed.''), aff'd, 69 F.3d 
260 (8th Cir. 1995); see also National Dynamics Corp. v. FTC, 492 
F.2d 1333, 1335 (2d Cir. 1974) (remarking upon the ``leisurely 
course typical of FTC proceedings''); J. Robert Robertson, FTC Part 
III Litigation: Lessons from Chicago Bridge and Evanston 
Northwestern Healthcare, 20 Antitrust 12 (Spring 2006); Report of 
the American Bar Association Section of Antitrust Law Special 
Committee to Study the Role of the Federal Trade Commission, 58 
Antitrust L.J. 43, 116 n.167 (1989) (``It is disappointing that the 
Commission * * * continues to have problems of delay.'').
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    In merger cases, parties frequently argue that drawn out 
proceedings will result in their abandoning transactions before the 
antitrust merits can be adjudicated and indeed the protracted nature of 
Part 3 proceedings has contributed to the reluctance of some federal 
courts to grant preliminary relief in merger cases brought under 
Section

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13(b) of the FTC Act, 15 U.S.C. 53(b). Moreover, protracted Part 3 
proceedings do not necessarily result in decisions that are more just 
or fair, and instead may result in substantially increased litigation 
costs for the Commission and respondents whose transactions or 
practices are challenged. For example, protracted discovery schedules 
and pretrial proceedings can result in nonessential discovery and 
motion practice that can be very costly to the Commission, respondents, 
and third parties.
    One of the most critical advantages of administrative 
adjudications, and a cornerstone characteristic of administrative 
agencies, is expertise. As detailed more fully in the NPRM, the 
Congress and the Executive have long recognized that the ability of 
administrative agencies to apply their expertise and to devote 
substantial resources to complex problems calling for specialized 
knowledge is a critical advantage and an important reason for the 
creation of those agencies.\5\ In creating the Commission, Congress 
intended the agency to use its substantive expertise and administrative 
adjudicative authority as a ``uniquely effective vehicle for the 
development of antitrust law in complex settings in which the agency's 
expertise [could] make a measurable difference,''\6\ as well as to 
apply its specialized knowledge to consumer protection matters. 
Certainty and quality in Commission opinions could serve not only to 
improve the resolution of individual cases, but to provide broad 
guidance to industry and the public and help set the policy agenda.\7\ 
With its expertise and unique institutional tools, the Commission was 
created to be--and continues to function as--a forum for expert 
adjudication.
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    \5\ Final Report of the Attorney General's Committee on 
Administrative Procedure 16 (1941) [hereinafter Attorney General's 
Final Report]; see also Marc Winerman, The Origins of the FTC: 
Concentration, Cooperation, Control, and Competition, 71 Antitrust 
L.J. 15 (2003) (discussing the formation and history of the FTC); D. 
Bruce Hoffman & M. Sean Royall, Administrative Litigation at the 
FTC: Past, Present, and Future, 71 Antitrust L.J. 319 (2003) 
(discussing the evolution of administrative adjudication at the 
FTC).
    \6\ Hoffman & Royall, supra note 5, at 319-20.
    \7\ Id.
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    The Commission also recognizes that the APA and the Attorney 
General's Final Report\8\ contemplated an important role for the 
hearing examiner (the predecessor of the ALJ) in the adjudicatory 
process when acting as the presiding official to preside over 
prehearing proceedings, hear evidence and issue an initial decision.\9\ 
Under the APA, the ALJ's authority is, however, ``subject to the 
published rules of the agency,'' a qualification which ``is intended to 
make clear the authority of the agency to lay down policies and 
procedural rules which will govern the exercise of such powers by 
[ALJs].''\10\ Thus, while the Commission's rules provide the presiding 
ALJ with necessary tools to ``conduct fair and impartial hearings, to 
take all necessary action to avoid delay in the disposition of 
proceedings, and to maintain order,''\11\ and with important duties 
including initial fact finding responsibilities, the ALJ must 
ultimately adhere to Commission decisions. The Commission believes the 
rules issued in this notice strike the appropriate balance between the 
important role played by the ALJ and the need to apply the Commission's 
expertise.
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    \8\ See supra note 5.
    \9\ See 5 U.S.C. 556(c).
    \10\ Attorney General's Manual on the Administrative Procedure 
Act 74-75 (1947) [hereinafter Attorney General's Manual]; see also 
Vermont Yankee Nuclear Power Corp. v. Natural Res. Def. Council, 
Inc., 435 U.S. 519, 524 (1978) (holding that agencies have 
discretion to enact procedures where Congress provided agencies with 
``the responsibility for substantive judgments.'').
    \11\ 16 CFR 3.42(c).
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    The proposed amendments announced in the October 7, 2008, NPRM were 
the culmination of a recent broad and systematic internal review to 
improve the Commission's Part 3 practices and procedures in light of 
recent adjudicatory experiences. The Commission undertook this effort 
in order to improve the Part 3 process through a comprehensive review, 
rather than piecemeal modifications of a limited number of rules, which 
would ensure that the rules are consistent with one another and that 
they are workable in practice. Input was obtained from various bureaus 
and offices within the Commission and staff further reviewed the APA's 
legal standards, the rules and procedures of the federal courts, and 
other agencies' adjudicative procedures.
    The Commission intended for the proposed amendments to balance 
three important interests: the public interest in a high quality 
decisionmaking process, the interests of justice in an expeditious 
resolution of litigated matters, and the interest of the parties in 
litigating matters without unnecessary expense. For example, in 
principle, expedited adjudications, while maintaining the high quality 
of the proceeding, may impose costs on the parties or the agency that 
they may not need bear if the demands of a given case permit a more 
leisurely adjudicative process. Alternatively, attempts to increase 
efficiency or decrease costs to those involved could lead to trade offs 
in the quality of the ultimate result.
    The most significant of the proposals in the NPRM included tighter 
time limits during the adjudicatory process leading up to the issuance 
of the initial decision, changes to ensure that the Commission can 
appropriately apply its legal and policy expertise earlier in the 
adjudicatory process, reforms in discovery and motions practice, the 
streamlining and expedition of evidentiary hearings, and a change in 
the Commission's process for handling motions to dismiss or to withdraw 
a case from administrative adjudication after a federal court's denial 
of a preliminary injunction in an action brought by the Commission.
    The Commission received eight comments on the proposed amendments 
from seven individuals or entities: a joint comment from Robert 
Pitofsky\12\ and Michael N. Sohn,\13\ the Section of Antitrust Law of 
the American Bar Association (``Section''), Whole Foods Market, Inc. 
(``Whole Foods'') (two comments), Linda Blumkin,\14\ the Chamber of 
Commerce of the United States of America (``Chamber''), Stephen 
Nagin,\15\ and Richard Hallberg. Some commenters endorsed the 
objectives of the Commission's proposed amendments. The Section 
commented that it ``supports the Commission's efforts to expedite 
certain adjudicative proceedings, improve the quality of its 
adjudicative decision making, and clarify the respective roles'' of the 
Commission and the ALJ. The Pitofsky-Sohn comment noted that 
``expediting Part 3 proceedings is a step in the right direction.''
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    \12\ Counsel to Arnold & Porter LLP and Sheehy Professor of 
Trade Regulation Law, Georgetown University Law Center. Mr. Pitofsky 
served as Chairman of the Commission and previously held other 
positions in the agency.
    \13\ Senior Partner, Arnold & Porter LLP and former General 
Counsel of the Commission.
    \14\ Former Assistant Director for General Litigation in the 
Bureau of Competition.
    \15\ Nagin, Gallup & Figueredo, PA.
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    But these and other commenters objected to various specific 
proposals and the absence of any proposal that would set a deadline on 
the Commission itself, in particular:
    (i) the proposed time limits did not set deadlines for the 
Commission to resolve appeals from initial decisions; (ii) the time 
limits imposed on ALJs were too rigid and might deprive respondents in 
some proceedings of their due process right to be heard; (iii) the 
proposals enabled the Commission to decide dispositive motions while a 
case is pending before an ALJ and would, therefore, undermine the ALJ's

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independence; (iv) the Commission was changing its policy on when it 
would pursue a case after a denial of a preliminary injunction; and (v) 
the proposed rule explicitly stating that the Commission or a 
designated Commissioner could oversee portions of the pretrial process 
infringed on the ALJ's independence. Several commenters argued that the 
30-day comment period was inadequate.

i) Deadlines on Commission decision making.

    Upon consideration of the various comments, the Commission agrees 
that the proposed rules should set deadlines on the Commission to act 
on appeals of initial decisions. The Commission is now adopting in Rule 
3.52 tight deadlines on its resolution of appeals. For cases in which 
the Commission seeks preliminary relief under Section 13(b) of the FTC 
Act, 15 U.S.C. 53(b), there will be automatic Commission review of the 
initial decision (i.e., no notice of appeal will need to be filed), 
briefing will be completed within 45 days of the issuance of the 
initial decision, and the Commission will commit to issue its final 
decision within 45 days of oral argument (i.e., within 100 days of the 
initial decision).\16\ For all other cases, an appealing party will 
need to file its objections to the initial decision by filing a notice 
of appeal, all briefing will be completed within 67 days of the initial 
decision, and the Commission will commit to issue its final decision 
within 100 days of oral argument (i.e., within six months of the 
initial decision).
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    \16\ The timing deadlines for the Commission's decisions on 
appeal or review, as with other rule deadlines, are subject to the 
timing requirements in Rule 4.3(a), which addresses, inter alia, 
when deadlines fall on a weekend or holiday.
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    Consistent with the need for expedited procedures, the Commission 
is also setting deadlines for when it must rule on dispositive motions, 
applications for interlocutory appeals, and motions to dismiss after 
the denial of a preliminary injunction.

ii) Deadlines leading up to Initial Decision.

    The comments filed so far do not persuade the Commission that its 
default timing deadlines are unfair. Comments that the revised rules 
would unduly limit respondents' ability to engage in adequate discovery 
or develop their defenses, and, hence, would violate their right to due 
process, have yet to provide support for this argument. The APA does 
not expressly require discovery. See McClelland v. Andrus, 606 F.2d 
1278, 1285 (D.C. Cir. 1979). Although ``discovery must be granted if in 
the particular situation a refusal to do so would so prejudice a party 
as to deny him due process,'' id. at 1286, it is difficult to see how 
the five and eight month deadlines from complaint to hearing, and the 
duration of pretrial discovery imposed by Rule 3.11(b), fail to satisfy 
due process. The comments thus far fail to demonstrate that respondents 
would not have adequate time to pursue broad discovery. Indeed, the 
revised rules allow the parties to move for more time upon a showing of 
good cause. Antitrust cases in federal court, such as the government's 
monopoly case against Microsoft and its merger case against Oracle, 
have gone to trial on roughly similar schedules, suggesting the 
reasonableness of such time frames.\17\
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    \17\ See, e.g., United States v. Microsoft, 253 F.3d 34 (D.C. 
Cir. 2001); United States v. Oracle Corp., 331 F. Supp. 2d 1098 
(N.D. Cal. 2004).
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    Further, the criticism in the comments received thus far that the 
time limits are too short fails to give adequate weight to provisions 
that authorize the Commission to grant extensions for ``good cause.'' 
The Commission anticipates that this authority will be used sparingly 
but is determined to use this authority whenever necessary to ensure 
that the parties have adequate time to prepare for trial and to present 
their case.

iii) Dispositive motions.

    Commenters' concerns about the role of the Commission in deciding 
legal and policy issues early in the proceeding have not demonstrated 
that early Commission involvement improperly interferes with the 
independence of the ALJ. This is especially true in view of the role 
that Congress envisioned for the Commission as an expert adjudicator. 
Moreover, as explained in the analysis of Rule 3.22, while the APA does 
confer a variety of powers on the ALJ primarily during and after the 
conduct of the evidentiary hearing, this does not include the authority 
to rule on prehearing motions that turn on legal and policy 
determinations.\18\ Rather, the ALJ's authority to rule on such motions 
depends on whether an agency has provided the ALJ with this power in an 
agency rule. Commission Rule 3.22 previously granted ALJ's this power, 
and the Commission plainly has the authority to limit it.
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    \18\ For example, the APA authorizes the ALJ to ``dispose of 
procedural requests or similar matters'' during the hearing, subject 
to the published rules of the agency. 5 U.S.C. 556(c)(9).
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iv) 1995 Policy Statement and procedures related to Part 3 proceedings 
following denial of a preliminary injunction.

    The Commission has adopted its proposal to amend Rule 3.26 to 
eliminate automatic withdrawals from adjudication or stays of Part 3 
proceedings when a party files a motion for withdrawal or to dismiss 
based on the denial of a preliminary injunction in an ancillary federal 
court action brought by the Commission. The Commission, however, has 
also amended the Rule to promote more prompt consideration of whether 
to proceed with Part 3 by providing for the filing of such motions long 
before the Commission has an opportunity to exhaust its appeals as 
provided in the previous Rule, and has also set a 30-day deadline for 
the Commission to decide such motions. The Commission also reaffirms in 
this document its adherence to its 1995 Policy Statement calling for a 
case-by-case analysis of whether the Commission should pursue Part 3 
litigation after it loses a preliminary injunction.\19\
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    \19\ 60 FR 39741 (Aug. 3, 1995).
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v) The proposed amendment providing express authority for the 
Commission or a Commissioner to preside over prehearing procedures.

    Commenters criticized as infringing on the independence of the ALJ 
proposed Rule 3.42(a) that would have made explicit the authority of 
the Commission or one of its members to preside over discovery or 
certain other prehearing procedures before transferring the matter to 
the ALJ. The Commission or its members have the authority to preside 
over prehearing procedures under the APA, 5 U.S.C. 556(b), as well as 
unamended Rule 3.42, and the collection of rule revisions adopted today 
reduce the need for early Commission involvement in case management. 
For these reasons, and to ensure there is no public misperception that 
the proposed revision unfairly enlarged the Commission's authority, the 
Commission has decided not to adopt the proposed revision to this rule.

vi) Improving Part 3 litigation while protecting the rights of the 
parties.

    Upon consideration of all the comments received so far, the 
Commission believes that the rules will improve the Part 3 litigation 
process. The timing deadlines, while aggressive, are consistent with 
the manner in which federal courts can move in complex antitrust cases, 
and parties can seek to extend them when necessary. The rules

[[Page 1807]]

bring the Commission's expertise to bear sooner in the process, which 
can be expected to streamline cases, especially where the principal 
issue is legal not factual, while ensuring that the ALJs will continue 
to play the dominant role in managing the litigation and overseeing the 
evidentiary hearing.

vii) Comment periods.

    As stated in the NPRM, the Commission sought public comment even 
though the proposed rule revisions relate solely to agency practice, 
and thus are not subject to the notice and comment requirements of the 
APA, 5 U.S.C. 553(b)(A). The Commission has been well served by the 
public comment period and the quality of many of the criticisms and 
suggestions undercuts the argument of some commenters that the 30-day 
comment period was too short. In any event, the rule amendments 
published in this notice are being issued only on an interim basis, and 
any rules that the Commission re-promulgates after the current comment 
period are not necessarily permanent. Instead, the Commission is 
instructing its internal Standing Committee on the Part 3 rules, as 
announced in the NPRM, to make recommendations bi-annually to the 
Commission on the need for changes to the Part 3 rules, including the 
rule revisions that become effective today and any rules that the 
Commission re-promulgates after the current comment period.
    In view of the many modifications and additions to rule amendments 
proposed in the NPRM and described in Part II of this document, the 
Commission is requesting further comments on its adjudicatory reforms. 
The Commission will consider comments on any of the rule revisions 
issued today, but will especially welcome comment on any amendments 
that were not proposed in the NPRM.
    The comments are addressed in more detail in the following section-
by-section analysis of the interim final rule revisions.\20\
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    \20\ The final rule amendments are not subject to the 
requirements of the Regulatory Flexibility Act, 5 U.S.C. 601(2) or 
the requirements of the Paperwork Reduction Act, 44 U.S.C. 
3518(c)(1)(B)(ii); 5 CFR 1320.4 (exempting information collected 
during the conduct of administrative proceedings or investigations).
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II. Section-by-Section Analysis of Interim Final Rule Revisions

Subpart A--Scope of Rules; Nature of Adjudicative Proceedings

Section 3.1: Scope of the rules in this part.

    The proposed amendment would have allowed the ALJ or the Commission 
to shorten time periods set by the Rule, provided that the shortened 
time periods would not unfairly prejudice any party. This authority is 
intended for use in proceedings where expedited procedures would serve 
the public interest (e.g., unconsummated mergers) or where the issues 
do not require elaborate discovery or evidentiary hearings (e.g., cases 
where the parties agree that a copious evidentiary record already 
exists that merely needs to be supplemented). In response to a comment, 
the Commission is amending the Rule to provide that the ALJ or the 
Commission may shorten time periods with the consent of the parties. 
Because consent will be required, the Commission is eliminating as 
unnecessary the qualifications that the shortening of a time period 
must not ``unfairly prejudice any party'' and not violate a party's 
legal rights. The Commission has also amended the Rule to state that 
the Part 3 rules generally apply only to ``formal'' adjudicative 
proceedings, i.e., those actions that are governed by the adjudicatory 
provisions of the APA, 5 U.S.C. 554, 556-57.

Section 3.2: Nature of adjudicative proceedings.

    The Commission proposed technical revisions to this Rule that would 
clarify that Commission consideration of consent orders--in addition to 
negotiations of consent orders--are not adjudicative proceedings. The 
proposed changes also omitted from the list of excluded items 
proceedings under specific statutes that have rarely occurred in recent 
decades. No comments were received on the proposed revisions, and the 
Commission adopts them as proposed.

Subpart B--Pleadings

Section 3.11: Commencement of proceedings.

    The Commission proposed amending Rule 3.11(b) to specify that the 
actual date for the evidentiary hearing would be five months from the 
date the complaint is issued in merger cases and eight months from the 
date of the complaint in all other cases, while allowing the Commission 
discretion to determine a different date for the evidentiary hearing 
when it issues the complaint. The Commission would also be able to 
extend the date of the evidentiary hearing upon a good cause showing by 
movants, as set out in proposed Rule 3.21(c).
    The Section and Whole Foods asserted that the five and eight month 
deadlines, along with the deadlines in other rules, are ``one-size-
fits-all'' rules. These comments overlooked the Commission's ability to 
extend the hearing date for all types of cases where a party can show 
that it needs more time to prepare for trial. The Commission, in its 
discretion, could also consider other factors in determining whether to 
find good cause to extend the hearing date, for example, if a 
respondent agrees not to consummate a merger that has not been enjoined 
by a court during the pendency of the Part 3 proceeding.
    The Section stated further that the five month deadline for 
consummated merger cases ``may be appropriate in some cases and not in 
other cases'' and that ``whether the matter was the subject of a 
preliminary injunction hearing'' should be one of the factors 
considered in setting the hearing date for consummated mergers. The 
Commission believes this comment has merit and is revising the Rule so 
that only those cases in connection with which the Commission has 
sought or is seeking relief under Section 13(b) of the FTC Act\21\ will 
be subject to the five month deadline, unless of course the Commission 
sets a different date for the evidentiary hearing when it issues the 
complaint.The eight month deadline will apply to all other cases unless 
the Commission sets a different deadline when it issues the complaint. 
For example, it is possible that the Commission might set a consummated 
merger case, that was not the subject of a Section 13(b) action, under 
the five month schedule if an expedited schedule would be in the public 
interest.
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    \21\ 15 U.S.C. 53(b).
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    The Commission typically seeks preliminary injunctive relief under 
Section 13(b) when it challenges an unconsummated merger, and the Part 
3 proceedings in these cases are frequently the ones that are most in 
need of expedition. As noted above, parties have argued that protracted 
proceedings for merger cases could result in their abandoning 
transactions before their antitrust merits can be adjudicated. The 
interim final Rule, like the proposed Rule, provides the Commission 
discretion to determine a different date for the evidentiary hearing 
when it issues the complaint, and Rule 3.21(c) provides that the 
Commission

[[Page 1808]]

may subsequently extend the date of the hearing upon a good cause 
showing by movants.
    The Chamber and Whole Foods asserted that rules expediting 
proceedings may violate due process if they deny respondents a fair 
opportunity to develop their defense. Whole Foods stated further that 
the deadlines favor complaint counsel because respondents do not share 
complaint counsel's power to obtain fact discovery during the pre-
complaint investigation conducted pursuant to Part 2 of the 
Commission's Rules of Practice.\22\ The five and eight month pretrial 
periods, however, should provide sufficient time for respondents to 
obtain discovery. Rule 3.31(a) requires both complaint counsel and 
respondent's counsel to make comprehensive initial disclosures within 
five days of receipt of respondent's answer to the complaint. These 
disclosures include documents complaint counsel has obtained from third 
parties, subject to the limitations on discovery in Rule 3.31(c)(2). 
The rules allow respondents to serve immediately on other parties 
interrogatories and requests for production of documents. Further, the 
rules allow respondents to issue immediately subpoenas for discovery, 
subject to the restrictions of Rules 3.36 and 3.31(c)(2). In the 
unlikely event that a respondent does not have adequate time for 
discovery, the respondent may file a motion with the Commission to 
delay the hearing date.
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    \22\ 16 CFR 2.1 et seq.
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    Further, the APA does not expressly provide for discovery, and as 
at least two appellate courts have observed:
 The extent of discovery to which a party to an administrative 
proceeding is entitled is primarily determined by the particular 
agency. . . . [C]ourts have consistently held that agencies need not 
observe all the rules and formalities applicable to courtroom 
proceedings. If an agency has adopted rules providing for discovery in 
its proceedings, the agency is bound by those rules and must ensure 
that its procedures meet due process requirements.\23\
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    \23\ Pacific Gas & Elec. Co. v. FERC, 746 F.2d 1383, 1387-88 
(9th Cir. 1984) (citing McClelland v. Andrus, 606 F.2d 1278, 1285 
(D.C. Cir. 1979)).
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    As demonstrated above, and based on the comments received thus far, 
the five and eight month deadlines more than satisfy due process 
requirements because respondent will have ample time for broad 
discovery and a respondent may also move for more time upon a showing 
of good cause under Rule 3.21(c).
    The deadlines in Rule 3.11 are similar to the schedules established 
in some complex antitrust cases in federal district court, some of 
which have gone to trial in five months or less.\24\ Moreover, other 
federal agencies provide limits on the pretrial process. For example, 
the Securities and Exchange Commission (``SEC'') puts cases on one of 
three tracks when it issues an order instituting administrative 
proceedings. For the longest track, SEC rules require that the hearing 
commence approximately four months from the date of the order.\25\
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    \24\ See, e.g., United States v. Microsoft, 253 F.3d 34 (D.C. 
Cir. 2001); United States v. Oracle Corp., 331 F. Supp. 2d 1098 
(N.D. Cal. 2004).
    \25\ 17 CFR 201.360(a)(2).
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    In contrast to the concerns raised by the Chamber and Whole Foods, 
the Section supported a far more accelerated pretrial schedule for 
unconsummated mergers. The Section advocated a five month period from 
complaint issuance to final Commission order for these cases. The 
Section's recommendation was based on its concern, shared by the 
Pitofsky-Sohn comment, that the proposed rules ``will not expedite Part 
3 proceedings nearly enough to make them practicable for unconsummated 
mergers.''\26\
---------------------------------------------------------------------------

    \26\ Both sets of comments noted that the proposed Rule fails to 
address a substantial source of delay--the time it takes the 
Commission to issue a final decision. As discussed below in the 
analysis of Rule 3.52, the Commission is responding to this concern 
by adopting rules that will expedite Commission review of initial 
decisions in all cases.
---------------------------------------------------------------------------

    The Commission also proposed deleting Rule 3.11(c), which allowed 
the respondent to file a motion for more definite statement. These 
motions are seldom filed and even less likely to be granted because 
Commission complaints are typically very detailed. Moreover, under 
previous Rule 3.12, if a respondent elected to file a motion for more 
definite statement, the motion tolled the deadline for the answer to 
the complaint and would result in substantial delay in the proceedings. 
As noted below, respondents may still raise similar objections in a 
motion to dismiss. The Commission therefore adopts this change.

Section 3.12: Answer.

    Proposed Rule 3.12(a) shortened the deadline for filing an answer 
from 20 to 14 days. The Section opposed a reduction in the time to 
answer the complaint, arguing that complaints can be very detailed and 
that respondents need adequate time to analyze the factual and legal 
allegations to respond properly, while the time saved by the Rule is 
modest. The Commission continues to believe, however, that 14 days to 
answer the complaint are sufficient for respondents who have become 
familiar with the issues during the Part 2 precomplaint investigation. 
While the Section argues that Part 2 ``is not a substitute for'' Part 3 
proceedings and that respondents often are not made aware of ``the full 
range of facts'' or gain a complete understanding of the Commission's 
legal theory during Part 2, the fact remains that very few, if any, 
Part 3 cases are ever initiated without the respondent having had 
extensive meetings with the Commissioners and staff. By the time the 
Commission issues a complaint, the parties should be well aware of the 
agency's factual and legal assertions. Further, if necessary, the 
Commission may exercise its authority to extend the 14 days for good 
cause. See Rule 4.3(b). The Commission is adopting the revision as 
proposed.
    Proposed Rule 3.12(a) also eliminated the provision in the Rule 
that allowed the filing of any motion to toll the deadline for 
respondents to file an answer to the complaint.\27\ The Commission was 
concerned that this provision too broadly permitted the filing of any 
motion, regardless of its merit or requested relief, to substantially 
delay the beginning of the Part 3 proceeding. The Section objected that 
no answer should be required until, at least, resolution of a motion 
for a more definite statement or to strike that challenges the 
sufficiency of a complaint. The Commission notes that its complaints 
tend to be highly detailed and that motions for a more definite 
statement are rarely filed and more rarely granted. Respondents may, 
however, always file a motion to dismiss to challenge the sufficiency 
of the complaint if necessary. The revisions to Rule 3.12(a) will 
ensure an earlier prehearing conference, earlier discovery, and will 
expedite the ultimate resolution of the proceeding. The Commission 
adopts the revisions to Rule 3.12(a) as proposed.
---------------------------------------------------------------------------

    \27\ This provision had been added by the Commission in its 2001 
Rule amendments. See 66 FR 17622 (Apr. 3, 2001).
---------------------------------------------------------------------------

    The Commission also proposed in Rule 3.12(b) and (c) to eliminate 
the ALJ's authority to render an initial decision when the allegations 
of the complaint are admitted or there is a default. In those cases, 
the Commission would issue a final decision on the basis of the facts 
alleged in the complaint. While the Section suggested that a decision 
by an independent ALJ can be useful even without a record to review, 
the Commission believes that in these

[[Page 1809]]

circumstances cases can be resolved more expeditiously without the 
intermediate step of an ALJ's initial decision; the only issues in such 
cases are legal or policy ones, in which the Commission's expertise is 
most relevant. The proposed revisions are adopted.

Subpart C--Prehearing Procedures; Motions: Interlocutory Appeals; 
Summary Decisions

Rule 3.21: Prehearing procedures.

    The Commission proposed amendments to Rule 3.21 that would impose 
tighter deadlines on prehearing procedures. No comments on this Rule 
were received, and the Commission adopts the rule revisions as 
proposed. Rule 3.21(a) requires that the parties' initial meet-and-
confer session take place within five days of the answer and requires 
the parties to discuss electronically stored information (``ESI'') at 
that time, including the scope of and the time period for the exchange 
of ESI and the format for exchanging such information. This change is 
intended to help expedite the case and facilitate resolution of 
production issues in ways that minimize costs. Rule 3.21(a) is also 
modified by deleting a phrase that suggested the parties should discuss 
a proposed hearing date because that date will already have been set by 
the Commission when it issued the complaint and the date can be 
modified only by the Commission upon a showing of good cause. Rule 
3.21(a), as amended, specifies broad subjects to be discussed at the 
parties' meet-and-confer session(s) before the scheduling conference.
    Rule 3.21(b) advances the deadline for the scheduling conference 
from 14 days after the answer is filed to 10 days after the answer is 
filed. Although the Commission extended the deadline to 14 days in 
2001,\28\ it believes the ten day deadline is reasonable for most 
cases. The Rule includes additional items to be discussed at the 
scheduling conference, such as stages of the proceeding that may be 
expedited. Under the Rule, the Commission contemplates that the parties 
will inform the ALJ of the results of their initial meeting(s) 
regarding their proposed discovery plan, including the disclosure of 
ESI, and that the ALJ will incorporate in the scheduling order a 
discovery plan that he or she deems appropriate.
---------------------------------------------------------------------------

    \28\ Id.
---------------------------------------------------------------------------

    Rule 3.21(c)(1) specifies that the ALJ's scheduling order will 
establish a schedule of proceedings that will permit the evidentiary 
hearing to commence on the date set by the Commission. The Rule also 
states that the Commission may, upon a showing of good cause, order a 
later date for the evidentiary hearing than the one specified in the 
complaint. The deadline for the prehearing scheduling conference and 
order and the more detailed requirements for both are intended to help 
keep the prehearing proceedings on track and enable the parties to 
contribute to a high quality record on which the ALJ can base his or 
her decisions.
    Rule 3.21(c)(2) authorizes the ALJ to extend, upon a showing of 
good cause, any deadline in the scheduling order other than the date of 
the evidentiary hearing. Rule 3.21(f) states that the ALJ shall hold 
additional prehearing and status conferences or enter additional orders 
as may be needed to ``ensure the just and expeditious disposition of 
the proceeding and to avoid unnecessary cost.'' These revisions give 
the ALJ substantial flexibility and discretion to manage particular 
cases.

Section 3.22: Motions.

    The proposed revision to Rule 3.22(a) provided that the Commission 
would resolve in the first instance motions to strike, motions for 
summary decision, and prehearing motions to dismiss, but provided the 
Commission discretion to refer the motion to the ALJ and to set a 
deadline in which the ALJ must rule on the motion. Significantly, the 
Section acknowledged in its comment that ``[e]arlier Commission 
involvement [to resolve dispositive motions] will undoubtedly result in 
more efficient resolution of these issues. Moreover, it will allow the 
Commission to apply its antitrust expertise to matters at an earlier 
stage. Delay occasioned by an erroneous ALJ decision on a dispositive 
motion * * * provides little benefit and exacts a toll on all 
participants in the process.''
    Nonetheless, commenters (including the Section) criticized the 
proposed Rule change as unfairly invading the province of the 
independent ALJ and compromising the Commission's dual roles as 
prosecutor and adjudicator. For example, the Section argued that the 
proposed changes, while ``likely [to] reduce or avoid delay,'' could 
raise concerns about the impartiality and fairness of the Part 3 
proceeding by permitting the Commission to adjudicate dispositive 
issues, including motions to dismiss challenging the facial sufficiency 
of a complaint, shortly after the Commission has voted out the 
complaint finding that it has ``reason to believe'' there was a law 
violation, without the benefit of an opinion by an independent ALJ. The 
Section added that, while ``it may sometimes be desirable for the 
Commission to address dispositive motions in the first instance, 
changing the Part 3 rules to make that the default procedure is 
unnecessary,'' and that ``concern about improving the quality of 
Commission decisions is better addressed by enhancing the antitrust 
expertise of the ALJs.'' The Pitofsky-Sohn comment similarly argued 
that the proposed rules, including Rule 3.22, would arguably infringe 
on the fairness of the Part 3 proceeding if the Commission more 
frequently ``invades what has heretofore been the province of an 
independent ALJ.'' Whole Foods argued that the rule change would 
compromise the independence of the ALJ, who will lose the opportunity 
to ``live with the case,'' will not write his initial decision on a 
``clean slate,'' but will be unduly influenced by the ``entirely 
transparent views of the Commission delivered on less than a full 
record,'' and will lose his ability to effectively manage discovery. 
The Chamber and Blumkin comments similarly argued that this change 
would compromise the ALJ's independent decision making role.
    Commenters, however, provided essentially no legal support for 
their argument that the Commission's resolution of dispositive motions 
in the first instance will unfairly prejudice litigants in Part 3 
proceedings or would violate the APA. Most important, these comments 
failed to undermine the central premise supporting the rule change: 
that the Commission has the authority and expertise to rule initially 
on dispositive motions and that doing so will improve the quality of 
the decisionmaking and (as acknowledged by the Section) will expedite 
the proceeding.\29\ This is because an erroneous decision by the ALJ on 
a dispositive motion dismissing the complaint may lead to unnecessary 
briefing, hearing, and reversal, resulting in substantial costs and 
delay to the litigants. Moreover, the APA does not confer on an ALJ the 
specific authority to rule on dispositive motions, and indeed, permits 
the Commission or Commissioners to act as presiding officers. See 5 
U.S.C. 556(b).\30\ It is

[[Page 1810]]

therefore hard to see how allowing the Commission to rule on 
dispositive motions deprives an ALJ of the independence conferred by 
the APA or is unfair to the parties.
---------------------------------------------------------------------------

    \29\ The Commission has in recent practice retained jurisdiction 
to resolve legal issues raised in a dispositive motion. See, e.g., 
In re S. Carolina State Bd. of Dentistry, 136 F.T.C. 229 (2004) 
(Commission retained jurisdiction to hear motions to dismiss and 
denied at that stage respondent's legal defense that its alleged 
unlawful activities were protected by the state action doctrine).
    \30\ Under the APA, the Commission or one of its Commissioners 
may take evidence at the hearing, 5 U.S.C. 556(b), and the 
Commission, on appeal or review, may make its own legal 
determinations and de novo factual findings from the hearing record. 
See, e.g., 5 U.S.C. 557(b) (``On appeal from or review of the 
initial decision, the agency has all the powers which it would have 
in making the initial decision except as it may limit the issues on 
notice or by rule.'').
---------------------------------------------------------------------------

    Codifying this approach will likely expedite the proceedings and 
save litigants resources to the extent the case is dismissed or the 
issues narrowed by the resolution of the legal or public interest 
issue. For example, a Commission order denying a motion to dismiss can 
articulate the legal standard to be applied to the facts alleged in the 
complaint and can be a useful tool to apply as facts are developed 
during discovery.\31\
---------------------------------------------------------------------------

    \31\ Whole Foods mistakenly asserted that by deciding 
dispositive motions, such as motions for summary decision, the 
Commission will be taking away the independent role of the ALJ to 
interpret facts and parse the evidentiary record. On the contrary, 
such motions inherently do not resolve factual disputes, but rather 
resolve legal or policy issues where there are no genuine issues of 
material facts in dispute. This commenter acknowledged that motions 
raising ``purely legal defenses'' might be appropriate for the 
Commission to resolve.
---------------------------------------------------------------------------

    Concerns raised by the Section that this rule change will result in 
``the practical unavailability of a motion to dismiss'' because the 
Commission had just previously found there to be a ``reason to 
believe'' there was a law violation, are without support and are 
refuted by recent Commission practice.\32\ Further, the logic of the 
argument about the benefit of delaying the Commission's involvement 
with the legal issues in a case would cast doubt on any effort to 
significantly reduce the time it takes for a case to reach the 
Commission for a final decision on both the law and the facts of the 
case. Indeed, the Section's proposal that the Commission issue a final 
decision in all unconsummated merger cases within five months after 
issuance of the complaint would have the Commission resolve the facts 
and law of the case within a few months after it voted to bring the 
case.
---------------------------------------------------------------------------

    \32\ See, e.g., S. Carolina State Bd. of Dentistry, 136 F.T.C. 
229 (denying respondent's motion to dismiss on state action grounds, 
but refusing to deny respondent's motion to dismiss on mootness 
grounds as urged by complaint counsel in favor of remanding to ALJ 
for limited discovery on mootness issue).
---------------------------------------------------------------------------

    The Commission also proposed in paragraph (a) that rulings on 
motions to dismiss based on the alleged failure to establish a prima 
facie case would be deferred until after the hearing record is closed, 
and eliminated the provision in the previous Rule for a recommended 
ruling by the ALJ when certifying to the Commission a motion outside 
his or her authority to decide. The Commission received no comments on 
these proposals and they have been adopted as proposed.
    Proposed paragraph (b) required that proceedings before the ALJ not 
be stayed during the Commission's consideration of the motion, unless 
otherwise ordered by the Commission. The Commission has revised the 
caption of paragraph (b) to ``Proceedings not stayed,'' to more 
accurately describe the subject matter of the paragraph. Proposed 
paragraph (e) required the ALJ to decide all motions within 14 days of 
the filing of all motion papers unless otherwise provided by rule or if 
the Commission extends the time for good cause. The purpose of proposed 
paragraph (b) was to ensure that discovery and other prehearing 
proceedings continue while the Commission deliberates over the 
dispositive motions, and paragraph (e) is similarly intended to 
expedite the proceedings. The Section objected that eliminating the 
stay for pre-answer motions will result in inadequate review of the 
sufficiency of a complaint, but as explained above, the Commission's 
complaints tend to be highly detailed and, in any event, respondents 
retain the right to challenge the sufficiency of a complaint by filing 
a motion to dismiss. Except for the revision of the caption of 
paragraph (b), paragraphs (b) and (e) are adopted as proposed.
    The Section commented, however, that by not staying the Part 3 case 
during the pendency of a dispositive motion before the Commission and 
with no deadlines imposed on the Commission to resolve such motions, 
litigants (and the ALJ) will be disadvantaged by not knowing the 
precise scope of the issues to be addressed at the hearing or, indeed, 
whether there will be any hearing at all. The Commission agrees and has 
therefore revised paragraph (a) to require that the Commission resolve 
any dispositive motion within 45 days of the filing of the motion 
papers unless it finds there to be good cause for an extension. In 
those cases where the Commission grants a dispositive motion, that 
decision will constitute the agency's final decision in the case, and 
this 45 day period for deciding dispositive motions is therefore the 
same amount of time as the Commission has allocated for issuing its 
final decision following oral argument in cases where the Commission 
has sought relief under Section 13(b).
    Proposed paragraph (c) also imposed word count limits on motion 
papers. Briefs in support of, and in opposition to, dispositive motions 
were to be limited to 10,000 words (approximately 40 double-spaced 
pages), and briefs in support of, and in opposition to, non-dispositive 
motions were limited to 2,500 words (approximately 10 double-spaced 
pages). The Commission received no comments on these word count 
limitations and they have been adopted as proposed.
    Proposed paragraph (d) provided an automatic right of reply in 
support of dispositive motions, stated that reply and surreply briefs 
in support of non-dispositive motions ``shall be permitted only in 
circumstances where the parties wish to draw the ALJ's or the 
Commission's attention to recent important developments or controlling 
authority that could not have been raised earlier in the party's 
principal brief,'' and imposed a five day filing deadline for any 
authorized reply to a motion. No comments were received on these 
provisions and they are adopted as proposed.
    The other proposed changes to Rule 3.22, such as eliminating 
previous paragraph (e) and redesignating previous paragraph (f) as 
paragraph (g), generated no comments and are adopted.

Section 3.23: Interlocutory appeals.

    The Commission proposed amendments to Rule 3.23 that would expedite 
consideration by the ALJ and the Commission of certain applications by 
a party that seek discretionary review of an interlocutory ruling by 
the ALJ. As noted in the NPRM, the proposal left unchanged in paragraph 
(a) the types of rulings that the parties can ask the Commission to 
review without a determination by the ALJ that interlocutory review is 
appropriate.
    In paragraph (b), the proposal continued to allow applications for 
interlocutory review of other rulings only on a determination that the 
ruling ``involves a controlling question of law or policy as to which 
there is substantial ground for difference of opinion and that an 
immediate appeal from the ruling may materially advance the ultimate 
termination of the litigation or subsequent review will be an 
inadequate remedy.'' In order to reduce delay, the Commission proposed 
requiring the ALJ to make his or her determination whether the 
application for review involves such a controlling question within 
three days after the filing by a party of a request for such a 
determination. The revision eliminated the requirement that the ALJ 
provide a

[[Page 1811]]

written justification for his or her determination. It also allowed the 
party to file its application for review with the Commission if the ALJ 
does not make a timely ruling on its request for a determination on the 
appropriateness of review. The Commission adopts these revisions as 
proposed.
    Because the pendency of an application for review may leave a cloud 
over the proceeding before the ALJ, paragraph (d) of the proposed Rule 
would have treated the failure of the Commission to act within three 
days as a denial of the application. As suggested by the Section's 
comment, the Commission has eliminated this default provision and the 
Rule now requires instead that the Commission decide whether to 
entertain an appeal within three days after the filing of the answer to 
the application. The Commission has also adopted the Section's 
suggestion that the Rule make explicit that the denial of an 
application does not constitute a ruling on the merits of the appeal.
    Also, to avoid unnecessary delay, the proposed Rule set shorter 
deadlines than the previous Rule for the filing of applications and 
answers and, to reduce burdens, imposed tighter limits than the 
previous Rule on the length of these filings. No comments were received 
on these provisions and the Commission has adopted them.

Section 3.24: Summary decisions.

    Proposed paragraph (a), in conjunction with proposed Rule 3.22, was 
revised to permit the Commission in the first instance to resolve 
dispositive motions unless referred by the Commission to the ALJ. This 
proposal was criticized by many of the commenters as improperly 
infringing on the independence of the ALJ. These commenters asserted 
that, after the Commission issues a complaint, it should not intervene 
in the Part 3 proceedings until after the ALJ has conducted the Part 3 
hearing and issued an initial decision. As noted in the analysis of 
Rule 3.22, the Commission may properly make initial rulings on 
dispositive motions presenting legal or public interest issues and 
doing so does not infringe on the ALJ's ability to preside over the 
evidentiary hearing and issue an initial decision.
    Proposed paragraph (a) also required that summary decision motions 
be filed no later than 30 days before the evidentiary hearing instead 
of 20 days as in the unamended Rule. The proposed Rule also extended 
the deadline for filing affidavits in opposition to a summary decision 
motion from 10 to 14 days in order to provide the nonmoving party more 
time to oppose the motion where the moving party may have had months in 
which to prepare its summary decision brief and supporting papers. No 
comments were received on these proposals and they are therefore being 
adopted.
    Proposed paragraph (a) also eliminated the previous 30 day deadline 
for ruling on a motion for summary decision but allowed the Commission 
to set a deadline for a decision when referring such a motion to the 
ALJ. As discussed above, several commenters complained that the lack of 
a Commission deadline to rule on dispositive motions while the Part 3 
case is proceeding may unfairly prejudice litigants who do not know if 
or how the issues will be narrowed before the beginning of the 
evidentiary hearing. In response, in Rule 3.22 the Commission has 
imposed on itself a 45 day deadline to resolve dispositive motions. As 
noted earlier, this 45 day period for deciding dispositive motions is 
the same amount of time as the Commission has allocated for issuing its 
final decision following oral argument in cases where the Commission 
has sought relief under Section 13(b).
    Finally, commenter Nagin suggested that, where an affidavit in 
support of or in opposition to a motion for summary decision is filed 
in bad faith, the list of possible disciplinary actions under Rule 
3.24(b) be expanded, from ``reprimand, suspension or disbarment'' to 
include ``notice to all professional licensing, registration and 
certification entities to which a lawyer is subject to discipline.'' 
The Commission has the authority to refer unethical conduct to state 
bar associations and does not believe that a special provision for this 
is needed in the Rule on summary decisions.

Section 3.26: Motions following denial of preliminary injunctive 
relief.

    Rule 3.26 was first adopted in connection with a 1995 Policy 
Statement, which explained that the Commission takes a case-by-case 
approach in deciding whether to pursue administrative litigation of a 
merger case following the denial of a preliminary injunction in federal 
court.\33\ Many commenters objected to the Commission's proposal to 
eliminate provisions in the Rule for automatic withdrawals from 
adjudication or stays when a party moves for withdrawal or to dismiss 
after the Commission loses a motion for preliminary injunction in a 
merger case. Several commenters argued that the Commission should not 
pursue administrative litigation in merger cases if it loses its 
application for a preliminary injunction. Of course, if the Commission 
were to adopt a policy uniformly disclaiming any intent to pursue the 
Part 3 adjudication on the merits after losing a preliminary 
injunction, there would be no need for Rule 3.26 at all. The Commission 
does not choose to take that approach and instead adheres to the case-
by-case approach of the 1995 Policy Statement.
---------------------------------------------------------------------------

    \33\ 60 FR 39741 (1995).
---------------------------------------------------------------------------

    Several comments argued that, by stating in the NPRM that 
continuation of the Part 3 adjudication after loss of a preliminary 
injunction should be the ``norm,'' the Commission's proposed amendment 
amounted to a reversal of its 1995 Policy Statement. According to that 
Statement,
 [I]t would not be in the public interest to forego an administrative 
trial solely because a preliminary injunction has been denied. Nor 
would it be in the public interest to require an administrative trial 
in every case in which a preliminary injunction has been denied. Thus, 
a case-by-case determination is appropriate. This approach gives the 
Commission the opportunity to assess such matters as (i) the factual 
findings and legal conclusions of the district court or any appellate 
court, (ii) any new evidence developed during the course of the 
preliminary injunction proceeding, (iii) whether the transaction raises 
important issues of fact, law, or merger policy that need resolution in 
administrative litigation, (iv) an overall assessment of the costs and 
benefits of further proceedings, and (v) any other matter that bears on 
whether it would be in the public interest to proceed with the merger 
challenge.\34\
---------------------------------------------------------------------------

    \34\ Id. at 39743.
---------------------------------------------------------------------------

    The 1995 Statement, however, offered no view on whether the typical 
outcome of a case-by-case analysis would be to continue or to abandon 
Part 3 litigation. The Pitofsky-Sohn comment states that ``articulating 
such a `norm' leaves the impression that the Commission will take 
little or no notice of what preliminary injunction courts have to say'' 
and points out that the NPRM was ``silent with respect to whether any 
or all of the factors [listed in the 1995 Statement and quoted above] 
will continue to be considered.''
    The Commission continues to consider the five factors as highly 
relevant to any determination whether to proceed with Part 3 and 
anticipates that the parties will address them in their motion papers 
and, if a motion for withdrawal is granted, in their presentations 
during the time the case is

[[Page 1812]]

withdrawn. The Commission, of course, will also continue to consider 
carefully the rulings by the district court and any appellate court 
rulings in deciding whether to proceed with Part 3. In this connection, 
the Commission urges parties to address anything in the judicial 
rulings that they believe is relevant to the public interest in further 
proceedings. Besides the factors listed in the 1995 Policy Statement, 
this would include, for example, a discussion of whether any judicial 
ruling on the merits of the challenge to the merger was based on a 
determination that the Commission had not even raised ``questions going 
to the merits so serious, substantial, difficult and doubtful as to 
make them fair ground for thorough investigation, study, deliberation 
and determination by the FTC in the first instance and ultimately by 
the Court of Appeals,'' the test articulated in such decisions as FTC 
v. H.J. Heinz Co.\35\ and FTC v. Whole Foods Market, Inc.\36\ for 
whether the Commission had made a sufficient showing of likelihood of 
success on the merits to warrant preliminary injunctive relief. Such a 
determination would itself raise serious questions about whether the 
Part 3 case should continue.
---------------------------------------------------------------------------

    \35\ 246 F.3d 708, 714-15 (D.C. Cir. 2001).
    \36\ No. 07-5276, 2008 U.S. App. LEXIS 24092, at *10 (D.C. Cir. 
Nov. 21, 2008) (Brown, J.); id. at *30 (Tatel, J., concurring).
---------------------------------------------------------------------------

    Although the Commission will maintain the case-by-case approach 
outlined in the 1995 Statement, this approach does not warrant the 
delays that result from automatic withdrawals or stays. The Commission, 
however, is committed to a prompt and careful consideration of the 
public interest and has accordingly added a requirement that it rule on 
motions to dismiss or for withdrawal from adjudication not later than 
30 days after the filing of motion papers.
    The Commission is making another change to the proposed amendment 
to ensure prompt consideration of the public interest in proceeding 
with the Part 3 litigation. Proposed paragraph (b) would have made 
explicit a requirement in the original Rule\37\ that a motion to 
dismiss or for withdrawal be filed only after the exhaustion of appeals 
from the district court's denial of the preliminary injunction. This 
restriction could prevent the filing of motions to dismiss or for 
withdrawal from adjudication under this Rule until many months after 
the district court decision. In order to allow much more prompt 
consideration of the public interest in determining whether to proceed 
with the Part 3 case, the Commission has revised paragraph (b) to 
authorize the filing of a motion to dismiss or for withdrawal at any 
time within 14 days after, but not earlier than, a court of appeals has 
denied a Commission request for an injunction or stay pending appeal. 
For cases in which the Commission has not sought relief from the court 
of appeals within seven days following the denial of a preliminary 
injunction, the Rule revision authorizes the filing of a motion to 
dismiss or for withdrawal at any time within 14 days after the district 
court denies a Commission request for preliminary relief.
---------------------------------------------------------------------------

    \37\ See 60 FR 39640, 39641; In re Equitable Resources, Inc., 
No. 9322, 2007 F.T.C. LEXIS 49 (May 30, 2007).
---------------------------------------------------------------------------

Subpart D--Discovery; Compulsory Process

Section 3.31: General discovery provisions.

    The Commission proposed to revise Rule 3.31(b) to specify that the 
documents to be disclosed as part of the parties' mandatory initial 
disclosures include declarations or affidavits, as well as transcripts 
of investigational hearings and depositions, and that initial 
disclosures also include ESI. The reference to ESI would update the 
term ``data compilations'' and would parallel the 2006 amendment to 
Fed. R. Civ. P. 26(a)(1)(B). The proposed limitations on disclosure of 
ESI in Rule 3.31(c)(3) follow Fed. R. Civ. P. 26(b)(2)(B). In 
particular, the proposed provision in Rule 3.31(c)(3) that a party need 
not provide discovery of ESI from sources that the party identifies as 
not reasonably accessible because of undue burden or cost is 
anticipated to reduce delays and costs to the parties. There were no 
comments on these revisions and the Commission adopts them as proposed. 
As discussed below, the Commission also proposed to treat expert 
discovery in a new Rule 3.31A, thereby eliminating the provisions in 
paragraphs (b) and (c) governing expert discovery.
    The proposed revisions to Rule 3.31(c)(2) would limit the scope of 
discovery for complaint counsel, respondents, and third parties who 
receive a discovery request. Complaint counsel would only need to 
search for materials that were collected or reviewed in the course of 
the investigation of the matter or prosecution of the case and that are 
in the possession, custody, or control of the Bureaus or Offices of the 
Commission that investigated the matter, including the Bureau of 
Economics. The ALJ could authorize for good cause additional discovery 
of materials in the possession, custody, or control of those Bureaus or 
Offices, or authorize other discovery pursuant to Rule 3.36. Neither 
complaint counsel, respondent, nor a third party receiving a discovery 
request under the rules would be required to search for materials 
generated and transmitted between an entity's counsel (including 
counsel's legal staff or in-house counsel) and not shared with anyone 
else, or between complaint counsel and non-testifying Commission 
employees, unless the ALJ determines there is good cause to provide 
such materials.
    The Section argued that requiring respondents to satisfy the 
``heightened requirements'' of good cause for agency materials that 
fall outside these limits could create a disparity in substantive 
outcomes in Part 3 proceedings and those in federal court. In fact, 
however, the proposed rule is similar to the restrictions on discovery 
in the Federal Rules of Civil Procedure. The Section admitted that 
``the FRCP generally limit the discovery of evidence that is 
duplicative, privileged, or work product.'' As the Commission stated in 
the NPRM, the materials excluded by the proposed rule are frequently 
duplicative and almost always protected by the deliberative process or 
attorney-client privileges or as work product. In the rare event that 
material excluded by the proposed rule is not duplicative, privileged 
or work product, it should not be difficult for respondent to satisfy a 
good cause standard or the requirements of Rule 3.36. Moreover, any 
alleged disadvantage for respondents is offset by the corresponding 
limitations on discovery of materials held by respondents and third 
parties. The Commission is adopting the revisions to Rule 3.31(c)(2) as 
proposed.
    Proposed Rule 3.31(d) would require the ALJ to issue the standard 
protective order set forth in an appendix to the Rule. The Section 
argued that the parties should be able to negotiate orders suited to 
the needs of the particular case. These negotiations, however, can 
substantially delay discovery, prevent the Commission from protecting 
confidential material in a uniform manner in all Part 3 cases, and 
reduce the confidence of third party submitters that their confidential 
submissions will be protected.
    The Section specifically objected to a provision that would 
prohibit disclosure of confidential discovery materials to a 
respondent's in-house counsel. It asserted that, in many cases, this 
restriction would inhibit a respondent's ability to defend itself. The 
Commission's statutory obligation to maintain the confidentiality of

[[Page 1813]]

commercially sensitive information,\38\ however, raises serious 
questions about the wisdom of allowing disclosure of information in its 
custody to in-house counsel, who might intentionally or unintentionally 
use it for purposes other than assisting in respondent's 
representation, for example, by making or giving advice about the 
company's business decisions.\39\ The Commission believes it is not 
sound policy to allow third party competitively sensitive information 
to be delivered to people who are in a position to misuse such 
information, even if inadvertently.
---------------------------------------------------------------------------

    \38\ E.g., FTC Act 6(f), 15 U.S.C. 46(f).
    \39\ Although protective orders could limit in-house counsel's 
access only to less sensitive third party information, third party 
submitters during a Part 2 investigation could only guess what 
degree of protection would eventually be afforded their confidential 
information in a subsequent Part 3 proceeding.
---------------------------------------------------------------------------

    The proposed standard protective order covered ``sensitive personal 
information,'' which includes, but is not limited to, an individual's 
Social Security number, taxpayer identification number, financial 
account number, credit card or debit card number, driver's license 
number, state-issued identification number, passport number, date of 
birth (other than year), and any sensitive health information 
identified\40\ by individual, such as an individual's medical records. 
The Commission is retaining this provision, and as discussed below, is 
making further conforming amendments to Rule 3.45, which will accord in 
camera treatment if such material is to be introduced as evidence or 
otherwise used in the proceeding. Likewise, the Commission is amending 
Rule 4.2, as explained further below, to govern the use of sensitive 
personal information in filings to the Commission.
---------------------------------------------------------------------------

    \40\ The final version of the standard protective order 
substitutes ``identifiable'' for ``identified.''
---------------------------------------------------------------------------

    The Nagin comment suggested several modifications to the standard 
protective order, including barring disclosure of confidential material 
to anyone affiliated with or employed ``directly or indirectly'' by a 
respondent, requiring notice if a party receives a discovery request 
from another government agency without regard to whether the request is 
part of an agency ``proceeding,'' and adding specific requirements for 
the disposition of electronically stored discovery materials at the end 
of the proceeding. It also recommended that parties maintain logs of 
all recipients of confidential discovery materials.
    Although the term ``proceeding'' is broad enough to encompass 
government investigations, the Commission is revising paragraph 11 of 
the standard order to apply to discovery requests ``received in any 
investigation or in any other proceeding or matter.'' The Commission, 
however, is not convinced that the comment's other recommended 
modifications are needed to protect confidential discovery material.
    The Commission has also eliminated paragraph (g) from the previous 
Rule. This paragraph applied to applications for the issuance of 
subpoenas to compel testimony at an adjudicative hearing pursuant to 
Rule 3.34. Because the Commission has amended Rule 3.34 to eliminate 
such applications, this paragraph is unnecessary.
    Rule 3.31(g) (proposed Rule 3.31(h)), as revised, addresses the 
resources used to avoid the risk of privilege and work product waiver, 
which add to the costs and delay of discovery. The risk of waiver, and 
the time and effort needed to avoid it, are aggravated when the party 
is producing ESI. The proposed amendment would limit the risk of 
waivers resulting from inadvertent disclosures as long as parties take 
reasonable measures to protect privileged materials. The proposal did 
not address obligations imposed by state bar rules on attorneys who 
receive materials that appear to be subject to a privilege claim.
    The FTC Act requires the Commission to protect ``privileged or 
confidential'' information.\41\ By providing that the Commission will 
not treat genuinely inadvertent disclosures as waivers of privilege 
claims, the proposed amendment, together with the relevant provisions 
of the FTC Act, was intended to assure respondents and third parties 
alike that if otherwise privileged materials are held by the FTC, those 
materials will not readily find their way into the public record. In 
this regard, the protective order expressly includes privileged 
information in the order's definition of ``confidential materials'' 
subject to the protective order. No comments were received on the 
provision regarding inadvertent disclosure, and the Commission adopts 
it as proposed.
---------------------------------------------------------------------------

    \41\ FTC Act, 6(f), 21(d)(1)(B), 15 U.S.C. 46(f), 57b-
2(d)(1)(B).
---------------------------------------------------------------------------

    Rule 3.31(h) (proposed Rule 3.31(i)), as revised, prohibits the 
filing of discovery materials with the Office of the Secretary, the 
ALJ, or otherwise providing such materials to the Commission, except 
when used to support or oppose a motion or to offer as evidence. This 
change is similar to Fed. R. Civ. P. 5(d), which generally prohibits 
the filing of discovery material unless ordered by the court or used in 
the proceeding. No comments were received on this provision and the 
Commission adopts it as proposed.

Section 3.31A: Expert discovery.

    Proposed Rule 3.31A mandated a schedule for the disclosure of 
potential expert witnesses, the production of expert reports, and the 
start and completion of expert depositions. The proposed Rule also 
incorporated and revised certain provisions contained in previous Rule 
3.31(b) and (c). As discussed below, the Commission is revising the 
Rule to expressly address respondent's ability, in limited 
circumstances, to call surrebuttal witnesses and to file surrebuttal 
reports. The Commission is adopting the remaining provisions of Rule 
3.31A as proposed.
    The scheduling provisions in the Rule will provide for expert 
discovery in a more orderly and expeditious manner than what has 
occurred in past proceedings by not permitting expert discovery to 
begin until fact discovery is essentially completed. The Commission 
believes that discovery of experts, including the production of expert 
reports, will be less than thorough if facts potentially relevant to 
their opinions have yet to be discovered. The Rule requires the parties 
to serve each other with a list of experts that they intend to call at 
the hearing no later than one day after the close of fact discovery. 
Commenter Nagin asserted that requiring respondents to disclose their 
expert witnesses at the close of fact discovery invades the work 
product of respondents. The disclosure of expert witnesses is 
necessary, however, to allow the parties to prepare for depositions and 
to engage in other discovery relevant to that witness.
    The Rule also limits the number of expert witnesses to five per 
side. The Section claimed that the revision should allow each party to 
call five experts, instead of limiting the number of experts to five 
per ``side.'' It has been the Commission's experience, however, that 
five expert witnesses per side is sufficient for each party to present 
its case in the vast majority of cases. The Rule also has a safety 
valve that allows a party to seek leave to call additional expert 
witnesses in extraordinary circumstances.
    The Rule requires that each expert who will testify at the 
evidentiary hearing produce a written report, thereby eliminating the 
ALJ's authority to dispense with them. Preparation of a written expert 
report is a common requirement in federal courts and, given the 
Commission's goal of expedited proceedings, will be required during the

[[Page 1814]]

discovery period to allow the parties more effective and targeted 
discovery. Paragraph (c) of the Rule specifies additional requirements 
for expert reports, including ``a listing of any other cases in which 
the witness has testified as an expert at trial or by deposition within 
the preceding 4 years.'' The Nagin comment argued that every expert 
should be required to maintain a database with substantial information 
about his or her testimony in other proceedings. This suggestion 
overlooks the fact that individuals may serve as experts in proceedings 
in other forums before being asked to be an expert in a Commission Part 
3 matter. An FTC rule could not require individuals to ``maintain'' 
such information when they are not involved in Commission proceedings, 
and to require an individual to create such a database once they are 
selected as an expert for a Part 3 matter would be unduly burdensome. 
The comment suggested further that the FTC maintain a database of all 
expert reports and expert testimony submitted in all Part 3 
proceedings. The Commission already makes all of the trial testimony 
and exhibits available to the public--except for confidential 
material--and has begun posting trial testimony at www.ftc.gov.\42\ The 
Commission declines the invitation to assume the additional burden 
suggested by the commenter.
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    \42\ For example, the trial transcript for the In re Rambus, 
Inc. matter is available at (http://www.ftc.gov/os/adjpro/d9302/exhibits/index.shtm).
---------------------------------------------------------------------------

    The Rule provides that complaint counsel submit their initial 
expert reports first, followed by respondents' expert reports. 
Respondents' reports, of course, can rebut material in complaint 
counsel's initial expert reports. The Rule also explicitly authorizes 
complaint counsel to call rebuttal experts and, if complaint counsel 
intends to exercise this option, requires the experts to prepare 
rebuttal expert reports. Thus, the Rule allows complaint counsel's 
experts an opportunity to respond to respondents' expert reports. The 
Section asserted that respondents should also have the express right to 
call surrebuttal experts in all situations, not just when material 
outside the scope of a fair rebuttal is presented. While the Commission 
continues to believe that respondents should only be able to call 
surrebuttal experts in order to respond to new arguments raised by 
complaint counsel's rebuttal experts, it is clarifying the Rule so that 
the ``appropriate relief'' sought by respondents in this circumstance 
explicitly includes the right to seek leave to call surrebuttal experts 
and to file a surrebuttal report, and includes a deadline for 
respondents to file such a motion.
    The Rule also excludes from expert discovery anyone who has been 
retained or specially employed by another party in anticipation of 
litigation or preparation for hearing unless he or she is expected to 
be called as a witness at the hearing, so as to prevent the discovery 
of the unpublished work product of non-testifying experts, particularly 
where such materials are proprietary and highly confidential. The 
discovery of such marginally relevant materials can be a major 
distraction from the central case and can have an adverse effect on the 
willingness of non-testifying experts to consult in the future.

Section 3.33: Depositions.

    The Commission has added to paragraph (a) a reference to Rule 3.36, 
which provides that certain subpoenas requiring the appearance of 
certain persons may issue only upon a motion approved by the ALJ.
    The proposed Rule added paragraph (b) to Rule 3.33, which allows 
the ALJ, upon a party's motion, to prevent the taking of a deposition 
if it would not meet the scope of discovery standard under Rule 3.31(c) 
or if its probative value is substantially outweighed by the danger of 
unfair prejudice, confusion of the issues, or if the evidence would be 
misleading, or based on considerations of undue delay, waste of time, 
or needless presentation of cumulative evidence (as set forth under 
Rule 3.43(b)). Proposed paragraph (b) also clarified that the fact that 
a witness testifies in an investigative hearing does not preclude the 
deposition of that witness.
    The Section contended that the proposed revision is inconsistent 
with the Federal Rules of Civil Procedure, because Fed. R. Civ. P. 
30(a)(2) sets out only limited circumstances when permission from a 
federal judge is required to take a deposition. In addition, the 
Section asserted that the revision imposes a burden on a party seeking 
to take the deposition to show that the evidence will be admissible. 
However, the Commission is adopting the revision as proposed. Under 
general principles of motions practice, the party filing a motion has 
the burden of persuasion. In this situation, the party moving to 
prevent the taking of the deposition would have the burden of showing 
that the evidence should be excluded for the reasons stated in the 
proposed Rule; there would not be a burden on the party seeking to take 
the deposition to show that the evidence will be admissible. The 
revision is therefore not a significant departure from the federal 
rules.
    The Commission proposed revising paragraph (c) to stop the practice 
of filing notices of deposition with the Office of the Secretary, the 
ALJ, or otherwise providing such notices to the Commission, except as 
provided in proposed Rule 3.31(h). Such notices serve no purpose for 
the ALJ or the agency, and receipt of these notices causes unnecessary 
processing costs for the Commission. No comments were received on this 
proposal and the Commission adopts it as proposed.
    Consistent with Rule 3.43, the Commission has proposed eliminating 
previous Rule 3.33(g)(1) because it contains hearsay-based limitations 
for the use of depositions. Revised Rule 3.43 reflects existing case 
law by providing for the admission of hearsay evidence in the 
evidentiary hearing if the evidence is ``relevant, material, and bears 
satisfactory indicia of reliability so that its use is fair.'' If 
meeting this standard, depositions, investigational hearings, and other 
prior testimony may be admitted. As discussed further below, the 
Commission is adopting Rule 3.43 as proposed, and accordingly is 
eliminating previous Rule 3.33(g)(1).

Section 3.34: Subpoenas.

    The Commission proposed amending paragraphs (a) and (b) to 
authorize counsel for a party to sign and issue a subpoena on a form 
provided by the Secretary. These revisions are intended to expedite the 
commencement of hearings by speeding the issuance of discovery and 
hearing subpoenas. The definition of ``documents'' would also be 
revised to parallel Fed. R. Civ. P. 45(c)(1). No comments were received 
on these rule changes and the Commission adopts them as proposed.
    The Commission also proposed revising paragraph (c) to reflect 
revised Rule 3.36, discussed below, which requires a special showing of 
need for subpoenas directed to the offices of the Commissioners, the 
General Counsel, Bureaus and Offices not involved in the matter, the 
ALJs, or the Secretary. No comments were received on the proposed 
revisions to Rule 3.36 and the Commission is adopting them as well as 
the corresponding changes in Rule 3.34(c).\43\ The Commission is also 
adding a reference to the discovery limitations in Rule 3.31(c)(2).
---------------------------------------------------------------------------

    \43\ See infra note 44.

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[[Page 1815]]

Section 3.35: Interrogatories to parties.

    The Commission proposed to add Rule 3.35(a)(3) to provide that 
interrogatories should not be filed with the Office of the Secretary, 
the ALJ, or otherwise provided to the Commission except as provided in 
proposed Rule 3.31(i) because ordinarily there is no reason to file 
discovery pleadings. No comments were received on this proposal and the 
Commission is adopting Rule 3.35(a)(3) as proposed.
    Proposed Rule 3.35(b)(2) would allow parties to delay answering a 
contention interrogatory until the close of discovery, the pretrial 
conference, or ``other later time.'' Although the Section recognized 
that contention interrogatories usually are not answered in federal 
court cases until the end of fact discovery, it nonetheless asserted 
that the proposed Rule unfairly shifts the burden of seeking a response 
to a contention interrogatory to the party who propounds it. The 
Section also commented that the phrase ``other later time'' is 
ambiguous and may allow the recipient of such an interrogatory to evade 
an answer altogether. The purpose of the proposed Rule is to conform 
Commission practice with federal court practice and consistently allow 
a party to delay answering a contention interrogatory until fact 
discovery is almost complete. However, the proposed Rule also allowed a 
party posing a contention interrogatory to secure an earlier answer, if 
one was necessary, by filing a motion seeking an earlier answer. The 
Rule is not intended to allow an answering party to evade an answer, 
but to postpone answering until it has all the information it needs to 
supply a full answer. Accordingly, the Rule now clarifies that 
contention interrogatories must be answered by the time designated 
discovery has been completed, but in no case later than three days 
before the final pretrial conference.

Section 3.36: Applications for subpoenas for records of or appearances 
by certain officials or employees of the Commission or officials or 
employees of governmental agencies other than the Commission, and 
subpoenas to be served in a foreign country.

    The Commission proposed to revise Rule 3.36 to require a special 
showing of need for subpoenas directed to the offices of the 
Commissioners, the General Counsel, Bureaus and Offices not involved in 
the matter, the ALJs, and the Secretary because these offices are 
unlikely to possess relevant, discoverable information that is not 
available from other sources. The Commission believed that the lack of 
useful additional information likely to be available from these offices 
suggested that the burden (and delay) of searches for responsive 
records and the creation of privilege logs should not be imposed 
without strong justification. The Commission's proposed revision to 
paragraph (b)(3) would require a showing of ``compelling need'' as the 
corresponding standard for witness testimony. No comments were received 
on these proposed amendments to Rule 3.36 and they are adopted as 
proposed.\44\
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    \44\ The Section did object to a related provision in proposed 
Rule 3.31(c)(2) to limit the scope of complaint counsel's obligation 
to search. As discussed earlier, the Commission is not persuaded by 
that objection.
---------------------------------------------------------------------------

Section 3.37: Production of documents, electronically stored 
information, and any tangible thing; access for inspection and other 
purposes.

    The Commission proposed to amend Rule 3.37 to include provisions 
from Fed. R. Civ. P. 34 on electronic discovery. The proposed amendment 
also provided that requests under this Rule not be filed with the 
Office of the Secretary, the ALJ or otherwise provided to the 
Commission, except as provided in proposed Rule 3.31(i). No comments 
were received on this proposal and it is adopted as proposed.

Section 3.38: Motion for order compelling disclosure or discovery; 
sanctions.

    The Commission proposed amending Rule 3.38 to impose short 
deadlines for responses to and rulings on motions to compel and a 2,500 
word limit for motions and answers. The Commission also proposed to 
amend the Rule to consolidate the sanctions for failure to comply with 
discovery and disclosure requirements and to add as a sanction the 
inability to call a witness who was not disclosed under Rule 3.31(b) or 
an expert not disclosed under proposed Rule 3.31A. No comments were 
received on the proposed amendments to Rule 3.38 and they are adopted 
as proposed.

Section 3.38A: Withholding requested material.

    The Commission proposed to amend Rule 3.38A to modify the 
requirement that a privilege/work product log always contain specific 
information for each item being withheld. The Commission proposed to 
substitute the more flexible requirement in Fed. R. Civ. P. 26(b)(5)(A) 
that the schedule of withheld items ``describe the nature of the 
documents, communications, or tangible things not produced or disclosed 
-- and do so in a manner that, without revealing information itself 
privileged or protected, will enable other parties to assess the 
claim.'' This proposed requirement would permit parties to describe 
withheld items by categories, but only if the description ``will enable 
other parties to assess the claim.'' Unless such descriptions are 
sufficient, item-by-item descriptions would be required.
    The proposed Rule also clarified that the log need not describe any 
material outside the scope of the duty to search set forth in revised 
Rule 3.31(c)(2) except to the extent that the ALJ has authorized 
additional discovery as provided in that Rule.
    No comments were received on the proposed amendments to this Rule 
and they are adopted.

Section 3.39: Orders requiring witnesses to testify or provide other 
information and granting immunity.

    The Commission proposed various technical revisions to this Rule. 
No comments were received on the proposed amendments and they are 
adopted.

Subpart E--Hearings

Section 3.41: General hearing rules.

    The proposed revisions to Rule 3.41(b) required that the 
evidentiary hearing commence on the date set in the notice accompanying 
the complaint, limited the length of the evidentiary hearing to 210 
hours (or the equivalent of 30 seven hour trial days) unless extended 
by the Commission, and established reasonable time allocations. The 
goal of these proposed revisions was to expedite the proceedings.
    The Section commented that the proposed Rule should allow 
``additional flexibility'' for the ALJ to extend the hearing length 
particularly for nonmerger cases involving multiple parties. Whole 
Foods complained that the proposed rule unfairly limited the ALJ's 
discretion over the length of the hearing and cited to the lack of such 
a limit in a recent Part 3 scheduling order, and the Chamber similarly 
asserted that the ALJ should decide if a longer trial is needed. The 
Commission believes that, in the vast majority of cases, 30 trial days 
is more than sufficient to complete the evidentiary hearing. Further, 
the Rule permits the Commission ``upon a showing of good cause'' to 
extend the commencement date or the length of the hearing if the case 
involves, for example, a particularly lengthy record or complex legal 
issues. For these reasons, the Rule is adopted as proposed.

[[Page 1816]]

    Commenter Nagin recommended that under paragraph (b)(3), the 
Commission should clarify that the ALJ can hold a separate segment of 
the hearing relating to one or more respondents in case any particular 
claim or issue necessitates such treatment. The current language of 
this provision, which permits the Commission or ALJ to order separate 
hearings of any claim, any separate issue, or any number of claims or 
issues, sufficiently covers the scenario raised by this commenter and, 
therefore, no change to this provision is necessary.
    Finally, the Commission's proposed amendment included a new 
paragraph (f), a provision moved (and revised) from previous Rule 
3.51(a) concerning the effect of collateral federal court actions on 
Part 3 proceedings. The new provision states that the pendency of a 
collateral federal action will stay the Part 3 proceeding only if the 
Commission (as opposed to the ALJ) so orders ``for good cause,'' and 
that deadlines set by the rules will be tolled during the period of the 
stay. The Commission, and not the ALJ, should be authorized to stay the 
Part 3 proceeding pending a collateral action in federal court, since 
the granting of a stay is likely to implicate public interest 
considerations that the Commission, rather than the ALJ, should 
resolve.

Section 3.42: Presiding officials.

    The proposed amendment would make explicit provision for the 
Commission to retain jurisdiction over a matter during some or all of 
the prehearing proceedings and to designate one or more Commissioners 
to preside. The Section objected that by ```codifying' the Commission's 
right to interject itself into prehearing case management, it may 
undermine the integrity of the process, compromise the ALJ, and create 
an appearance of unfairness.'' The Pitofsky-Sohn comment argued that 
``the more the Commission invades what has heretofore been the province 
of an independent ALJ, the more it lends credence to concerns regarding 
the fairness of the Part 3 adjudicative process.''
    The APA, 5 U.S.C. 556(b), and unamended Rule 3.42(a) allow the 
Commission or one or more Commissioners to preside over the hearing as 
ALJ. It therefore remains unclear how authorizing the Commission or a 
Commissioner to preside over the initial phases of the pretrial 
proceeding raises a legal issue or, for that matter, creates an 
appearance of unfairness. The package of rule amendments governing 
scheduling, discovery, and other aspects of the pretrial proceedings, 
however, will reduce the need for early Commission or Commissioner 
involvement in case management. Nor is the proposed Rule needed to 
authorize the Commission or a Commissioner to preside over the initial 
phases of the pretrial process; that authority is already implicit in 
Rule 3.42(a), which authorizes the Commission or one or more 
Commissioners to preside. The Commission, therefore, views the proposed 
amendment to Rule 3.42(a) as unnecessary and has not adopted it.

Section 3.43: Evidence.

    The proposed revision in paragraph (b) defined hearsay evidence and 
expressly provided for the admission of such evidence if it ``is 
relevant, material, and bears satisfactory indicia of reliability so 
that its use is fair.'' The Section complained that expressly 
permitting the admission of hearsay evidence would create unnecessary 
disparities between Part 3 and federal court procedures that could lead 
to substantive differences in case outcomes. It also asserted that the 
unamended Rule, which it interprets as applying a case-by-case approach 
to hearsay, is preferable to ``the new default rule admitting hearsay 
evidence in every circumstance'' that might unfairly disadvantage 
respondents.
    However, it is settled law that the Commission's Rules of Practice 
already permit the introduction of hearsay evidence, provided that it 
meets the standards of materiality, reliability, and relevance. See, 
e.g., In re Schering-Plough Corp., 136 F.T.C. 956, 1007 (2003), vacated 
on other grounds, 402 F.3d 1056 (11th Cir. 2005). As stated in the 
NPRM, and as acknowledged by the Section, administrative agencies are 
not bound by the stricter hearsay rules in the Federal Rules of 
Evidence, but must independently assess the reliability of the evidence 
itself.\45\ The ALJ in the first instance, and the Commission in its de 
novo review, must determine the admissibility and probative value, if 
any, to be given to hearsay evidence by analyzing, for example, the 
possible bias of an out-of-court declarant, the context in which the 
hearsay material was created, whether the statement was sworn to, and 
whether it is corroborated or contradicted by other forms of direct 
evidence.
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    \45\ See 5 U.S.C. 556(d) (APA provides that ``[a]ny oral or 
documentary evidence may be received, but the agency as a matter of 
policy shall provide for the exclusion of irrelevant, immaterial or 
unduly repetitious evidence. A sanction may not be imposed or rule 
or order issued except on consideration of the whole record or those 
parts thereof cited by a party and supported by and in accordance 
with the reliable, probative, and substantial evidence.''); see also 
J.A.M. Builders, Inc. v. Herman, 233 F.3d 1350, 1354 (11th Cir. 
2000) (hearsay admissible in administrative proceedings if 
``reliable and credible''); FTC v. Cement Inst., 333 U.S. 683, 705-
06 (1948); Richardson v. Perales, 402 U.S. 389, 407-08 (1971); 
Calhoun v. Bailar, 626 F.2d 145, 148 (9th Cir. 1980); Buchwalter v. 
FTC, 235 F.2d 344 (2d Cir. 1956) (hearsay evidence is admissible in 
FTC administrative cases).
---------------------------------------------------------------------------

    Proposed paragraph (b) also provided concrete examples of this 
principle by expressly stating that depositions, investigational 
hearings, and prior testimony in Commission and other proceedings, and 
any other form of hearsay, would be admissible and would not be 
excluded solely because they constitute or contain hearsay, if the 
testimony or other form of hearsay was sufficiently reliable and 
probative. Proposed paragraph (b) also provided that relevant 
statements or testimony by a party-opponent would be admitted; such 
statements do not constitute hearsay.
    The proposed Rule was intended to ensure that ALJs do not take an 
overly narrow approach to admitting hearsay evidence. The proposed Rule 
did not, however, provide for the admission of hearsay evidence ``in 
every circumstance,'' but only where such evidence is sufficiently 
relevant, reliable and probative ``so that its use is fair.'' The 
Commission is adopting the hearsay provision in paragraph (b) as 
proposed.
    The Section also argued that, if the amendment is to be adopted, it 
should require parties to provide notice every time they intend to 
introduce hearsay evidence to permit the opposing party to rebut the 
evidence, relying on the residual hearsay exception rule in Fed. R. 
Evid. 807 that requires such notice. Rule 807, however, does not govern 
the most familiar forms of admissible hearsay exceptions and the 
Commission is not persuaded that a blanket notice rule should apply to 
the admission of hearsay evidence in Part 3 proceedings. The Commission 
notes that the Rule contains provisions designed to protect against the 
unfair use of hearsay evidence by prohibiting the admission of 
unreliable, immaterial or duplicative hearsay evidence, by excluding 
relevant hearsay evidence ``if its probative value is substantially 
outweighed by the danger of unfair prejudice,'' and by providing the 
right of parties ``to submit rebuttal evidence'' to counter the 
admission of any hearsay evidence.
    The Commission also proposed a new paragraph (c) to facilitate the 
admissibility of third party documents by self-authentication through a 
written declaration of the third party document custodian. This 
provision is analogous to Fed. R. Evid. 902(11). The

[[Page 1817]]

Commission received no comments on this provision and it is adopted as 
proposed.
    Proposed paragraph (d)(1) expressly incorporated the APA standard 
in 5 U.S.C. 556(d) to allow a party ``to present its case or defense by 
sworn oral testimony and documentary evidence, to submit rebuttal 
evidence, and to conduct such cross-examination, as in the discretion 
of the Administrative Law Judge, may be required for a full and true 
disclosure of the facts.'' While the Section objected that the proposed 
provision might be interpreted to limit cross-examination in violation 
of the APA, the new provision expressly incorporates the APA standard 
for the presentation of evidence. While the APA standard does not 
impose an absolute or unlimited right of cross examination,\46\ it 
necessarily allows for all cross-examination in order to ascertain the 
``full and true disclosure of the facts.'' This revision is adopted as 
proposed.
---------------------------------------------------------------------------

    \46\ See, e.g., Citizens Awareness Network, Inc. v. United 
States, 391 F.3d 338, 351 (1st Cir. 2004); Central Freight Lines, 
Inc. v. United States, 669 F.2d 1063 (5th Cir. 1982).
---------------------------------------------------------------------------

    Commenter Nagin recommended that paragraph (e), which allows the 
disclosure and offering into evidence of any information obtained by 
the Commission, be amended to require adherence to other Part 3 rules 
in order to prevent ``unfairness or surprise.'' There is a large 
difference, however, between offering such evidence into the record and 
its admission into the record, and--given the mandatory disclosure 
requirements and other discovery obligations--there are sufficient 
protections in these rules against any unfair use of evidence by 
complaint counsel. The Commission is not persuaded that this change is 
necessary.
    Finally, the Commission proposed in re-designated paragraph (f) a 
definition of ``official notice,'' and to provide that a party may 
controvert an officially noticed fact either by opposing the other 
party's request that official notice be taken or after it has been 
noticed by the ALJ or the Commission. Previous Rule 3.43 did not define 
official notice or what constitutes such notice. The Commission 
received no comments on this revision and it is adopted as proposed.
    Other paragraphs in the proposed Rule were redesignated to 
accommodate new paragraphs and will be adopted as proposed.

Section 3.44: Record.

    The Commission proposed to revise Rule 3.44 to require that witness 
testimony be video recorded digitally and made part of the official 
record along with the witness's written transcript. As noted in the 
NPRM, the purpose of the proposed revision is to enable the Commission, 
which is tasked with reviewing the record de novo, to independently 
assess witness demeanor when necessary. Courts have recognized the 
``added value of demeanor evidence'' from video recording.\47\ 
Requiring video recording of witness testimony will improve the quality 
of Commission decisions whenever witness demeanor is an important 
issue. No comments criticized this provision and it is adopted as 
proposed.
---------------------------------------------------------------------------

    \47\ See FTC v. Tarriff, 557 F. Supp. 2d 92, 97 (D.D.C. 2008).
---------------------------------------------------------------------------

    The Commission also proposed to revise paragraph (c) by deleting 
the word ``immediately'' at the beginning of the first sentence to 
provide the parties with three business days to review the record to 
determine if it is complete or needs to be supplemented. This revision 
generated no comments and is adopted as proposed.

Section 3.45: In camera orders.

    The Commission proposed revising paragraph (b) to add a paragraph 
making clear that parties have no obligation to file or provide in 
camera versions of filings with sensitive materials with anyone other 
than opposing counsel and the ALJ during the proceedings, as well as 
with the Commission or federal courts during any appeals. No comments 
were received on this revision and the Commission adopts it as 
proposed.
    Additional amendments are being made to conform the Commission's in 
camera procedures to the standard protective order that the Commission 
has adopted as final as an appendix to Rule 3.31, discussed above. 
Accordingly, paragraph (b) of Rule 3.45 has been further amended to 
incorporate the order's definition of ``sensitive personal 
information'' to be accorded in camera treatment if such material is to 
be introduced as evidence or otherwise used in the proceeding. Thus, 
where a party's proposed findings, briefs, or other documents, filings, 
and submissions contain such information, parties will be required to 
prepare public (redacted) and non-public (in camera) versions in order 
to avoid public disclosure, just as the parties are currently required 
to do under the Rule for other material granted in camera treatment or 
subject to a protective order. See Rule 3.45(d), (e). Likewise, the 
Commission is amending Rule 4.2, as explained further below, to require 
that parties minimize or omit sensitive personal information in their 
filings when such information is not needed for the conduct of the 
proceeding.

Section 3.46: Proposed findings, conclusions, and order.

    The Commission proposed to revise paragraph (a) to provide 
expressly for the simultaneous filing of proposed findings of fact, 
conclusions of law, rule or order, and supporting briefs within 21 days 
of the close of the hearing record, as well as the optional filing of 
proposed reply findings, conclusions, and briefs within 10 days of the 
filing of the initial proposed findings. The previous Rule did not 
impose any deadlines or specify the order of these filings, requiring 
instead that such submissions be filed ``[u]pon the closing of the 
hearing record, or within a reasonable time thereafter fixed by the 
Administrative Law Judge.'' The proposed change was intended to require 
the orderly and timely submission of proposed findings and conclusions 
on which the ALJ may consult and to expedite the post-hearing phase and 
issuance of the initial decision.
    Whole Foods commented that the proposed change ``revokes the ALJ's 
discretion over the timing of proposed findings of fact, conclusions of 
law and briefs in favor of rigid, one-size-fits-all time schedules.'' 
The schedule outlined in the proposed Rule, however, should be 
reasonable in the vast majority of cases. In the unusual situation, a 
party may move the ALJ under Rule 4.3 for an extension ``[f]or good 
cause shown.'' The revision is adopted as proposed.

Subpart F--Decision

Section 3.51: Initial decision.

    The Commission proposed to revise paragraph (a) to require the 
initial decision to be filed within 70 days after the last-filed 
proposed findings of fact and conclusions of law (or 85 days after the 
closing of the hearing record if the parties waive filing proposed 
findings), but allowed the ALJ to extend these deadlines by 30 days 
``for good cause.'' The previous Rule required that the initial 
decision be filed within 90 days of the close of the hearing record, 
but the Commission determined that setting the initial decision 
deadline to the filing of proposed findings and conclusions, on which 
the ALJ may consult in preparing his or her decision, was more 
reasonable than basing the deadline on the closing of the hearing 
record.
    The proposed revision also maintained the previous Rule's over-all 
one year deadline for the issuance of the

[[Page 1818]]

initial decision, but added that only the Commission could extend the 
one year deadline ``upon a finding of extraordinary circumstances and 
if appropriate in the public interest.'' The previous Rule permitted 
the ALJ to grant consecutive 60 day extensions upon a finding of 
``extraordinary circumstances,'' but the Commission believed that the 
proposed revision would prevent protracted delays while still providing 
sufficient time for the ALJ to review the evidence and issue the 
initial decision.
    The Section's comment was generally favorable, stating that while 
it ``believes that in most cases, expediting the merger review process 
is a positive step, such timing requirements are not universally 
applicable. The Section applauds this revision to speed up an ALJ's 
decision.'' The Section noted, however, that based on other deadlines 
imposed in these rules, the schedule for cases in which the hearing 
will typically be set for eight months after the complaint issues will 
likely result in the initial decision being filed slightly beyond the 
one year deadline. The Commission has eliminated the overall one year 
deadline for all cases. The Commission concludes that the filing of the 
initial decision within 70 days after the filing of the last-filed 
proposed findings and conclusions (or 30 days beyond that if the ALJ 
directs the one-time extension for ``good cause'') provides a 
sufficient time limit.
    Based on these revisions to this paragraph, the Commission is also 
slightly modifying a sentence in the proposed Rule to now state that: 
``The Commission may further extend any of these time periods for good 
cause.'' This modification imposes a standard for extensions and 
clarifies that the ALJ cannot extend the deadline beyond the 30 days 
provided in the Rule.
    The Commission has also removed language from previous Rule 3.51(a) 
regarding the effect of a pending collateral federal court proceeding 
on a Part 3 case, and inserted revised language into Rule 3.41 as the 
stay and tolling provisions incident to collateral federal actions 
potentially affect more than the deadline for filing the initial 
decision.
    Commenter Nagin recommended that paragraph (c), regarding the 
evidence to support an initial decision, be changed from ``reliable and 
probative evidence,'' to ``competent and reliable, probative evidence'' 
so as to be consistent with certain scientific nomenclature. The 
Commission does not believe that such a change materially alters the 
standard of evidence necessary to support an initial decision and 
therefore does not revise the Rule as suggested.
    Finally, proposed paragraph (c)(2) required that the initial 
decision be filed in a word processing format that is accessible to the 
Commission on review. This revision generated no comments and is 
adopted as proposed.

Section 3.52: Appeal from initial decision.

    The Commission proposed to revise paragraphs (b) and (c) to shorten 
the word counts for the principal appellate briefs from 18,750 words to 
14,000 words (approximately 55 double-spaced pages), to revise 
paragraph (d) to shorten the word count limits for reply briefs to half 
of the principals' briefs (or 7,000 words), to make explicit that 
parties cannot raise new arguments or matters in reply briefs that 
could have been raised earlier, to revise paragraph (c) to reduce the 
word count limit for cross-appeal briefs to 16,500 words, and to revise 
paragraph (j) to limit the word count limit on amicus briefs to ``no 
more than one-half the maximum length authorized by these rules for a 
party's principal brief.'' The Commission also proposed to revise 
paragraph (k) to specify the contents of the brief that would count 
toward the word count limit. While the Commission is not required to 
follow the Federal Rules of Appellate Procedure in its Rules of 
Practice, these new word count limits are consistent with limits for 
analogous briefs under Fed. R. App. P. 28.1, 29 and 32.
    As explained in the NPRM, while lengthier appellate briefs could be 
justified by the Commission's obligation to review the record de novo, 
the Commission's review is also enhanced by its access to the parties' 
proposed findings and conclusions filed with the ALJ. Further, the 
Commission may extend these word count limits if the case involves a 
particularly large record or complex legal issues. As noted in 
paragraph (k), however, the Commission will not lightly permit such 
extensions. The Commission received no comments on these suggested word 
count revisions and they are adopted as proposed.
    The Commission is also imposing deadlines on the issuance of its 
final decision. The Commission had announced in the NPRM ``its 
intention to make best efforts to expedite its preparation and 
disposition of final orders and opinions in its review of initial 
decisions in adjudicatory proceedings.''\48\ The Commission recognized 
that complaints about the protracted nature of Part 3 proceedings 
extend both to proceedings before the ALJ and to the Commission's 
issuance of the final decision.
---------------------------------------------------------------------------

    \48\ 73 FR at 58834.
---------------------------------------------------------------------------

    Nonetheless, given the Commission's stated goal of expediting the 
Part 3 process, several commenters criticized the absence in the 
proposed rules of any formal deadlines for the Commission to issue its 
final decision of an appeal. For example, according to the Pitofsky-
Sohn comment:
 The proposed changes to Part 3 do not address the absence in the 
present rules of any limitation on the Commission's time to render a 
decision in the event of an appeal from the ALJ's decision. It has been 
said that since 2000, it has taken the Commission an average of 18 
months to render its own decision, even in those cases where no 
complicated remedial issues requiring further proceedings were 
involved. This hole should be plugged with a rule change requiring the 
Commission to render its decision within six months of the ALJ's 
ruling, except in narrow and unusual circumstances.
    The Section commented that the rule proposals ``fail sufficiently 
to expedite Part 3 proceedings by not imposing a time within which the 
Commission should issue a final decision,'' which is ``the stage of the 
proceeding that consumes the greatest time.'' The Section recommended 
that, in unconsummated merger cases, the final Commission order be 
issued within five months from filing of the complaint and that, in 
general, the Commission issue its final order within 90 days after the 
initial decision. The Chamber also asserted that the Commission failed 
to place a deadline on ``a decision by the Commissioners, which is very 
often a source of substantial delay.'' Based on these concerns, the 
Commission is setting strict deadlines for the issuance of its final 
decisions in all Part 3 cases.
    For cases in which the Commission has sought preliminary relief 
under Section 13(b) of the FTC Act\49\ (typically unconsummated merger 
cases), the Commission has provided that it will review all initial 
decisions--without requiring a notice of appeal--and issue a final 
decision within 45 days of oral argument (i.e., within 100 days of the 
filing of the initial decision).\50\ Although the Section has urged the 
Commission to decide all merger cases within five months of the filing 
of the complaint,

[[Page 1819]]

the Commission believes that this is a pace that unduly rushes the 
parties and virtually precludes any opportunity for the Commission to 
treat exhaustively any novel issues that may arise in a particular 
case. This deadline would also be faster than what federal courts 
frequently manage even for expedited permanent injunction cases on the 
merits (after which, like Commission decisions, appeals are to be filed 
in federal appellate courts).\51\ This rule revision institutionalizes 
an approach for dealing with such cases on a consistent and even-handed 
basis as opposed to an expedited schedule being issued ad hoc on a 
case-by-case basis.
---------------------------------------------------------------------------

    \49\ 15 U.S.C. 53(b).
    \50\ The timing deadlines for the Commission's decisions on 
appeal or review, as with other rule deadlines, are subject to the 
timing requirements in Rule 4.3(a). Thus, these deadlines may be 
enlarged slightly if, for example, a deadline were to fall on a 
weekend or holiday.
    \51\ United States v. Carilion Health Sys., 707 F. Supp. 840, 
841 (W.D. Va.), aff'd, No. 89-2625, 1989 WL 157282 (4th Cir. Nov. 
29, 1989) (decision issued approximately nine months after complaint 
filed); United States v. Primestar, Inc., No. 98-CV-01193 (D.D.C. 
filed May 12, 1998) (approximately nine months from complaint to 
trial on the merits).
---------------------------------------------------------------------------

    The Commission is also setting deadlines in all other cases in 
which preliminary relief was not sought, although on a less rapid 
schedule. These cases will typically include cases involving 
allegations of anticompetitive conduct, most cases challenging 
consummated mergers, and most consumer protection cases. In these 
matters, the Commission will issue its final decision within 100 days 
after oral argument (i.e., within six months of the issuance of the 
initial decision).
    To accommodate those expedited deadlines, the Commission is 
reducing the time in which parties may file briefs from the initial 
decision. For cases in which the Commission has sought preliminary 
relief under Section 13(b), there will be automatic Commission review 
of the initial decision (i.e., no notice of appeal will be required). 
In these cases, a party objecting to any portion of the initial 
decision (e.g., decision on liability or scope of remedy) must file its 
opening brief within 20 days of the issuance of the initial decision. 
Parties would respond to any objections filed by another party by 
filing answering briefs within 20 days of service of the opening brief, 
and any reply briefs would be due within five days of service of the 
answering brief. The Commission will schedule oral argument within 10 
days after the deadline for the filing of any reply briefs and will 
issue its final decision within 45 days after oral argument.\52\
---------------------------------------------------------------------------

    \52\ In the event that no objections to the initial decision are 
filed, the Commission in its discretion may schedule oral argument 
within 10 days after the deadline for the filing of objections, and 
will issue its final decision within 45 days after oral argument. If 
no oral argument is scheduled, the Commission will issue its final 
decision within 45 days after the deadline for the filing of 
objections.
---------------------------------------------------------------------------

    For all other cases, review by the Commission will not be 
automatic, but will normally be initiated by a party filing a notice of 
appeal (as under the previous Rule).\53\ In these cases, any party 
objecting to any portion of the initial decision must file a notice of 
appeal within 10 days of the initial decision, or within five days of 
the initial notice if a party is filing a cross-appeal. Any party 
filing a notice of appeal (including a cross-notice of appeal) must 
then perfect its appeal by filing its opening brief within 30 days of 
the issuance of the initial decision. Parties may respond to opening 
briefs by filing answering briefs within 30 days of service of the 
opening briefs and may file reply briefs within seven days of service 
of the answering briefs. The Commission will schedule oral argument 
within 15 days after the deadline for the filing of the reply briefs, 
and the Commission will issue its final decision within 100 days after 
oral argument.\54\
---------------------------------------------------------------------------

    \53\ The Commission has retained Rule 3.53, which authorizes the 
Commission to place a case on its docket for review in the absence 
of an appeal.
    \54\ If no argument is scheduled, the Commission will issue its 
final decision within 100 days after the deadline for the filing of 
any reply briefs.
---------------------------------------------------------------------------

    The new Rule requires simultaneous briefing on review for all cases 
brought in Part 3. For that reason, the word count limitations in the 
former Rule for a combined answering and cross-appeal brief, and the 
additional rounds of briefing provided in the former Rule for cross-
appeals, are unnecessary, and these provisions have been eliminated in 
the new Rule.
    Finally, the Commission's proposal to revise paragraph (h) 
regarding oral arguments by striking the last two sentences generated 
no comments and will be adopted.

Section 4.2: Requirements as to form, and filing of documents other 
than correspondence.

    The Commission has added a new paragraph (c)(4), and redesignated 
existing paragraph (c)(4) as (c)(5), to require that filing parties 
redact or omit ``sensitive personal information'' from their filings 
when such information is not needed for the conduct of the proceeding. 
Sensitive personal information, which is also protected by the standard 
protective order contained in Appendix A of Rule 3.31, will be accorded 
in camera treatment pursuant to Rule 3.45 if such material is to be 
introduced as evidence or otherwise used in the proceeding. These 
procedures, as amended, are intended to safeguard the confidentiality 
of such information in the event such information must be filed or 
otherwise used in the proceeding.

Section 4.3: Time.

    The proposed revision to Rule 4.3(b) specified that the ALJ may 
extend a time period set by a Commission order only if the order 
expressly authorizes the ALJ to do so. It also added time limits 
regarding motions directed to the Commission to the list of extensions 
that only the Commission may grant. The revision also clarified that 
the ALJ may not enlarge any deadline that a rule specifically 
authorizes only the Commission to extend. No comments were received on 
these revisions and the Commission adopts them as proposed.

III. Invitation To Comment

    The Commission invites interested members of the public to submit 
written comments addressing any issues raised by the interim rule 
amendments. Such comments must be filed by February 12, 2009, and must 
be filed in accordance with the instructions in the ADDRESSES section 
of this document. While the Commission will consider all comments it 
receives, it is inviting comment in particular on the rules it is 
adopting which reflect changes from the proposed amendments.

IV. Interim Final Rule Revisions

List of Subjects in 16 CFR Part 3

    Administrative practice and procedure.

List of Subjects in 16 CFR Part 4

    Administrative practice and procedure.

0
For the reasons set forth in the preamble, the Federal Trade Commission 
amends Title 16, Chapter 1, Subchapter A of the Code of Federal 
Regulations, parts 3 and 4, as follows:

PART 3--RULES OF PRACTICE FOR ADJUDICATIVE PROCEEDINGS

0
1. The authority citation for part 3 continues to read as follows:

    Authority: 15 U.S.C. 46, unless otherwise noted.

0
2. Revise Sec.  3.1 to read as follows:


Sec.  3.1  Scope of the rules in this part.

    The rules in this part govern procedure in formal adjudicative 
proceedings. To the extent practicable and consistent with requirements 
of law, the Commission's policy is to conduct such proceedings 
expeditiously. In the conduct of such proceedings the Administrative 
Law Judge and counsel for all parties shall make every effort at each 
stage of a proceeding to avoid delay. The

[[Page 1820]]

Commission, at any time, or the Administrative Law Judge at any time 
prior to the filing of his or her initial decision, may, with the 
consent of the parties, shorten any time limit prescribed by these 
Rules of Practice.
0
3. Revise Sec.  3.2 to read as follows:


Sec.  3.2  Nature of adjudicative proceedings.

    Adjudicative proceedings are those formal proceedings conducted 
under one or more of the statutes administered by the Commission which 
are required by statute to be determined on the record after 
opportunity for an agency hearing. The term includes hearings upon 
objections to orders relating to the promulgation, amendment, or repeal 
of rules under sections 4, 5 and 6 of the Fair Packaging and Labeling 
Act, but does not include rulemaking proceedings up to the time when 
the Commission determines under Sec.  1.26(g) of this chapter that 
objections sufficient to warrant the holding of a public hearing have 
been filed. The term also includes proceedings for the assessment of 
civil penalties pursuant to Sec.  1.94 of this chapter. The term does 
not include other proceedings such as negotiations for and Commission 
consideration of the entry of consent orders; investigational hearings 
as distinguished from proceedings after the issuance of a complaint; 
requests for extensions of time to comply with final orders or other 
proceedings involving compliance with final orders; proceedings for the 
promulgation of industry guides or trade regulation rules; or the 
promulgation of substantive rules and regulations.
0
4. Revise Sec.  3.11 to read as follows:


Sec.  3.11  Commencement of proceedings.

    (a) Complaint. Except as provided in Sec.  3.13, an adjudicative 
proceeding is commenced when an affirmative vote is taken by the 
Commission to issue a complaint.
    (b) Form of complaint. The Commission's complaint shall contain the 
following:
    (1) Recital of the legal authority and jurisdiction for institution 
of the proceeding, with specific designation of the statutory 
provisions alleged to have been violated;
    (2) A clear and concise factual statement sufficient to inform each 
respondent with reasonable definiteness of the type of acts or 
practices alleged to be in violation of the law;
    (3) Where practical, a form of order which the Commission has 
reason to believe should issue if the facts are found to be as alleged 
in the complaint; and
    (4) Notice of the specific date, time and place for the evidentiary 
hearing. Unless a different date is determined by the Commission, the 
date of the evidentiary hearing shall be 5 months from the date of the 
administrative complaint in a proceeding in which the Commission, in an 
ancillary proceeding, has sought or is seeking relief pursuant to 
Section 13(b) of the FTC Act, 15 U.S.C. 53(b), and 8 months from the 
date of issuance of the administrative complaint in all other 
proceedings
0
5. Revise Sec.  3.12 to read as follows:


Sec.  3.12  Answer.

    (a) Time for filing. A respondent shall file an answer within 14 
days after being served with the complaint.
    (b) Content of answer. An answer shall conform to the following:
    (1) If allegations of complaint are contested. An answer in which 
the allegations of a complaint are contested shall contain:
    (i) A concise statement of the facts constituting each ground of 
defense;
    (ii) Specific admission, denial, or explanation of each fact 
alleged in the complaint or, if the respondent is without knowledge 
thereof, a statement to that effect. Allegations of a complaint not 
thus answered shall be deemed to have been admitted.
    (2) If allegations of complaint are admitted. If the respondent 
elects not to contest the allegations of fact set forth in the 
complaint, the answer shall consist of a statement that the respondent 
admits all of the material allegations to be true. Such an answer shall 
constitute a waiver of hearings as to the facts alleged in the 
complaint, and together with the complaint will provide a record basis 
on which the Commission shall issue a final decision containing 
appropriate findings and conclusions and a final order disposing of the 
proceeding. In such an answer, the respondent may, however, reserve the 
right to submit proposed findings of fact and conclusions of law under 
Sec.  3.46.
    (c) Default. Failure of the respondent to file an answer within the 
time provided shall be deemed to constitute a waiver of the 
respondent's right to appear and contest the allegations of the 
complaint and to authorize the Commission, without further notice to 
the respondent, to find the facts to be as alleged in the complaint and 
to enter a final decision containing appropriate findings and 
conclusions and a final order disposing of the proceeding.
0
6. Revise Sec.  3.21 to read as follows:


Sec.  3.21  Prehearing procedures.

    (a) Meeting of the parties before scheduling conference. As early 
as practicable before the prehearing scheduling conference described in 
paragraph (b) of this section, but in any event no later than 5 days 
after the answer is filed by the last answering respondent, counsel for 
the parties shall meet to discuss the nature and basis of their claims 
and defenses and the possibilities for a prompt settlement or 
resolution of the case. The parties shall also agree, if possible, on 
(1) a proposed discovery plan specifically addressing a schedule for 
depositions of fact witnesses, the production of documents and 
electronically stored information, and the timing of expert discovery 
pursuant to Sec.  3.31A. The parties' agreement regarding 
electronically stored information should include the scope of and a 
specified time period for the exchange of such information that is 
subject to Sec. Sec.  3.31(b)(2), 3.31(c), and 3.37(a), and the format 
for the disclosure of such information, consistent with Sec.  
3.31(c)(3) and Sec.  3.37(c); (2) a preliminary estimate of the time 
required for the evidentiary hearing; and (3) any other matters to be 
determined at the scheduling conference.
    (b) Scheduling conference. Not later than 10 days after the answer 
is filed by the last answering respondent, the Administrative Law Judge 
shall hold a scheduling conference. At the scheduling conference, 
counsel for the parties shall be prepared to address: (1) their factual 
and legal theories; (2) the current status of any pending motions; (3) 
a schedule of proceedings that is consistent with the date of the 
evidentiary hearing set by the Commission; (4) steps taken to preserve 
evidence relevant to the issues raised by the claims and defenses; (5) 
the scope of anticipated discovery, any limitations on discovery, and a 
proposed discovery plan, including the disclosure of electronically 
stored information; (6) issues that can be narrowed by agreement or by 
motion, suggestions to expedite the presentation of evidence at trial, 
and any request to bifurcate issues, claims or defenses; and (7) other 
possible agreements or steps that may aid in the just and expeditious 
disposition of the proceeding and to avoid unnecessary cost.
    (c) Prehearing scheduling order. (1) Not later than 2 days after 
the scheduling conference, the Administrative Law Judge shall enter an 
order that sets forth the results of the conference and establishes a 
schedule of proceedings that will permit the evidentiary hearing to 
commence on the

[[Page 1821]]

date set by the Commission, including a plan of discovery that 
addresses the deposition of fact witnesses, timing of expert discovery, 
and the production of documents and electronically stored information, 
dates for the submission and hearing of motions, the specific method by 
which exhibits shall be numbered or otherwise identified and marked for 
the record, and the time and place of a final prehearing conference. 
The Commission may, upon a showing of good cause, order a later date 
for the evidentiary hearing than the one specified in the complaint. 
(2) The Administrative Law Judge may, upon a showing of good cause, 
grant a motion to extend any deadline or time specified in this 
scheduling order other than the date of the evidentiary hearing. Such 
motion shall set forth the total period of extensions, if any, 
previously obtained by the moving party. In determining whether to 
grant the motion, the Administrative Law Judge shall consider any 
extensions already granted, the length of the proceedings to date, the 
complexity of the issues, and the need to conclude the evidentiary 
hearing and render an initial decision in a timely manner. The 
Administrative Law Judge shall not rule on ex parte motions to extend 
the deadlines specified in the scheduling order, or modify such 
deadlines solely upon stipulation or agreement of counsel.
    (d) Meeting prior to final prehearing conference. Counsel for the 
parties shall meet before the final prehearing conference described in 
paragraph (e) of this section to discuss the matters set forth therein 
in preparation for the conference.
    (e) Final prehearing conference. As close to the commencement of 
the evidentiary hearing as practicable, the Administrative Law Judge 
shall hold a final prehearing conference, which counsel shall attend in 
person, to submit any proposed stipulations as to law, fact, or 
admissibility of evidence, exchange exhibit and witness lists, and 
designate testimony to be presented by deposition. At this conference, 
the Administrative Law Judge shall also resolve any outstanding 
evidentiary matters or pending motions (except motions for summary 
decision) and establish a final schedule for the evidentiary hearing.
    (f) Additional prehearing conferences and orders. The 
Administrative Law Judge shall hold additional prehearing and status 
conferences or enter additional orders as may be needed to ensure the 
just and expeditious disposition of the proceeding and to avoid 
unnecessary cost. Such conferences shall be held in person to the 
extent practicable.
    (g) Public access and reporting. Prehearing conferences shall be 
public unless the Administrative Law Judge determines in his or her 
discretion that the conference (or any part thereof) shall be closed to 
the public. The Administrative Law Judge shall have discretion to 
determine whether a prehearing conference shall be stenographically 
reported.
0
7. Revise Sec.  3.22 to read as follows:


Sec.  3.22  Motions.

    (a) Presentation and disposition. Motions filed under Sec.  3.26 or 
Sec.  4.17 shall be directly referred to and ruled on by the 
Commission. Motions to dismiss filed before the evidentiary hearing, 
motions to strike, and motions for summary decision shall be directly 
referred to the Commission and shall be ruled on by the Commission 
unless the Commission in its discretion refers the motion to the 
Administrative Law Judge. Motions not referred to the Administrative 
Law Judge shall be ruled on by the Commission within 45 days of the 
filing of the last-filed answer or reply to the motion, if any, unless 
the Commission determines there is good cause to extend the deadline. 
If the Commission refers the motion to the Administrative Law Judge, it 
may set a deadline for the ruling by the Administrative Law Judge, and 
a party may seek review of the ruling of the Administrative Law Judge 
in accordance with Sec.  3.23. During the time a proceeding is before 
an Administrative Law Judge, all other motions shall be addressed to 
and decided by the Administrative Law Judge, if within his or her 
authority. The Administrative Law Judge shall certify to the Commission 
a motion to disqualify filed under Sec.  3.42(g) if the Administrative 
Law Judge does not disqualify himself or herself within 10 days. The 
Administrative Law Judge shall certify to the Commission forthwith any 
other motion upon which he or she has no authority to rule. Rulings 
containing information granted in camera status pursuant to Sec.  3.45 
shall be filed in accordance with Sec.  3.45(f). When a motion to 
dismiss is made at the close of the evidence offered in support of the 
complaint based upon an alleged failure to establish a prima facie 
case, the Administrative Law Judge shall defer ruling thereon until 
immediately after all evidence has been received and the hearing record 
is closed. All written motions shall be filed with the Secretary of the 
Commission, and all motions addressed to the Commission shall be in 
writing. The moving party shall also provide a copy of its motion to 
the Administrative Law Judge at the time the motion is filed with the 
Secretary.
    (b) Proceedings not stayed. A motion under consideration by the 
Commission shall not stay proceedings before the Administrative Law 
Judge unless the Commission so orders.
    (c) Content. All written motions shall state the particular order, 
ruling, or action desired and the grounds therefor. Memoranda in 
support of, or in opposition to, any dispositive motion shall not 
exceed 10,000 words. Memoranda in support of, or in opposition to, any 
other motion shall not exceed 2,500 words. Any reply in support of a 
dispositive motion shall not exceed 5,000 words and any reply in 
support of any other motion authorized by the Administrative Law Judge 
or the Commission shall not exceed 1,250 words. These word count 
limitations include headings, footnotes, and quotations, but do not 
include the cover, table of contents, table of citations or 
authorities, glossaries, statements with respect to oral argument, any 
addendums containing statutes, rules or regulations, any certificates 
of counsel, proposed form of order, and any attachment required by 
Sec.  3.45(e). Documents that fail to comply with these provisions 
shall not be filed with the Secretary. Motions must also include the 
name, address, telephone number, fax number, and e-mail address (if 
any) of counsel and attach a draft order containing the proposed 
relief. If a party includes in a motion information that has been 
granted in camera status pursuant to Sec.  3.45(b) or is subject to 
confidentiality protections pursuant to a protective order, the party 
shall file 2 versions of the motion in accordance with the procedures 
set forth in Sec.  3.45(e). The party shall mark its confidential 
filings with brackets or similar conspicuous markings to indicate the 
material for which it is claiming confidential treatment. The time 
period specified by Sec.  3.22(d) within which an opposing party may 
file an answer will begin to run upon service on that opposing party of 
the confidential version of the motion.
    (d) Responses. Within 10 days after service of any written motion, 
or within such longer or shorter time as may be designated by the 
Administrative Law Judge or the Commission, the opposing party shall 
answer or shall be deemed to have consented to the granting of the 
relief asked for in the motion. If an opposing party includes in an 
answer information that has been granted in camera status pursuant to 
Sec.  3.45(b) or is subject to confidentiality protections pursuant to 
a protective order, the

[[Page 1822]]

opposing party shall file 2 versions of the answer in accordance with 
the procedures set forth in Sec.  3.45(e). The moving party shall have 
no right to reply, except for dispositive motions or as otherwise 
permitted by the Administrative Law Judge or the Commission. Reply and 
surreply briefs to motions other than dispositive motions shall be 
permitted only in circumstances where the parties wish to draw the 
Administrative Law Judge's or the Commission's attention to recent 
important developments or controlling authority that could not have 
been raised earlier in the party's principal brief. The reply may be 
conditionally filed with the motion seeking leave to reply. Any reply 
with respect to a dispositive motion, or any permitted reply to any 
other motion, shall be filed within 5 days after service of the last 
answer to that motion.
    (e) Rulings on motions. Unless otherwise provided by a relevant 
rule, the Administrative Law Judge shall rule on motions within 14 days 
after the filing of all motion papers authorized by this section. The 
Commission, for good cause, may extend the time allowed for a ruling.
    (f) Motions for extensions. The Administrative Law Judge or the 
Commission may waive the requirements of this section as to motions for 
extensions of time; however, the Administrative Law Judge shall have no 
authority to rule on ex parte motions for extensions of time.
    (g) Statement. Each motion to quash filed pursuant to Sec.  
3.34(c), each motion to compel or determine sufficiency pursuant to 
Sec.  3.38(a), each motion for sanctions pursuant to Sec.  3.38(b), and 
each motion for enforcement pursuant to Sec.  3.38(c) shall be 
accompanied by a signed statement representing that counsel for the 
moving party has conferred with opposing counsel in an effort in good 
faith to resolve by agreement the issues raised by the motion and has 
been unable to reach such an agreement. If some of the matters in 
controversy have been resolved by agreement, the statement shall 
specify the matters so resolved and the matters remaining unresolved. 
The statement shall recite the date, time, and place of each such 
conference between counsel, and the names of all parties participating 
in each such conference. Unless otherwise ordered by the Administrative 
Law Judge, the statement required by this rule must be filed only with 
the first motion concerning compliance with the discovery demand at 
issue.
0
8. Revise Sec.  3.23 to read as follows:


Sec.  3.23  Interlocutory appeals.

    (a) Appeals without a determination by the Administrative Law 
Judge.
    (1) The Commission may, in its discretion, entertain interlocutory 
appeals where a ruling of the Administrative Law Judge:
    (i) Requires the disclosure of records of the Commission or another 
governmental agency or the appearance of an official or employee of the 
Commission or another governmental agency pursuant to Sec.  3.36, if 
such appeal is based solely on a claim of privilege: Provided, that the 
Administrative Law Judge shall stay until further order of the 
Commission the effectiveness of any ruling, whether or not appeal is 
sought, that requires the disclosure of nonpublic Commission minutes, 
Commissioner circulations, or similar documents prepared by the 
Commission, an individual Commissioner, or the Office of the General 
Counsel;
    (ii) Suspends an attorney from participation in a particular 
proceeding pursuant to Sec.  3.42(d); or
    (iii) Grants or denies an application for intervention pursuant to 
the provisions of Sec.  3.14.
    (2) Appeal from such rulings may be sought by filing with the 
Commission an application for review within 3 days after notice of the 
Administrative Law Judge's ruling. An answer may be filed within 3 days 
after the application for review is filed. The Commission upon its own 
motion may enter an order staying compliance with a discovery demand 
authorized by the Administrative Law Judge pursuant to Sec.  3.36 or 
placing the matter on the Commission's docket for review. Any order 
placing the matter on the Commission's docket for review will set forth 
the scope of the review and the issues which will be considered and 
will make provision for the filing of memoranda of law if deemed 
appropriate by the Commission.
    (b) Other interlocutory appeals. A party may request the 
Administrative Law Judge to determine that a ruling involves a 
controlling question of law or policy as to which there is substantial 
ground for difference of opinion and that an immediate appeal from the 
ruling may materially advance the ultimate termination of the 
litigation or subsequent review will be an inadequate remedy. An answer 
may be filed within 3 days after the application for review is filed. 
The Administrative Law Judge shall issue a ruling on the request for 
determination within 3 days of the deadline for filing an answer. The 
party may file an application for review with the Commission within 1 
day after notice that the Administrative Law Judge has issued the 
requested determination or 1 day after the deadline has passed for the 
Administrative Law Judge to issue a ruling on the request for 
determination and the Administrative Law Judge has not issued his or 
her ruling.
    (c) The application for review shall attach the ruling from which 
appeal is being taken and any other portions of the record on which the 
moving party relies. Neither the application for review nor the answer 
shall exceed 2,500 words. This word count limitation includes headings, 
footnotes, and quotations, but does not include the cover, table of 
contents, table of citations or authorities, glossaries, statements 
with respect to oral argument, any addendums containing statutes, rules 
or regulations, any certificates of counsel, proposed form of order, 
and any attachment required by Sec.  3.45(e). The Commission may order 
additional briefing on the application.
    (d) Ruling on application for review. Within 3 days after the 
deadline for filing an answer, the Commission will determine whether to 
grant the application for review. The denial of an application shall 
not constitute a ruling on the merits of the ruling that is the subject 
of the application.
    (e) Proceedings not stayed. An application for review and appeal 
hereunder shall not stay proceedings before the Administrative Law 
Judge unless the Judge or the Commission shall so order.
0
9. Revise Sec.  3.24 to read as follows:


Sec.  3.24  Summary decisions.

    (a) Procedure. (1) Any party may move, with or without supporting 
affidavits, for a summary decision in the party's favor upon all or any 
part of the issues being adjudicated. The motion shall be accompanied 
by a separate and concise statement of the material facts as to which 
the moving party contends there is no genuine issue for trial. Counsel 
in support of the complaint may so move at any time after 20 days 
following issuance of the complaint and any respondent may so move at 
any time after issuance of the complaint. Any such motion by any party, 
however, shall be filed in accordance with the scheduling order issued 
pursuant to Sec.  3.21, but in any case at least 30 days before the 
date fixed for the hearing.
    (2) Any other party may, within 14 days after service of the 
motion, file opposing affidavits. The opposing party shall include a 
separate and concise statement of those material facts as to which the 
opposing party contends there exists a genuine issue for trial, as

[[Page 1823]]

provided in Sec.  3.24(a)(3). The parties may file memoranda of law in 
support of, or in opposition to, the motion consistent with Sec.  
3.22(c). If a party includes in any such brief or memorandum 
information that has been granted in camera status pursuant to Sec.  
3.45(b) or is subject to confidentiality protections pursuant to a 
protective order, the party shall file 2 versions of the document in 
accordance with the procedures set forth in Sec.  3.45(e). If the 
Commission (or, when appropriate, the Administrative Law Judge) 
determines that there is no genuine issue as to any material fact 
regarding liability or relief, it shall issue a final decision and 
order. In the event that the motion has been referred to the 
Administrative Law Judge, such determination by the Administrative Law 
Judge shall constitute his or her initial decision and shall conform to 
the procedures set forth in Sec.  3.51(c). A summary decision, 
interlocutory in character and in compliance with the procedures set 
forth in Sec.  3.51(c), may be rendered on the issue of liability alone 
although there is a genuine issue as to relief.
    (3) Affidavits shall set forth such facts as would be admissible in 
evidence and shall show affirmatively that the affiant is competent to 
testify to the matters stated therein. The Commission (or, when 
appropriate, the Administrative Law Judge) may permit affidavits to be 
supplemented or opposed by depositions, answers to interrogatories, or 
further affidavits. When a motion for summary decision is made and 
supported as provided in this rule, a party opposing the motion may not 
rest upon the mere allegations or denials of his or her pleading; the 
response, by affidavits or as otherwise provided in this rule, must set 
forth specific facts showing that there is a genuine issue of material 
fact for trial. If no such response is filed, summary decision, if 
appropriate, shall be rendered.
    (4) Should it appear from the affidavits of a party opposing the 
motion that it cannot, for reasons stated, present by affidavit facts 
essential to justify its opposition, the Commission (or, when 
appropriate, the Administrative Law Judge) may deny the motion for 
summary decision or may order a continuance to permit affidavits to be 
obtained or depositions to be taken or discovery to be had or make such 
other order as is appropriate and a determination to that effect shall 
be made a matter of record.
    (5) If on motion under this rule a summary decision is not rendered 
upon the whole case or for all the relief asked and a trial is 
necessary, the Commission (or, when appropriate, the Administrative Law 
Judge) shall issue an order specifying the facts that appear without 
substantial controversy and directing further proceedings in the 
action. The facts so specified shall be deemed established.
    (b) Affidavits filed in bad faith. (1) Should it appear to the 
satisfaction of the Commission (or, when appropriate, the 
Administrative Law Judge) at any time that any of the affidavits 
presented pursuant to this rule are presented in bad faith, or solely 
for the purpose of delay, or are patently frivolous, the Commission 
(or, when appropriate, the Administrative Law Judge) shall enter a 
determination to that effect upon the record.
    (2) If upon consideration of all relevant facts attending the 
submission of any affidavit covered by paragraph (b)(1) of this 
section, the Commission (or, when appropriate, the Administrative Law 
Judge) concludes that action to suspend or remove an attorney from the 
case is warranted, it shall take action as specified in Sec.  3.42(d). 
If the Administrative Law Judge to whom the Commission has referred a 
motion for summary decision concludes, upon consideration of all the 
relevant facts attending the submission of any affidavit covered by 
paragraph (b)(1) of this section, that the matter should be certified 
to the Commission for consideration of disciplinary action against an 
attorney, including reprimand, suspension or disbarment, the 
Administrative Law Judge shall certify the matter, with his or her 
findings and recommendations, to the Commission for its consideration 
of disciplinary action in the manner provided by the Commission's 
rules. If the Commission has addressed the motion directly, it may 
consider such disciplinary action without a certification by the 
Administrative Law Judge.
0
10. Revise Sec.  3.26 to read as follows:


Sec.  3.26  Motions following denial of preliminary injunctive relief.

    (a) This section sets forth two procedures by which respondents may 
obtain consideration of whether continuation of an adjudicative 
proceeding is in the public interest after a court has denied 
preliminary injunctive relief in a separate proceeding brought under 
section 13(b) of the Federal Trade Commission Act, 15 U.S.C. 53(b), in 
aid of the adjudication.
    (b) A motion under this section shall be addressed to the 
Commission and filed with the Secretary of the Commission. If the 
Commission has filed a request for a stay, injunction, or other 
emergency relief pending appeal to a court of appeals, the motion must 
be filed within 14 days after, but no earlier than, the court of 
appeals has denied the Commission's request. In cases in which the 
Commission has not sought relief from the court of appeals within 7 
days following the denial of a preliminary injunction, the motion must 
be filed within 14 days after the district court has denied preliminary 
relief.
    (c) Withdrawal from adjudication. If a court has denied preliminary 
injunctive relief to the Commission in a section 13(b) proceeding 
brought in aid of an adjudicative proceeding, respondents may move that 
the proceeding be withdrawn from adjudication in order to consider 
whether or not the public interest warrants further litigation. Such a 
motion shall be filed jointly or separately by each of the respondents 
in the adjudicative proceeding. Complaint counsel may file a response 
within 14 days after such motion is filed. The matter will not be 
withdrawn from adjudication unless the Commission so directs.
    (d) Consideration on the record. Instead of a motion to withdraw 
the matter from adjudication, any respondent or respondents may file a 
motion under this paragraph to dismiss the administrative complaint on 
the basis that the public interest does not warrant further litigation 
after a court has denied preliminary injunctive relief to the 
Commission. Complaint counsel may file a response within 14 days after 
such motion is filed. The filing of a motion to dismiss shall not stay 
the proceeding unless the Commission so directs.
    (e) Form. Memoranda in support of or in opposition to such motions 
shall not exceed 10,000 words. This word count limitation includes 
headings, footnotes, and quotations, but does not include the cover, 
table of contents, table of citations or authorities, glossaries, 
statements with respect to oral argument, any addendums containing 
statutes, rules or regulations, any certificates of counsel, proposed 
form of order, and any attachment required by Sec.  3.45(e).
    (f) In camera materials. If any filing includes materials that are 
subject to confidentiality protections pursuant to an order entered in 
either the proceeding under section 13(b) or in the proceeding under 
this part, such materials shall be treated as in camera materials for 
purposes of this paragraph and the party shall file 2 versions of the 
document in accordance with the procedures set forth in Sec.  3.45(e). 
The time within which complaint counsel may file an answer under this 
paragraph

[[Page 1824]]

will begin to run upon service of the in camera version of the motion 
(including any supporting briefs and memoranda).
    (g) Ruling by Commission. The Commission shall rule on any motion 
authorized by this section within 30 days after the filing of the 
motion and any memoranda in support of or in opposition to the motion.
0
11. Revise Sec.  3.31 to read as follows:


Sec.  3.31  General discovery provisions.

    (a) Discovery methods. Parties may obtain discovery by one or more 
of the following methods: Depositions upon oral examination or written 
questions; written interrogatories; production of documents or things 
for inspection and other purposes; and requests for admission. Except 
as provided in the rules, or unless the Administrative Law Judge orders 
otherwise, the frequency or sequence of these methods is not limited. 
The parties shall, to the greatest extent practicable, conduct 
discovery simultaneously; the fact that a party is conducting discovery 
shall not operate to delay any other party's discovery.
    (b) Mandatory initial disclosures. Complaint counsel and 
respondent's counsel shall, within 5 days of receipt of a respondent's 
answer to the complaint and without awaiting a discovery request, 
provide to each other:
    (1) The name, and, if known, the address and telephone number of 
each individual likely to have discoverable information relevant to the 
allegations of the Commission's complaint, to the proposed relief, or 
to the defenses of the respondent, as set forth in Sec.  3.31(c)(1); 
and
    (2) A copy of, or a description by category and location of, all 
documents and electronically stored information including declarations, 
transcripts of investigational hearings and depositions, and tangible 
things in the possession, custody, or control of the Commission or 
respondent(s) that are relevant to the allegations of the Commission's 
complaint, to the proposed relief, or to the defenses of the 
respondent, as set forth in Sec.  3.31(c)(1); unless such information 
or materials are subject to the limitations in Sec.  3.31(c)(2), 
privileged as defined in Sec.  3.31(c)(4), pertain to hearing 
preparation as defined in Sec.  3.31(c)(5), pertain to experts as 
defined in Sec.  3.31A, or are obtainable from some other source that 
is more convenient, less burdensome, or less expensive. A party shall 
make its disclosures based on the information then reasonably available 
to it and is not excused from making its disclosures because it has not 
fully completed its investigation.
    (c) Scope of discovery. Unless otherwise limited by order of the 
Administrative Law Judge or the Commission in accordance with these 
rules, the scope of discovery is as follows:
    (1) In general. Parties may obtain discovery to the extent that it 
may be reasonably expected to yield information relevant to the 
allegations of the complaint, to the proposed relief, or to the 
defenses of any respondent. Such information may include the existence, 
description, nature, custody, condition, and location of any books, 
documents, other tangible things, electronically stored information, 
and the identity and location of persons having any knowledge of any 
discoverable matter. Information may not be withheld from discovery on 
grounds that the information will be inadmissible at the hearing if the 
information sought appears reasonably calculated to lead to the 
discovery of admissible evidence.
    (2) Limitations. Complaint counsel need only search for materials 
that were collected or reviewed in the course of the investigation of 
the matter or prosecution of the case and that are in the possession, 
custody or control of the Bureaus or Offices of the Commission that 
investigated the matter, including the Bureau of Economics. The 
Administrative Law Judge may authorize for good cause additional 
discovery of materials in the possession, custody, or control of those 
Bureaus or Offices, or authorize other discovery pursuant to Sec.  
3.36. Neither complaint counsel, respondent, nor a third party 
receiving a discovery request under these rules is required to search 
for materials generated and transmitted between an entity's counsel 
(including counsel's legal staff or in-house counsel) and not shared 
with anyone else, or between complaint counsel and non-testifying 
Commission employees, unless the Administrative Law Judge determines 
there is good cause to provide such materials. The frequency or extent 
of use of the discovery methods otherwise permitted under these rules 
shall be limited by the Administrative Law Judge if he or she 
determines that:
    (i) The discovery sought is unreasonably cumulative or duplicative, 
or is obtainable from some other source that is more convenient, less 
burdensome, or less expensive;
    (ii) The party seeking discovery has had ample opportunity by 
discovery in the action to obtain the information sought; or
    (iii) The burden and expense of the proposed discovery outweigh its 
likely benefit.
    (3) Electronically stored information. A party need not provide 
discovery of electronically stored information from sources that the 
party identifies as not reasonably accessible because of undue burden 
or cost. On a motion to compel discovery, the party from whom discovery 
is sought must show that the information is not reasonably accessible 
because of undue burden or cost. If that showing is made, the 
Administrative Law Judge may nonetheless order discovery if the 
requesting party shows good cause, considering the limitations of 
paragraph (c)(2). The Administrative Law Judge may specify conditions 
for the discovery.
    (4) Privilege. Discovery shall be denied or limited in order to 
preserve the privilege of a witness, person, or governmental agency as 
governed by the Constitution, any applicable act of Congress, or the 
principles of the common law as they may be interpreted by the 
Commission in the light of reason and experience.
    (5) Hearing preparations: Materials. Subject to the provisions of 
Sec.  3.31A, a party may obtain discovery of documents and tangible 
things otherwise discoverable under paragraph (c)(1) of this section 
and prepared in anticipation of litigation or for hearing by or for 
another party or by or for that other party's representative (including 
the party's attorney, consultant, or agent) only upon a showing that 
the party seeking discovery has substantial need of the materials in 
the preparation of its case and that the party is unable without undue 
hardship to obtain the substantial equivalent of the materials by other 
means. In ordering discovery of such materials when the required 
showing has been made, the Administrative Law Judge shall protect 
against disclosure of the mental impressions, conclusions, opinions, or 
legal theories of an attorney or other representative of a party.
    (d) Protective orders; orders to preserve evidence. In order to 
protect the parties and third parties against improper use and 
disclosure of confidential information, the Administrative Law Judge 
shall issue a protective order as set forth in the appendix to this 
section. The Administrative Law Judge may also deny discovery or make 
any other order which justice requires to protect a party or other 
person from annoyance, embarrassment, oppression, or undue burden or 
expense, or to prevent undue delay in the proceeding. Such an order may 
also be issued to preserve evidence

[[Page 1825]]

upon a showing that there is substantial reason to believe that such 
evidence would not otherwise be available for presentation at the 
hearing.
    (e) Supplementation of disclosures and responses. A party who has 
made a mandatory initial disclosure under Sec.  3.31(b) or responded to 
a request for discovery with a disclosure or response is under a duty 
to supplement or correct the disclosure or response to include 
information thereafter acquired if ordered by the Administrative Law 
Judge or in the following circumstances:
    (1) A party is under a duty to supplement at appropriate intervals 
its mandatory initial disclosures under Sec.  3.31(b) if the party 
learns that in some material respect the information disclosed is 
incomplete or incorrect and if the additional or corrective information 
has not otherwise been made known to the other parties during the 
discovery process or in writing.
    (2) A party is under a duty to amend in a timely manner a prior 
response to an interrogatory, request for production, or request for 
admission if the party learns that the response is in some material 
respect incomplete or incorrect.
    (f) Stipulations. When approved by the Administrative Law Judge, 
the parties may by written stipulation (1) provide that depositions may 
be taken before any person, at any time or place, upon any notice, and 
in any manner and when so taken may be used like other depositions, and 
(2) modify the procedures provided by these rules for other methods of 
discovery.
    (g) Inadvertent production. The inadvertent production of 
information produced by a party or third party in discovery that is 
subject to a claim of privilege or immunity for hearing preparation 
material shall not waive such claims as to that or other information 
regarding the same subject matter if the Administrative Law Judge 
determines that the holder of the claim made efforts reasonably 
designed to protect the privilege or the hearing preparation material, 
provided, however, this provision shall not apply if the party, or an 
entity related to that party, who inadvertently produced the privileged 
information relies upon such information to support a claim or defense.
    (h) Restriction on filings. Unless otherwise ordered by the 
Administrative Law Judge in his or her discretion, mandatory initial 
and supplemental disclosures, interrogatories, depositions, requests 
for documents, requests for admissions, and answers and responses 
thereto shall be served upon other parties but shall not be filed with 
the Office of the Secretary, the Administrative Law Judge, or otherwise 
provided to the Commission, except to support or oppose a motion or to 
offer as evidence.

Appendix A to Sec.  3.31: Standard Protective Order.

    For the purpose of protecting the interests of the parties and 
third parties in the above-captioned matter against improper use and 
disclosure of confidential information submitted or produced in 
connection with this matter:
    IT IS HEREBY ORDERED THAT this Protective Order Governing 
Confidential Material (``Protective Order'') shall govern the handling 
of all Discovery Material, as hereafter defined.
    1. As used in this Order, ``confidential material'' shall refer to 
any document or portion thereof that contains privileged, competitively 
sensitive information, or sensitive personal information. ``Sensitive 
personal information'' shall refer to, but shall not be limited to, an 
individual's Social Security number, taxpayer identification number, 
financial account number, credit card or debit card number, driver's 
license number, state-issued identification number, passport number, 
date of birth (other than year), and any sensitive health information 
identifiable by individual, such as an individual's medical records. 
``Document'' shall refer to any discoverable writing, recording, 
transcript of oral testimony, or electronically stored information in 
the possession of a party or a third party. ``Commission'' shall refer 
to the Federal Trade Commission (``FTC''), or any of its employees, 
agents, attorneys, and all other persons acting on its behalf, 
excluding persons retained as consultants or experts for purposes of 
this proceeding.
    2. Any document or portion thereof submitted by a respondent or a 
third party during a Federal Trade Commission investigation or during 
the course of this proceeding that is entitled to confidentiality under 
the Federal Trade Commission Act, or any regulation, interpretation, or 
precedent concerning documents in the possession of the Commission, as 
well as any information taken from any portion of such document, shall 
be treated as confidential material for purposes of this Order. The 
identity of a third party submitting such confidential material shall 
also be treated as confidential material for the purposes of this Order 
where the submitter has requested such confidential treatment.
    3. The parties and any third parties, in complying with informal 
discovery requests, disclosure requirements, or discovery demands in 
this proceeding may designate any responsive document or portion 
thereof as confidential material, including documents obtained by them 
from third parties pursuant to discovery or as otherwise obtained.
    4. The parties, in conducting discovery from third parties, shall 
provide to each third party a copy of this Order so as to inform each 
such third party of his, her, or its rights herein.
    5. A designation of confidentiality shall constitute a 
representation in good faith and after careful determination that the 
material is not reasonably believed to be already in the public domain 
and that counsel believes the material so designated constitutes 
confidential material as defined in Paragraph of this Order.
    6. Material may be designated as confidential by placing on or 
affixing to the document containing such material (in such manner as 
will not interfere with the legibility thereof), or if an entire folder 
or box of documents is confidential by placing or affixing to that 
folder or box, the designation ``CONFIDENTIAL--FTC Docket No. XXXX'' or 
any other appropriate notice that identifies this proceeding, together 
with an indication of the portion or portions of the document 
considered to be confidential material. Confidential information 
contained in electronic documents may also be designated as 
confidential by placing the designation ``CONFIDENTIAL--FTC Docket No. 
XXXX'' or any other appropriate notice that identifies this proceeding, 
on the face of the CD or DVD or other medium on which the document is 
produced. Masked or otherwise redacted copies of documents may be 
produced where the portions deleted contain privileged matter, provided 
that the copy produced shall indicate at the appropriate point that 
portions have been deleted and the reasons therefor.
    7. Confidential material shall be disclosed only to: (a) the 
Administrative Law Judge presiding over this proceeding, personnel 
assisting the Administrative Law Judge, the Commission and its 
employees, and personnel retained by the Commission as experts or 
consultants for this proceeding; (b) judges and other court personnel 
of any court having jurisdiction over any appellate proceedings 
involving this matter; (c) outside counsel of record for any 
respondent, their associated attorneys and other employees of their law 
firm(s), provided they are not employees of a respondent; (d) anyone 
retained to assist outside counsel in the preparation or hearing of 
this proceeding including

[[Page 1826]]

consultants, provided they are not affiliated in any way with a 
respondent and have signed an agreement to abide by the terms of the 
protective order; and (e) any witness or deponent who may have authored 
or received the information in question.
    8. Disclosure of confidential material to any person described in 
Paragraph 7 of this Order shall be only for the purposes of the 
preparation and hearing of this proceeding, or any appeal therefrom, 
and for no other purpose whatsoever, provided, however, that the 
Commission may, subject to taking appropriate steps to preserve the 
confidentiality of such material, use or disclose confidential material 
as provided by its Rules of Practice; sections 6(f) and 21 of the 
Federal Trade Commission Act; or any other legal obligation imposed 
upon the Commission.
    9. In the event that any confidential material is contained in any 
pleading, motion, exhibit or other paper filed or to be filed with the 
Secretary of the Commission, the Secretary shall be so informed by the 
Party filing such papers, and such papers shall be filed in camera. To 
the extent that such material was originally submitted by a third 
party, the party including the materials in its papers shall 
immediately notify the submitter of such inclusion. Confidential 
material contained in the papers shall continue to have in camera 
treatment until further order of the Administrative Law Judge, 
provided, however, that such papers may be furnished to persons or 
entities who may receive confidential material pursuant to Paragraphs 7 
or 8. Upon or after filing any paper containing confidential material, 
the filing party shall file on the public record a duplicate copy of 
the paper that does not reveal confidential material. Further, if the 
protection for any such material expires, a party may file on the 
public record a duplicate copy which also contains the formerly 
protected material.
    10. If counsel plans to introduce into evidence at the hearing any 
document or transcript containing confidential material produced by 
another party or by a third party, they shall provide advance notice to 
the other party or third party for purposes of allowing that party to 
seek an order that the document or transcript be granted in camera 
treatment. If that party wishes in camera treatment for the document or 
transcript, the party shall file an appropriate motion with the 
Administrative Law Judge within 5 days after it receives such notice. 
Except where such an order is granted, all documents and transcripts 
shall be part of the public record. Where in camera treatment is 
granted, a duplicate copy of such document or transcript with the 
confidential material deleted therefrom may be placed on the public 
record.
    11. If any party receives a discovery request in any investigation 
or in any other proceeding or matter that may require the disclosure of 
confidential material submitted by another party or third party, the 
recipient of the discovery request shall promptly notify the submitter 
of receipt of such request. Unless a shorter time is mandated by an 
order of a court, such notification shall be in writing and be received 
by the submitter at least 10 business days before production, and shall 
include a copy of this Protective Order and a cover letter that will 
apprise the submitter of its rights hereunder. Nothing herein shall be 
construed as requiring the recipient of the discovery request or anyone 
else covered by this Order to challenge or appeal any order requiring 
production of confidential material, to subject itself to any penalties 
for non-compliance with any such order, or to seek any relief from the 
Administrative Law Judge or the Commission. The recipient shall not 
oppose the submitter's efforts to challenge the disclosure of 
confidential material. In addition, nothing herein shall limit the 
applicability of Rule 4.11(e) of the Commission's Rules of Practice, 16 
CFR 4.11(e), to discovery requests in another proceeding that are 
directed to the Commission.
    12. At the time that any consultant or other person retained to 
assist counsel in the preparation of this action concludes 
participation in the action, such person shall return to counsel all 
copies of documents or portions thereof designated confidential that 
are in the possession of such person, together with all notes, 
memoranda or other papers containing confidential information. At the 
conclusion of this proceeding, including the exhaustion of judicial 
review, the parties shall return documents obtained in this action to 
their submitters, provided, however, that the Commission's obligation 
to return documents shall be governed by the provisions of Rule 4.12 of 
the Rules of Practice, 16 CFR 4.12.
    13. The provisions of this Protective Order, insofar as they 
restrict the communication and use of confidential discovery material, 
shall, without written permission of the submitter or further order of 
the Commission, continue to be binding after the conclusion of this 
proceeding.
0
12. Add Sec.  3.31A to read as follows:


Sec.  3.31A  Expert discovery.

    (a) The parties shall serve each other with a list of experts they 
intend to call as witnesses at the hearing not later than 1 day after 
the close of fact discovery, meaning the close of discovery except for 
depositions and other discovery permitted under Sec.  3.24(a)(4), and 
discovery for purposes of authenticity and admissibility of exhibits. 
Complaint counsel shall serve the other parties with a report prepared 
by each of its expert witnesses not later than 14 days after the close 
of fact discovery. Each respondent shall serve each other party with a 
report prepared by each of its expert witnesses not later than 14 days 
after the deadline for service of complaint counsel's expert reports. 
Complaint counsel shall serve respondents with a list of any rebuttal 
expert witnesses and a rebuttal report prepared by each such witness 
not later than 10 days after the deadline for service of respondent's 
expert reports. Aside from any information required by paragraph (c), a 
rebuttal report shall be limited to rebuttal of matters set forth in a 
respondent's expert reports. If material outside the scope of fair 
rebuttal is presented, a respondent may file a motion not later than 5 
days after the deadline for service of complaint counsel's rebuttal 
reports, seeking appropriate relief with the Administrative Law Judge, 
including striking all or part of the report, leave to submit a 
surrebuttal report by respondent's experts, or leave to call a 
surrebuttal witness and to submit a surrebuttal report by that witness.
    (b) No party may call an expert witness at the hearing unless he or 
she has been listed and has provided reports as required by this 
section. Each side will be limited to calling at the evidentiary 
hearing 5 expert witnesses, including any rebuttal or surrebuttal 
expert witnesses. A party may file a motion seeking leave to call 
additional expert witnesses due to extraordinary circumstances.
    (c) Each report shall be signed by the expert and contain a 
complete statement of all opinions to be expressed and the basis and 
reasons therefor; the data, materials, or other information considered 
by the witness in forming the opinions; any exhibits to be used as a 
summary of or support for the opinions; the qualifications of the 
witness, including a list of all publications authored by the witness 
within the preceding 10 years; the compensation to be paid for the 
study and testimony; and a listing of any other cases in which the 
witness has testified as an expert at trial or by deposition

[[Page 1827]]

within the preceding 4 years. A rebuttal or surrebuttal report need not 
include any information already included in the initial report of the 
witness.
    (d) A party may depose any person who has been identified as an 
expert whose opinions may be presented at trial. Unless otherwise 
ordered by the Administrative Law Judge, a deposition of any expert 
witness shall be conducted after the disclosure of a report prepared by 
the witness in accordance with paragraph (a). Depositions of expert 
witnesses shall be completed not later than 65 days after the close of 
fact discovery. Upon motion, the Administrative Law Judge may order 
further discovery by other means, subject to such restrictions as to 
scope as the Administrative Law Judge may deem appropriate. A party, 
however, may not discover facts known or opinions held by an expert who 
has been retained or specially employed by another party in 
anticipation of litigation or preparation for hearing and who is not 
listed as a witness for the evidentiary hearing.
0
13. Revise Sec.  3.33 to read as follows:


Sec.  3.33  Depositions.

    (a) In general. Any party may take a deposition of any named person 
or of a person or persons described with reasonable particularity, 
provided that such deposition is reasonably expected to yield 
information within the scope of discovery under Sec.  3.31(c)(1) and 
subject to the requirements in Sec.  3.36. Such party may, by motion, 
obtain from the Administrative Law Judge an order to preserve relevant 
evidence upon a showing that there is substantial reason to believe 
that such evidence would not otherwise be available for presentation at 
the hearing. Depositions may be taken before any person having power to 
administer oaths, either under the law of the United States or of the 
state or other place in which the deposition is taken, who may be 
designated by the party seeking the deposition, provided that such 
person shall have no interest in the outcome of the proceeding. The 
party seeking the deposition shall serve upon each person whose 
deposition is sought and upon each party to the proceeding reasonable 
notice in writing of the time and place at which it will be taken, and 
the name and address of each person or persons to be examined, if 
known, and if the name is not known, a description sufficient to 
identify them. The parties may stipulate in writing or the 
Administrative Law Judge may upon motion order that a deposition be 
taken by telephone or other remote electronic means. A deposition taken 
by such means is deemed taken at the place where the deponent is to 
answer questions.
    (b) The Administrative Law Judge may rule on motion by a party that 
a deposition shall not be taken upon a determination that such 
deposition would not be reasonably expected to meet the scope of 
discovery set forth under Sec.  3.31(c), or that the value of the 
deposition would be outweighed by the considerations set forth under 
Sec.  3.43(b). The fact that a witness testifies at an investigative 
hearing does not preclude the deposition of that witness.
    (c)(1) Notice to corporation or other organization. A party may 
name as the deponent a public or private corporation, partnership, 
association, governmental agency other than the Federal Trade 
Commission, or any bureau or regional office of the Federal Trade 
Commission, and describe with reasonable particularity the matters on 
which examination is requested. The organization so named shall 
designate one or more officers, directors, or managing agents, or other 
persons who consent to testify on its behalf, and may set forth, for 
each person designated, the matters on which he or she will testify. A 
subpoena shall advise a non-party organization of its duty to make such 
a designation. The persons so designated shall testify as to matters 
known or reasonably available to the organization. This subsection does 
not preclude taking a deposition by any other procedure authorized in 
these rules.
    (2) Notice to Commission. Except as provided in Sec.  3.31(h), 
notices of depositions shall not be filed with the Office of the 
Secretary, the Administrative Law Judge, or otherwise provided to the 
Commission.
    (d) Taking of deposition. Each deponent shall be duly sworn, and 
any party shall have the right to question him or her. Objections to 
questions or to evidence presented shall be in short form, stating the 
grounds of objections relied upon. The questions propounded and the 
answers thereto, together with all objections made, shall be recorded 
and certified by the officer. Thereafter, upon payment of the charges 
therefor, the officer shall furnish a copy of the deposition to the 
deponent and to any party.
    (e) Depositions upon written questions. A party desiring to take a 
deposition upon written questions shall serve them upon every other 
party with a notice stating:
    (1) The name and address of the person who is to answer them, and
    (2) The name or descriptive title and address of the officer before 
whom the deposition is to be taken.
    A deposition upon written questions may be taken of a public or 
private corporation, partnership, association, governmental agency 
other than the Federal Trade Commission, or any bureau or regional 
office of the Federal Trade Commission in accordance with the 
provisions of Sec.  3.33(c). Within 30 days after the notice and 
written questions are served, any other party may serve cross questions 
upon all other parties. Within 10 days after being served with cross 
questions, the party taking the deposition may serve redirect questions 
upon all other parties. Within 10 days after being served with redirect 
questions, any other party may serve recross questions upon all other 
parties. The content of any question shall not be disclosed to the 
deponent prior to the taking of the deposition. A copy of the notice 
and copies of all questions served shall be delivered by the party 
taking the deposition to the officer designated in the notice, who 
shall proceed promptly to take the testimony of the deponent in 
response to the questions and to prepare, certify, and file or mail the 
deposition, attaching thereto the copy of the notice and the questions 
received by him or her. When the deposition is filed the party taking 
it shall promptly give notice thereof to all other parties.
    (f) Correction of deposition. A deposition may be corrected, as to 
form or substance, in the manner provided by Sec.  3.44(b). Any such 
deposition shall, in addition to the other required procedures, be read 
to or by the deponent and signed by him or her, unless the parties by 
stipulation waive the signing or the deponent is unavailable or cannot 
be found or refuses to sign. If the deposition is not signed by the 
deponent within 30 days of its submission or attempted submission, the 
officer shall sign it and certify that the signing has been waived or 
that the deponent is unavailable or that the deponent has refused to 
sign, as the case may be, together with the reason for the refusal to 
sign, if any has been given. The deposition may then be used as though 
signed unless, on a motion to suppress under Sec.  3.33(g)(2)(iv), the 
Administrative Law Judge determines that the reasons given for the 
refusal to sign require rejection of the deposition in whole or in 
part. In addition to and not in lieu of the procedure for formal 
correction of the deposition, the deponent may enter in the record at 
the time of signing a list of objections to the transcription of his or 
her remarks, stating with specificity the alleged errors in the 
transcript.
    (g) Objections; errors and irregularities.

[[Page 1828]]

    (1) Objections to admissibility. Subject to the provisions of 
paragraph (g)(2) of this section, objection may be made at the hearing 
to receiving in evidence any deposition or part thereof for any reason 
which would require the exclusion of the evidence if the witness were 
then present and testifying.
    (2) Effect of errors and irregularities in depositions-(i) As to 
notice. All errors and irregularities in the notice for taking a 
deposition are waived unless written objection is promptly served upon 
the party giving the notice.
    (ii) As to disqualification of officer. Objection to taking a 
deposition because of disqualification of the officer before whom it is 
to be taken is waived unless made before the taking of the deposition 
begins or as soon thereafter as the disqualification becomes known or 
could be discovered with reasonable diligence.
    (iii) As to taking of deposition. (A) Objections to the competency 
of a witness or to the competency, relevancy, or materiality of 
testimony are not waived by failure to make them before or during the 
taking of the deposition, unless the ground of the objection is one 
which might have been obviated or removed if presented at that time.
    (B) Errors and irregularities occurring at the oral examination in 
the manner of taking the deposition, in the form of the questions or 
answers, in the oath or affirmation, or in the conduct of parties, and 
errors of any kind which might be obviated, removed, or cured if 
promptly presented, are waived unless seasonable objection thereto is 
made at the taking of the deposition.
    (C) Objections to the form of written questions are waived unless 
served in writing upon all parties within the time allowed for serving 
the succeeding cross or other questions and within 5 days after service 
of the last questions authorized.
    (iv) As to completion and return of deposition. Errors and 
irregularities in the manner in which the testimony is transcribed or 
the deposition is prepared, signed, certified, endorsed, or otherwise 
dealt with by the officer are waived unless a motion to suppress the 
deposition or some part thereof is made with reasonable promptness 
after such defect is or with due diligence might have been ascertained.
0
14. Revise Sec.  3.34 to read as follows:


Sec.  3.34  Subpoenas.

    (a) Subpoenas ad testificandum. Counsel for a party may sign and 
issue a subpoena, on a form provided by the Secretary, requiring a 
person to appear and give testimony at the taking of a deposition to a 
party requesting such subpoena or to attend and give testimony at an 
adjudicative hearing.
    (b) Subpoenas duces tecum; subpoenas to permit inspection of 
premises. Counsel for a party may sign and issue a subpoena, on a form 
provided by the Secretary, commanding a person to produce and permit 
inspection and copying of designated books, documents, or tangible 
things, or commanding a person to permit inspection of premises, at a 
time and place therein specified. The subpoena shall specify with 
reasonable particularity the material to be produced. The person 
commanded by the subpoena need not appear in person at the place of 
production or inspection unless commanded to appear for a deposition or 
hearing pursuant to paragraph (a) of this section. As used herein, the 
term ``documents'' includes written materials, electronically stored 
information, and tangible things. A subpoena duces tecum may be used by 
any party for purposes of discovery, for obtaining documents for use in 
evidence, or for both purposes, and shall specify with reasonable 
particularity the materials to be produced.
    (c) Motions to quash; limitation on subpoenas. Any motion by the 
subject of a subpoena to limit or quash the subpoena shall be filed 
within the earlier of 10 days after service thereof or the time for 
compliance therewith. Such motions shall set forth all assertions of 
privilege or other factual and legal objections to the subpoena, 
including all appropriate arguments, affidavits and other supporting 
documentation, and shall include the statement required by Sec.  
3.22(g). Nothing in paragraphs (a) and (b) of this section authorizes 
the issuance of subpoenas except in accordance with Sec.  3.31(c)(2) 
and Sec.  3.36.
0
15. Revise Sec.  3.35 to read as follows:


Sec.  3.35  Interrogatories to parties

    (a) Availability; procedures for use. (1) Any party may serve upon 
any other party written interrogatories, not exceeding 25 in number, 
including all discrete subparts, to be answered by the party served or, 
if the party served is a public or private corporation, partnership, 
association or governmental agency, by any officer or agent, who shall 
furnish such information as is available to the party. For this 
purpose, information shall not be deemed to be available insofar as it 
is in the possession of the Commissioners, the General Counsel, the 
office of Administrative Law Judges, or the Secretary in his or her 
capacity as custodian or recorder of any such information, or their 
respective staffs.
    (2) Each interrogatory shall be answered separately and fully in 
writing under oath, unless it is objected to on grounds not raised and 
ruled on in connection with the authorization, in which event the 
reasons for objection shall be stated in lieu of an answer. The answers 
are to be signed by the person making them, and the objections signed 
by the attorney making them. The party upon whom the interrogatories 
have been served shall serve a copy of the answers, and objections, if 
any, within 30 days after the service of the interrogatories. The 
Administrative Law Judge may allow a shorter or longer time.
    (3) Except as provided in Sec.  3.31(h), interrogatories shall not 
be filed with the Office of the Secretary, the Administrative Law 
Judge, or otherwise provided to the Commission.
    (b) Scope; use at hearing. (1) Interrogatories may relate to any 
matters that can be inquired into under Sec.  3.31(c)(1), and the 
answers may be used to the extent permitted by the rules of evidence.
    (2) An interrogatory otherwise proper is not necessarily 
objectionable merely because an answer to the interrogatory involves an 
opinion or contention that relates to fact or the application of law to 
fact, but such an interrogatory need not be answered until after 
designated discovery has been completed, but in no case later than 3 
days before the final pretrial conference.
    (c) Option to produce records. Where the answer to an interrogatory 
may be derived or ascertained from the records of the party upon whom 
the interrogatory has been served or from an examination, audit, or 
inspection of such records, or from a compilation, abstract, or summary 
based thereon, and the burden of deriving or ascertaining the answer is 
substantially the same for the party serving the interrogatory as for 
the party served, it is a sufficient answer to such interrogatory to 
specify the records from which the answer may be derived or ascertained 
and to afford to the party serving the interrogatory reasonable 
opportunity to examine, audit or inspect such records and to make 
copies, compilations, abstracts or summaries. The specification shall 
include sufficient detail to permit the interrogating party to identify 
readily the individual documents from which the answer may be 
ascertained.
0
16. Revise Sec.  3.36 to read as follows:

[[Page 1829]]

Sec.  3.36  Applications for subpoenas for records of or appearances by 
certain officials or employees of the Commission or officials or 
employees of governmental agencies other than the Commission, and 
subpoenas to be served in a foreign country.

    (a) Form. An application for issuance of a subpoena for the 
production of documents, as defined in Sec.  3.34(b), or for the 
issuance of a request requiring the production of or access to 
documents, other tangible things, or electronically stored information 
for the purposes described in Sec.  3.37(a), in the possession, 
custody, or control of the Commissioners, the General Counsel, any 
Bureau or Office not involved in the matter, the office of 
Administrative Law Judges, or the Secretary in his or her capacity as 
custodian or recorder of any such information, or their respective 
staffs, or of a governmental agency other than the Commission or the 
officials or employees of such other agency, or for the issuance of a 
subpoena requiring the appearance of a Commissioner, the General 
Counsel, an official of any Bureau or Office not involved in the 
matter, an Administrative Law Judge, or the Secretary in his or her 
capacity as custodian or recorder of any such information, or their 
respective staffs, or of an official or employee of another 
governmental agency, or for the issuance of a subpoena to be served in 
a foreign country, shall be made in the form of a written motion filed 
in accordance with the provisions of Sec.  3.22(a). No application for 
records pursuant to Sec.  4.11 of this chapter or the Freedom of 
Information Act may be filed with the Administrative Law Judge.
    (b) Content. The motion shall make a showing that:
    (1) The material sought is reasonable in scope;
    (2) If for purposes of discovery, the material falls within the 
limits of discovery under Sec.  3.31(c)(1), or, if for an adjudicative 
hearing, the material is reasonably relevant;
    (3) If for purposes of discovery, the information or material 
sought cannot reasonably be obtained by other means or, if for purposes 
of compelling a witness to appear at the evidentiary hearing, the 
movant has a compelling need for the testimony;
    (4) With respect to subpoenas to be served in a foreign country, 
that the party seeking discovery or testimony has a good faith belief 
that the discovery requested would be permitted by treaty, law, custom, 
or practice in the country from which the discovery or testimony is 
sought and that any additional procedural requirements have been or 
will be met before the subpoena is served; and
    (5) If the subpoena requires access to documents or other tangible 
things, it meets the requirements of Sec.  3.37.
    (c) Execution. If an Administrative Law Judge issues an order 
authorizing a subpoena pursuant to this section, the moving party may 
forward to the Secretary a request for the authorized subpoena, with a 
copy of the authorizing order attached. Each such subpoena shall be 
signed by the Secretary; shall have attached to it a copy of the 
authorizing order; and shall be served by the moving party only in 
conjunction with a copy of the authorizing order.
0
17. Revise Sec.  3.37 to read as follows:


Sec.  3.37  Production of documents, electronically stored information, 
and any tangible things; access for inspection and other purposes.

    (a) Availability; procedures for use. Any party may serve on 
another party a request: to produce and permit the party making the 
request, or someone acting on the party's behalf, to inspect and copy 
any designated documents or electronically stored information, as 
defined in Sec.  3.34(b), or to inspect and copy, test, or sample any 
tangible things which are within the scope of Sec.  3.31(c)(1) and in 
the possession, custody, or control of the party upon whom the request 
is served; or to permit entry upon designated land or other property in 
the possession or control of the party upon whom the order would be 
served for the purpose of inspection and measuring, surveying, 
photographing, testing, or sampling the property or any designated 
object or operation thereon, within the scope of Sec.  3.31(c)(1). Each 
such request shall specify with reasonable particularity the documents 
or things to be produced or inspected, or the property to be entered. 
Each such request shall also specify a reasonable time, place, and 
manner of making the production or inspection and performing the 
related acts. Each request may specify the form in which electronically 
stored information is to be produced, but the requested form of 
electronically stored information must not be overly burdensome or 
unnecessarily costly to the producing party. A party shall make 
documents available as they are kept in the usual course of business or 
shall organize and label them to correspond with the categories in the 
request. A person not a party to the action may be compelled to produce 
documents and things or to submit to an inspection as provided in Sec.  
3.34. Except as provided in Sec.  3.31(h), requests under this section 
shall not be filed with the Office of the Secretary, the Administrative 
Law Judge, or otherwise provided to the Commission.
    (b) Response; objections. No more than 30 days after receiving the 
request, the response of the party upon whom the request is served 
shall state, with respect to each item or category, that inspection and 
related activities will be permitted as requested, unless the request 
is objected to, in which event the reasons for the objection shall be 
stated. If objection is made to part of an item or category, the part 
shall be specified and inspection permitted of the remaining parts. The 
response may state an objection to a requested form for producing 
electronically stored information. If the responding party objects to a 
requested form - or if no form was specified in the request - the party 
must state the form it intends to use. The party submitting the request 
may move for an order under Sec.  3.38(a) with respect to any objection 
to or other failure to respond to the request or any part thereof, or 
any failure to permit inspection as requested.
    (c) Production of documents or electronically stored information. 
Unless otherwise stipulated or ordered by the Administrative Law Judge, 
these procedures apply to producing documents or electronically stored 
information:
    (i) A party must produce documents as they are kept in the usual 
course of business or must organize and label them to correspond to the 
categories in the request;
    (ii) If a request does not specify a form for producing 
electronically stored information, a party must produce it in a form in 
which it is ordinarily maintained or in a reasonably usable form; and
    (iii) A party need not produce the same electronically stored 
information in more than one form.
0
18. Revise Sec.  3.38 to read as follows:


Sec.  3.38  Motion for order compelling disclosure or discovery; 
sanctions.

    (a) Motion for order to compel. A party may apply by motion to the 
Administrative Law Judge for an order compelling disclosure or 
discovery, including a determination of the sufficiency of the answers 
or objections with respect to the mandatory initial disclosures 
required by Sec.  3.31(b), a request for admission under Sec.  3.32, a 
deposition under Sec.  3.33, an interrogatory under Sec.  3.35, or a 
production of documents or things or access for inspection or other 
purposes under Sec.  3.37. Any memorandum in support of such motion 
shall be no longer than 2,500 words. Any response

[[Page 1830]]

to the motion by the opposing party must be filed within 5 days of 
receipt of service of the motion and shall be no longer than 2,500 
words. These word count limitations include headings, footnotes, and 
quotations, but do not include the cover, table of contents, table of 
citations or authorities, glossaries, statements with respect to oral 
argument, any addendums containing statutes, rules or regulations, any 
certificates of counsel, proposed form of order, and any attachment 
required by Sec.  3.45(e). The Administrative Law Judge shall rule on a 
motion to compel within 3 business days of the date in which the 
response is due. Unless the Administrative Law Judge determines that 
the objection is justified, the Administrative Law Judge shall order 
that an initial disclosure or an answer to any requests for admissions, 
documents, depositions, or interrogatories be served or disclosure 
otherwise be made.
    (b) If a party or an officer or agent of a party fails to comply 
with any discovery obligation imposed by these rules, upon motion by 
the aggrieved party, the Administrative Law Judge or the Commission, or 
both, may take such action in regard thereto as is just, including but 
not limited to the following:
    (1) Order that any answer be amended to comply with the request, 
subpoena, or order;
    (2) Order that the matter be admitted or that the admission, 
testimony, documents, or other evidence would have been adverse to the 
party;
    (3) Rule that for the purposes of the proceeding the matter or 
matters concerning which the order or subpoena was issued be taken as 
established adversely to the party;
    (4) Rule that the party may not introduce into evidence or 
otherwise rely, in support of any claim or defense, upon testimony by 
such party, officer, agent, expert, or fact witness, or the documents 
or other evidence, or upon any other improperly withheld or undisclosed 
materials, information, witnesses, or other discovery;
    (5) Rule that the party may not be heard to object to introduction 
and use of secondary evidence to show what the withheld admission, 
testimony, documents, or other evidence would have shown;
    (6) Rule that a pleading, or part of a pleading, or a motion or 
other submission by the party, concerning which the order or subpoena 
was issued, be stricken, or that a decision of the proceeding be 
rendered against the party, or both.
    (c) Any such action may be taken by written or oral order issued in 
the course of the proceeding or by inclusion in an initial decision of 
the Administrative Law Judge or an order or opinion of the Commission. 
It shall be the duty of parties to seek and Administrative Law Judges 
to grant such of the foregoing means of relief or other appropriate 
relief as may be sufficient to compensate for withheld testimony, 
documents, or other evidence. If in the Administrative Law Judge's 
opinion such relief would not be sufficient, or in instances where a 
nonparty fails to comply with a subpoena or order, he or she shall 
certify to the Commission a request that court enforcement of the 
subpoena or order be sought.
0
19. Revise Sec.  3.38A to read as follows:


Sec.  3.38A  Withholding requested material.

    (a) Any person withholding material responsive to a subpoena issued 
pursuant to Sec.  3.34 or Sec.  3.36, written interrogatories requested 
pursuant to Sec.  3.35, a request for production or access pursuant to 
Sec.  3.37, or any other request for the production of materials under 
this part, shall assert a claim of privilege or any similar claim not 
later than the date set for production of the material. Such person 
shall, if so directed in the subpoena or other request for production, 
submit, together with such claim, a schedule which describes the nature 
of the documents, communications, or tangible things not produced or 
disclosed - and does so in a manner that, without revealing information 
itself privileged or protected, will enable other parties to assess the 
claim. The schedule need not describe any material outside the scope of 
the duty to search set forth in Sec.  3.31(c)(2) except to the extent 
that the Administrative Law Judge has authorized additional discovery 
as provided in that paragraph.
    (b) A person withholding material for reasons described in Sec.  
3.38A(a) shall comply with the requirements of that subsection in lieu 
of filing a motion to limit or quash compulsory process.
    (Sec. 5 of the FTC Act (15 U.S.C. 45))
0
20. Revise Sec.  3.39 to read as follows:


Sec.  3.39  Orders requiring witnesses to testify or provide other 
information and granting immunity.

    (a) Where Commission complaint counsel desire the issuance of an 
order requiring a witness or deponent to testify or provide other 
information and granting immunity under 18 U.S.C. 6002, Directors and 
Assistant Directors of Bureaus and Regional Directors and Assistant 
Regional Directors of Commission Regional Offices who supervise 
complaint counsel responsible for presenting evidence in support of the 
complaint are authorized to determine:
    (1) That the testimony or other information sought from a witness 
or deponent, or prospective witness or deponent, may be necessary to 
the public interest, and
    (2) That such individual has refused or is likely to refuse to 
testify or provide such information on the basis of his or her 
privilege against self-incrimination; and to request, through the 
Commission's liaison officer, approval by the Attorney General for the 
issuance of such order. Upon receipt of approval by the Attorney 
General (or his or her designee), the Administrative Law Judge is 
authorized to issue an order requiring the witness or deponent to 
testify or provide other information and granting immunity when the 
witness or deponent has invoked his or her privilege against self-
incrimination and it cannot be determined that such privilege was 
improperly invoked.
    (b) Requests by counsel other than Commission complaint counsel for 
an order requiring a witness to testify or provide other information 
and granting immunity under 18 U.S.C. 6002 may be made to the 
Administrative Law Judge and may be made ex parte. When such requests 
are made, the Administrative Law Judge is authorized to determine:
    (1) That the testimony or other information sought from a witness 
or deponent, or prospective witness or deponent, may be necessary to 
the public interest, and
    (2) That such individual has refused or is likely to refuse to 
testify or provide such information on the basis of his or her 
privilege against self-incrimination; and, upon making such 
determinations, to request, through the Commission's liaison officer, 
approval by the Attorney General for the issuance of an order requiring 
a witness to testify or provide other information and granting 
immunity; and, after the Attorney General (or his or her designee) has 
granted such approval, to issue such order when the witness or deponent 
has invoked his or her privilege against self-incrimination and it 
cannot be determined that such privilege was improperly invoked.
    (18 U.S.C. 6002, 6004)
0
21. Revise Sec.  3.41, to read as follows:


Sec.  3.41  General hearing rules.

    (a) Public hearings. All hearings in adjudicative proceedings shall 
be public unless an in camera order is entered by the Administrative 
Law Judge pursuant to Sec.  3.45(b) of this chapter or unless otherwise 
ordered by the Commission.

[[Page 1831]]

    (b) Expedition. Hearings shall proceed with all reasonable 
expedition, and, insofar as practicable, shall be held at one place and 
shall continue, except for brief intervals of the sort normally 
involved in judicial proceedings, without suspension until concluded. 
The hearing will take place on the date specified in the notice 
accompanying the complaint, pursuant to Sec.  3.11(b)(4), and should be 
limited to no more than 210 hours. The Commission, upon a showing of 
good cause, may order a later date for the evidentiary hearing to 
commence or extend the number of hours for the hearing. Consistent with 
the requirements of expedition:
    (1) The Administrative Law Judge may order hearings at more than 
one place and may grant a reasonable recess at the end of a case-in-
chief for the purpose of discovery deferred during the prehearing 
procedure if the Administrative Law Judge determines that such recess 
will materially expedite the ultimate disposition of the proceeding.
    (2) When actions involving a common question of law or fact are 
pending before the Administrative Law Judge, the Commission or the 
Administrative Law Judge may order a joint hearing of any or all the 
matters in issue in the actions; the Commission or the Administrative 
Law Judge may order all the actions consolidated; and the Commission or 
the Administrative Law Judge may make such orders concerning 
proceedings therein as may tend to avoid unnecessary costs or delay.
    (3) When separate hearings will be conducive to expedition and 
economy, the Commission or the Administrative Law Judge may order a 
separate hearing of any claim, or of any separate issue, or of any 
number of claims or issues.
    (4) Each side shall be allotted no more than half of the trial time 
within which to present its opening statements, in limine motions, all 
arguments excluding the closing argument, direct or cross examinations, 
or other evidence.
    (5) Each side shall be permitted to make an opening statement that 
is no more than 2 hours in duration.
    (6) Each side shall be permitted to make a closing argument no 
later than 5 days after the last filed proposed findings. The closing 
argument shall last no longer than 2 hours.
    (c) Rights of parties. Every party, except intervenors, whose 
rights are determined under Sec.  3.14, shall have the right of due 
notice, cross-examination, presentation of evidence, objection, motion, 
argument, and all other rights essential to a fair hearing.
    (d) Adverse witnesses. An adverse party, or an officer, agent, or 
employee thereof, and any witness who appears to be hostile, unwilling, 
or evasive, may be interrogated by leading questions and may also be 
contradicted and impeached by the party calling him or her.
    (e) Requests for an order requiring a witness to testify or provide 
other information and granting immunity under 18 U.S.C. 6002 shall be 
disposed of in accordance with Sec.  3.39.
    (f) Collateral federal court actions.The pendency of a collateral 
federal court action that relates to the administrative adjudication 
shall not stay the proceeding unless a court of competent jurisdiction, 
or the Commission for good cause, so directs. A stay shall toll any 
deadlines set by the rules.
0
22. Revise Sec.  3.43 to read as follows:


Sec.  3.43  Evidence.

    (a) Burden of proof. Counsel representing the Commission, or any 
person who has filed objections sufficient to warrant the holding of an 
adjudicative hearing pursuant to Sec.  3.13, shall have the burden of 
proof, but the proponent of any factual proposition shall be required 
to sustain the burden of proof with respect thereto.
    (b) Admissibility. Relevant, material, and reliable evidence shall 
be admitted. Irrelevant, immaterial, and unreliable evidence shall be 
excluded. Evidence, even if relevant, may be excluded if its probative 
value is substantially outweighed by the danger of unfair prejudice, 
confusion of the issues, or if the evidence would be misleading, or 
based on considerations of undue delay, waste of time, or needless 
presentation of cumulative evidence. Evidence that constitutes hearsay 
may be admitted if it is relevant, material, and bears satisfactory 
indicia of reliability so that its use is fair. Hearsay is a statement, 
other than one made by the declarant while testifying at the hearing, 
offered in evidence to prove the truth of the matter asserted. If 
otherwise meeting the standards for admissibility described in this 
paragraph, depositions, investigational hearings, prior testimony in 
Commission or other proceedings, and any other form of hearsay, shall 
be admissible and shall not be excluded solely on the ground that they 
are or contain hearsay. Statements or testimony by a party-opponent, if 
relevant, shall be admitted.
    (c) Admissibility of third party documents. Extrinsic evidence of 
authenticity as a condition precedent to admissibility of documents 
received from third parties is not required with respect to the 
original or a duplicate of a domestic record of regularly conducted 
activity by that third party that otherwise meets the standards of 
admissibility described in paragraph (b) if accompanied by a written 
declaration of its custodian or other qualified person, in a manner 
complying with any Act of Congress or rule prescribed by the Supreme 
Court pursuant to statutory authority, certifying that the record:
    (1) was made at or near the time of the occurrence of the matters 
set forth by, or from information transmitted by, a person with 
knowledge of those matters;
    (2) was kept in the course of the regularly conducted activity; and
    (3) was made by the regularly conducted activity as a regular 
practice.
    (d) Presentation of evidence.
    (1) A party is entitled to present its case or defense by sworn 
oral testimony and documentary evidence, to submit rebuttal evidence, 
and to conduct such cross-examination as, in the discretion of the 
Commission or the Administrative Law Judge, may be required for a full 
and true disclosure of the facts.
    (2) The Administrative Law Judge shall exercise reasonable control 
over the mode and order of interrogating witnesses and presenting 
evidence so as to--
    (i) Make the interrogation and presentation effective for the 
ascertainment of the truth;
    (ii) Avoid needless consumption of time; and
    (iii) Protect witnesses from harassment or undue embarrassment.
    (3) As respondents are in the best position to determine the nature 
of documents generated by such respondents and which come from their 
own files, the burden of proof is on the respondent to introduce 
evidence to rebut a presumption that such documents are authentic and 
kept in the regular course of business.
    (e) Information obtained in investigations. Any documents, papers, 
books, physical exhibits, or other materials or information obtained by 
the Commission under any of its powers may be disclosed by counsel 
representing the Commission when necessary in connection with 
adjudicative proceedings and may be offered in evidence by counsel 
representing the Commission in any such proceeding
    (f) Official notice. ``Official notice'' may be taken of any 
material fact that is not subject to reasonable dispute in that it is 
either generally known within the Commission's expertise or capable of 
accurate and ready determination by resort to sources whose accuracy 
cannot reasonably be questioned. If official notice is requested or is 
taken of a material fact not appearing in the

[[Page 1832]]

evidence in the record, the parties, upon timely request, shall be 
afforded an opportunity to disprove such noticed fact.
    (g) Objections. Objections to evidence shall timely and briefly 
state the grounds relied upon, but the transcript shall not include 
argument or debate thereon except as ordered by the Administrative Law 
Judge. Rulings on all objections shall appear in the record.
    (h) Exceptions. Formal exception to an adverse ruling is not 
required.
    (i) Excluded evidence. When an objection to a question propounded 
to a witness is sustained, the questioner may make a specific offer of 
what he or she expects to prove by the answer of the witness, or the 
Administrative Law Judge may, in his or her discretion, receive and 
report the evidence in full. Rejected exhibits, adequately marked for 
identification, shall be retained in the record so as to be available 
for consideration by any reviewing authority.
0
23. Revise Sec.  3.44 to read as follows:


Sec.  3.44  Record.

    (a) Reporting and transcription. Hearings shall be stenographically 
reported and transcribed by the official reporter of the Commission 
under the supervision of the Administrative Law Judge, and the original 
transcript shall be a part of the record and the sole official 
transcript. The live oral testimony of each witness shall be video 
recorded digitally, and the video recording and the written transcript 
of the testimony shall be made part of the record. Copies of 
transcripts are available from the reporter at rates not to exceed the 
maximum rates fixed by contract between the Commission and the 
reporter.
    (b) Corrections. Corrections of the official transcript may be made 
only when they involve errors affecting substance and then only in the 
manner herein provided. Corrections ordered by the Administrative Law 
Judge or agreed to in a written stipulation signed by all counsel and 
parties not represented by counsel, and approved by the Administrative 
Law Judge, shall be included in the record, and such stipulations, 
except to the extent they are capricious or without substance, shall be 
approved by the Administrative Law Judge. Corrections shall not be 
ordered by the Administrative Law Judge except upon notice and 
opportunity for the hearing of objections. Such corrections shall be 
made by the official reporter by furnishing substitute type pages, 
under the usual certificate of the reporter, for insertion in the 
official record. The original uncorrected pages shall be retained in 
the files of the Commission.
    (c) Closing of the hearing record. Upon completion of the 
evidentiary hearing, the Administrative Law Judge shall issue an order 
closing the hearing record after giving the parties 3 business days to 
determine if the record is complete or needs to be supplemented. The 
Administrative Law Judge shall retain the discretion to permit or order 
correction of the record as provided in Sec.  3.44(b).
0
24. Revise Sec.  3.45 to read as follows:


Sec.  3.45  In camera orders.

    (a) Definition. Except as hereinafter provided, material made 
subject to an in camera order will be kept confidential and not placed 
on the public record of the proceeding in which it was submitted. Only 
respondents, their counsel, authorized Commission personnel, and court 
personnel concerned with judicial review may have access thereto, 
provided that the Administrative Law Judge, the Commission and 
reviewing courts may disclose such in camera material to the extent 
necessary for the proper disposition of the proceeding.
    (b) In camera treatment of material. A party or third party may 
obtain in camera treatment for material, or portions thereof, offered 
into evidence only by motion to the Administrative Law Judge. Parties 
who seek to use material obtained from a third party subject to 
confidentiality restrictions must demonstrate that the third party has 
been given at least 10 days notice of the proposed use of such 
material. Each such motion must include an attachment containing a copy 
of each page of the document in question on which in camera or 
otherwise confidential excerpts appear. The Administrative Law Judge 
shall order that such material, whether admitted or rejected, be placed 
in camera only after finding that its public disclosure will likely 
result in a clearly defined, serious injury to the person, partnership, 
or corporation requesting in camera treatment or after finding that the 
material constitutes sensitive personal information. ``Sensitive 
personal information'' shall include, but shall not be limited to, an 
individual's Social Security number, taxpayer identification number, 
financial account number, credit card or debit card number, driver's 
license number, state-issued identification number, passport number, 
date of birth (other than year), and any sensitive health information 
identifiable by individual, such as an individual's medical records. 
For material other than sensitive personal information, a finding that 
public disclosure will likely result in a clearly defined, serious 
injury shall be based on the standard articulated in H.P. Hood & Sons, 
Inc., 58 F.T.C. 1184, 1188 (1961); see also Bristol-Myers Co., 90 
F.T.C. 455, 456 (1977), which established a three-part test that was 
modified by General Foods Corp., 95 F.T.C. 352, 355 (1980). The party 
submitting material for which in camera treatment is sought must 
provide, for each piece of such evidence and affixed to such evidence, 
the name and address of any person who should be notified in the event 
that the Commission intends to disclose in camera information in a 
final decision. No material, or portion thereof, offered into evidence, 
whether admitted or rejected, may be withheld from the public record 
unless it falls within the scope of an order issued in accordance with 
this section, stating the date on which in camera treatment will 
expire, and including:
    (1) A description of the material;
    (2) A statement of the reasons for granting in camera treatment; 
and
    (3) A statement of the reasons for the date on which in camera 
treatment will expire, except in the case of sensitive personal 
information, which shall be accorded permanent in camera treatment 
unless disclosure or an expiration date is required or provided by law. 
For in camera material other than sensitive personal information, an 
expiration date may not be omitted except in unusual circumstances, in 
which event the order shall state with specificity the reasons why the 
need for confidentiality of the material, or portion thereof at issue 
is not likely to decrease over time, and any other reasons why such 
material is entitled to in camera treatment for an indeterminate 
period. If an in camera order is silent as to duration, without 
explanation, then it will expire 3 years after its date of issuance. 
Material subject to an in camera order shall be segregated from the 
public record and filed in a sealed envelope, or other appropriate 
container, bearing the title, the docket number of the proceeding, the 
notation ``In Camera Record under Sec.  3.45,'' and the date on which 
in camera treatment expires. If the Administrative Law Judge has 
determined that in camera treatment should be granted for an 
indeterminate period, the notation should state that fact. Parties are 
not required to provide documents subject to in camera treatment, 
including documents obtained from third parties, to any individual or 
entity other than the Administrative Law Judge, counsel for other 
parties, and, during an appeal, the Commission or a federal court.

[[Page 1833]]

    (c) Release of in camera material. In camera material constitutes 
part of the confidential records of the Commission and is subject to 
the provisions of Sec.  4.11 of this chapter.
    (d) Briefs and other submissions referring to in camera or 
confidential information. Parties shall not disclose information that 
has been granted in camera status pursuant to Sec.  3.45(b) or is 
subject to confidentiality protections pursuant to a protective order 
in the public version of proposed findings, briefs, or other documents. 
This provision does not preclude references in such proposed findings, 
briefs, or other documents to in camera or other confidential 
information or general statements based on the content of such 
information.
    (e) When in camera or confidential information is included in 
briefs and other submissions. If a party includes specific information 
that has been granted in camera status pursuant to Sec.  3.45(b) or is 
subject to confidentiality protections pursuant to a protective order 
in any document filed in a proceeding under this part, the party shall 
file 2 versions of the document. A complete version shall be marked 
``In Camera'' or ``Subject to Protective Order,'' as appropriate, on 
the first page and shall be filed with the Secretary and served by the 
party on the other parties in accordance with the rules in this part. 
Submitters of in camera or other confidential material should mark any 
such material in the complete versions of their submissions in a 
conspicuous matter, such as with highlighting or bracketing. References 
to in camera or confidential material must be supported by record 
citations to relevant evidentiary materials and associated 
Administrative Law Judge in camera or other confidentiality rulings to 
confirm that in camera or other confidential treatment is warranted for 
such material. In addition, the document must include an attachment 
containing a copy of each page of the document in question on which in 
camera or otherwise confidential excerpts appear, and providing the 
name and address of any person who should be notified of the 
Commission's intent to disclose in a final decision any of the in 
camera or otherwise confidential information in the document. Any time 
period within which these rules allow a party to respond to a document 
shall run from the date the party is served with the complete version 
of the document. An expurgated version of the document, marked ``Public 
Record'' on the first page and omitting the in camera and confidential 
information and attachment that appear in the complete version, shall 
be filed with the Secretary within 5 days after the filing of the 
complete version, unless the Administrative Law Judge or the Commission 
directs otherwise, and shall be served by the party on the other 
parties in accordance with the rules in this part. The expurgated 
version shall indicate any omissions with brackets or ellipses, and its 
pagination and depiction of text on each page shall be identical to 
that of the in camera version.
    (f) When in camera or confidential information is included in 
rulings or recommendations of the Administrative Law Judge. If the 
Administrative Law Judge includes in any ruling or recommendation 
information that has been granted in camera status pursuant to Sec.  
3.45(b) or is subject to confidentiality protections pursuant to a 
protective order, the Administrative Law Judge shall file 2 versions of 
the ruling or recommendation. A complete version shall be marked ``In 
Camera'' or ``Subject to Protective Order,'' as appropriate, on the 
first page and shall be served upon the parties. The complete version 
will be placed in the in camera record of the proceeding. An expurgated 
version, to be filed within 5 days after the filing of the complete 
version, shall omit the in camera and confidential information that 
appears in the complete version, shall be marked ``Public Record'' on 
the first page, shall be served upon the parties, and shall be included 
in the public record of the proceeding.
    (g) Provisional in camera rulings. The Administrative Law Judge may 
make a provisional grant of in camera status to materials if the 
showing required in Sec.  3.45(b) cannot be made at the time the 
material is offered into evidence but the Administrative Law Judge 
determines that the interests of justice would be served by such a 
ruling. Within 20 days of such a provisional grant of in camera status, 
the party offering the evidence or an interested third party must 
present a motion to the Administrative Law Judge for a final ruling on 
whether in camera treatment of the material is appropriate pursuant to 
Sec.  3.45(b). If no such motion is filed, the Administrative Law Judge 
may either exclude the evidence, deny in camera status, or take such 
other action as is appropriate.
0
26. Revise Sec.  3.46 to read as follows:


Sec.  3.46  Proposed findings, conclusions, and order.

    (a) General. Within 21 days of the closing of the hearing record, 
each party may file with the Secretary for consideration of the 
Administrative Law Judge proposed findings of fact, conclusions of law, 
and rule or order, together with reasons therefor and briefs in support 
thereof. Such proposals shall be in writing, shall be served upon all 
parties, and shall contain adequate references to the record and 
authorities relied on. If a party includes in the proposals information 
that has been granted in camera status pursuant to Sec.  3.45(b), the 
party shall file 2 versions of the proposals in accordance with the 
procedures set forth in Sec.  3.45(e). Reply findings of fact, 
conclusions of law, and briefs may be filed by each party within 10 
days of service of the initial proposed findings.
    (b) Exhibit index. The first statement of proposed findings of fact 
and conclusions of law filed by a party shall include an index listing 
for each exhibit offered by the party and received in evidence:
    (1) The exhibit number, followed by
    (2) The exhibit's title or a brief description if the exhibit is 
untitled;
    (3) The transcript page at which the Administrative Law Judge ruled 
on the exhibit's admissibility or a citation to any written order in 
which such ruling was made;
    (4) The transcript pages at which the exhibit is discussed;
    (5) An identification of any other exhibit which summarizes the 
contents of the listed exhibit, or of any other exhibit of which the 
listed exhibit is a summary;
    (6) A cross-reference, by exhibit number, to any other portions of 
that document admitted as a separate exhibit on motion by any other 
party; and
    (7) A statement whether the exhibit has been accorded in camera 
treatment, and a citation to the in camera ruling.
    (c) Witness index. The first statement of proposed findings of fact 
and conclusions of law filed by a party shall also include an index to 
the witnesses called by that party, to include for each witness:
    (1) The name of the witness;
    (2) A brief identification of the witness;
    (3) The transcript pages at which any testimony of the witness 
appears; and
    (4) A statement whether the exhibit has been accorded in camera 
treatment, and a citation to the in camera ruling.
    (d) Stipulated indices. As an alternative to the filing of separate 
indices, the parties are encouraged to stipulate to joint exhibit and 
witness indices at the time the first statement of proposed findings of 
fact and conclusions of law is due to be filed.
    (e) Rulings. The record shall show the Administrative Law Judge's 
ruling on each proposed finding and conclusion, except when the order 
disposing of the

[[Page 1834]]

proceeding otherwise informs the parties of the action taken.
0
27. Revise Sec.  3.51 to read as follows:


Sec.  3.51  Initial decision.

    (a) When filed and when effective. The Administrative Law Judge 
shall file an initial decision within 70 days after the filing of the 
last filed initial or reply proposed findings of fact, conclusions of 
law and order pursuant to Sec.  3.46, within 85 days of the closing the 
hearing record pursuant to Sec.  3.44(c) where the parties have waived 
the filing of proposed findings, or within 14 days after the granting 
of a motion for summary decision following a referral of such motion 
from the Commission. The Administrative Law Judge may extend any of 
these time periods by up to 30 days for good cause. The Commission may 
further extend any of these time periods for good cause. Except in 
cases subject to Sec.  3.52(a), once issued, the initial decision shall 
become the decision of the Commission 30 days after service thereof 
upon the parties or 30 days after the filing of a timely notice of 
appeal, whichever shall be later, unless a party filing such a notice 
shall have perfected an appeal by the timely filing of an appeal brief 
or the Commission shall have issued an order placing the case on its 
own docket for review or staying the effective date of the decision.
    (b) Exhaustion of administrative remedies. An initial decision 
shall not be considered final agency action subject to judicial review 
under 5 U.S.C. 704. Any objection to a ruling by the Administrative Law 
Judge, or to a finding, conclusion or a provision of the order in the 
initial decision, which is not made a part of an appeal to the 
Commission shall be deemed to have been waived.
    (c) Content, format for filing. (1) An initial decision shall be 
based on a consideration of the whole record relevant to the issues 
decided, and shall be supported by reliable and probative evidence. The 
initial decision shall include a statement of findings of fact (with 
specific page references to principal supporting items of evidence in 
the record) and conclusions of law, as well as the reasons or basis 
therefor, upon all the material issues of fact, law, or discretion 
presented on the record (or those designated under paragraph (c)(2) of 
this section) and an appropriate rule or order. Rulings containing 
information granted in camera status pursuant to Sec.  3.45 shall be 
filed in accordance with Sec.  3.45(f).
    (2) The initial decision shall be prepared in a common word 
processing format, such as WordPerfect or Microsoft Word, and shall be 
filed by the Administrative Law Judge with the Office of the Secretary 
in both electronic and paper versions.
    (3) When more than one claim for relief is presented in an action, 
or when multiple parties are involved, the Administrative Law Judge may 
direct the entry of an initial decision as to one or more but fewer 
than all of the claims or parties only upon an express determination 
that there is no just reason for delay and upon an express direction 
for the entry of initial decision.
    (d) By whom made. The initial decision shall be made and filed by 
the Administrative Law Judge who presided over the hearings, except 
when he or she shall have become unavailable to the Commission.
    (e) Reopening of proceeding by Administrative Law Judge; 
termination of jurisdiction. (1) At any time from the close of the 
hearing record pursuant to Sec.  3.44(c) until the filing of his or her 
initial decision, an Administrative Law Judge may reopen the proceeding 
for the reception of further evidence for good cause shown.
    (2) Except for the correction of clerical errors or pursuant to an 
order of remand from the Commission, the jurisdiction of the 
Administrative Law Judge is terminated upon the filing of his or her 
initial decision with respect to those issues decided pursuant to 
paragraph (c)(1) of this section.
0
28. Revise Sec.  3.52 to read as follows:


Sec.  3.52  Appeal from initial decision.

    (a) Automatic review of cases in which the Commission sought 
preliminary relief in federal court; timing. For proceedings with 
respect to which the Commission has sought preliminary relief in 
federal court under 15 U.S.C. 53(b), the Commission will review the 
initial decision without the filing of a notice of appeal.
    (1) In such cases, any party may file objections to the initial 
decision or order of the Administrative Law Judge by filing its opening 
appeal brief, subject to the requirements in paragraph (c), within 20 
days of the issuance of the initial decision. Any party may respond to 
any objections filed by another party by filing an answering brief, 
subject to the requirements of paragraph (d), within 20 days of service 
of the opening brief. Any party may file a reply to an answering brief, 
subject to the requirements of paragraph (e), within 5 days of service 
of the answering brief. Unless the Commission determines there shall be 
no oral argument, it will schedule oral argument within 10 days after 
the deadline for the filing of any reply briefs. The Commission will 
issue its final decision pursuant to Sec.  3.54 within 45 days after 
oral argument. If no oral argument is scheduled, the Commission will 
issue its final decision pursuant to Sec.  3.54 within 45 days after 
the deadline for the filing of any reply briefs.
    (2) If no objections to the initial decision are filed, the 
Commission may in its discretion schedule oral argument within 10 days 
after the deadline for the filing of objections, and will issue its 
final decision pursuant to Sec.  3.54 within 45 days after oral 
argument. If no oral argument is scheduled, the Commission will issue 
its final decision pursuant to Sec.  3.54 within 45 days after the 
deadline for the filing of objections.
    (b) Review in all other cases; timing. (1) In all cases other than 
those subject to paragraph (a), any party may file objections to the 
initial decision or order of the Administrative Law Judge by filing a 
notice of appeal with the Secretary within 10 days after service of the 
initial decision. The notice shall specify the party or parties against 
whom the appeal is taken and shall designate the initial decision and 
order or part thereof appealed from. If a timely notice of appeal is 
filed by a party, any other party may thereafter file a notice of 
appeal within 5 days after service of the first notice, or within 10 
days after service of the initial decision, whichever period expires 
last.
    (2) In such cases, any party filing a notice of appeal must perfect 
its appeal by filing its opening appeal brief, subject to the 
requirements in paragraph (c), within 30 days of the issuance of the 
initial decision. Any party may respond to the opening appeal brief by 
filing an answering brief, subject to the requirements of paragraph 
(d), within 30 days of service of the opening brief. Any party may file 
a reply to an answering brief, subject to the requirements of paragraph 
(e), within 7 days of service of the answering brief. Unless the 
Commission determines there shall be no oral argument, it will schedule 
oral argument within 15 days after the deadline for the filing of any 
reply briefs. The Commission will issue its final decision pursuant to 
Sec.  3.54 within 100 days after oral argument. If no oral argument is 
scheduled, the Commission will issue its final decision pursuant to 
Sec.  3.54 within 100 days after the deadline for the filing of any 
reply briefs.
    (c) Appeal brief. (1) The opening appeal brief shall contain, in 
the order indicated, the following:
    (i) A subject index of the matter in the brief, with page 
references, and a table of cases (alphabetically arranged),

[[Page 1835]]

textbooks, statutes, and other material cited, with page references 
thereto;
    (ii) A concise statement of the case, which includes a statement of 
facts relevant to the issues submitted for review, and a summary of the 
argument, which must contain a succinct, clear, and accurate statement 
of the arguments made in the body of the brief, and which must not 
merely repeat the argument headings;
    (iii) A specification of the questions intended to be urged;
    (iv) The argument presenting clearly the points of fact and law 
relied upon in support of the position taken on each question, with 
specific page references to the record and the legal or other material 
relied upon; and
    (v) A proposed form of order for the Commission's consideration 
instead of the order contained in the initial decision.
    (2) The brief shall not, without leave of the Commission, exceed 
14,000 words.
    (d) Answering brief. The answering brief shall contain a subject 
index, with page references, and a table of cases (alphabetically 
arranged), textbooks, statutes, and other material cited, with page 
references thereto, as well as arguments in response to the appellant's 
appeal brief. The answering brief shall not, without leave of the 
Commission, exceed 14,000 words.
    (e) Reply brief. The reply brief shall be limited to rebuttal of 
matters in the answering brief and shall not, without leave of the 
Commission, exceed 7,000 words. The Commission will not consider new 
arguments or matters raised in reply briefs that could have been raised 
earlier in the principal briefs. No further briefs may be filed except 
by leave of the Commission.
    (f) In camera information. If a party includes in any brief to be 
filed under this section information that has been granted in camera 
status pursuant to Sec.  3.45(b) or is subject to confidentiality 
provisions pursuant to a protective order, the party shall file 2 
versions of the brief in accordance with the procedures set forth in 
Sec.  3.45(e). The time period specified by this section within which a 
party may file an answering or reply brief will begin to run upon 
service on the party of the in camera or confidential version of a 
brief.
    (g) Signature. (1) The original of each brief filed shall have a 
hand-signed signature by an attorney of record for the party, or in the 
case of parties not represented by counsel, by the party itself, or by 
a partner if a partnership, or by an officer of the party if it is a 
corporation or an unincorporated association.
    (2) Signing a brief constitutes a representation by the signer that 
he or she has read it; that to the best of his or her knowledge, 
information, and belief, the statements made in it are true; that it is 
not interposed for delay; that it complies with the applicable word 
count limitation; and that to the best of his or her knowledge, 
information, and belief, it complies with all the other rules in this 
part. If a brief is not signed or is signed with intent to defeat the 
purpose of this section, it may be stricken as sham and false and the 
proceeding may go forward as though the brief has not been filed.
    (h) Oral argument. All oral arguments shall be public unless 
otherwise ordered by the Commission. Oral arguments will be held in all 
cases on appeal or review to the Commission, unless the Commission 
otherwise orders upon its own initiative or upon request of any party 
made at the time of filing his or her brief. Oral arguments before the 
Commission shall be reported stenographically, unless otherwise 
ordered, and a member of the Commission absent from an oral argument 
may participate in the consideration and decision of the appeal in any 
case in which the oral argument is stenographically reported.
    (i) Corrections in transcript of oral argument. The Commission will 
entertain only joint motions of the parties requesting corrections in 
the transcript of oral argument, except that the Commission will 
receive a unilateral motion which recites that the parties have made a 
good faith effort to stipulate to the desired corrections but have been 
unable to do so. If the parties agree in part and disagree in part, 
they should file a joint motion incorporating the extent of their 
agreement, and, if desired, separate motions requesting those 
corrections to which they have been unable to agree. The Secretary, 
pursuant to delegation of authority by the Commission, is authorized to 
prepare and issue in the name of the Commission a brief ``Order 
Correcting Transcript'' whenever a joint motion to correct transcript 
is received.
    (j) Briefs of amicus curiae. A brief of an amicus curiae may be 
filed by leave of the Commission granted on motion with notice to the 
parties or at the request of the Commission, except that such leave 
shall not be required when the brief is presented by an agency or 
officer of the United States; or by a State, territory, commonwealth, 
or the District of Columbia, or by an agency or officer of any of them. 
The brief may be conditionally filed with the motion for leave. A 
motion for leave shall identify the interest of the applicant and state 
how a Commission decision in the matter would affect the applicant or 
persons it represents. The motion shall also state the reasons why a 
brief of an amicus curiae is desirable. Except as otherwise permitted 
by the Commission, an amicus curiae shall file its brief within the 
time allowed the parties whose position as to affirmance or reversal 
the amicus brief will support. The Commission shall grant leave for a 
later filing only for cause shown, in which event it shall specify 
within what period such brief must be filed. A motion for an amicus 
curiae to participate in oral argument will be granted only for 
extraordinary reasons. An amicus brief may be no more than one-half the 
maximum length authorized by these rules for a party's principal brief.
    (k) Word count limitation. The word count limitations in this 
section include headings, footnotes and quotations, but do not include 
the cover, table of contents, table of citations or authorities, 
glossaries, statements with respect to oral argument, any addendums 
containing statutes, rules or regulations, any certificates of counsel, 
proposed form of order, and any attachment required by Sec.  3.45(e). 
Extensions of word count limitations are disfavored, and will only be 
granted where a party can make a strong showing that undue prejudice 
would result from complying with the existing limit.

PART 4--MISCELLANEOUS RULES

0
1. The authority citation for part 4 continues to read as follows:

    Authority: 15 U.S.C. 46, unless otherwise noted.
0
2. Revise Sec.  4.2 to read as follows:


Sec.  4.2  Requirements as to form, and filing of documents other than 
correspondence.

    (a) Filing. (1) Except as otherwise provided, all documents 
submitted to the Commission, including those addressed to the 
Administrative Law Judge, shall be filed with the Secretary of the 
Commission; Provided, however, That informal applications or requests 
may be submitted directly to the official in charge of any Bureau, 
Division, or Office of the Commission, or to the Administrative Law 
Judge.
    (2) Documents submitted to the Commission in response to a Civil 
Investigative Demand under section 20 of the FTC Act shall be filed 
with the custodian or deputy custodian named in the demand.

[[Page 1836]]

    (b) Title. Documents shall clearly show the file or docket number 
and title of the action in connection with which they are filed.
    (c) Paper and electronic copies of and service of filings before 
the Commission, and of filings before an ALJ in adjudicative 
proceedings. (1) Except as otherwise provided, each document filed 
before the Commission, whether in an adjudicative or a nonadjudicative 
proceeding, shall be filed with Secretary of the Commission, and shall 
include a paper original, 12 paper copies, and an electronic copy (in 
ASCII format, WordPerfect, or Microsoft Word). Except as otherwise 
provided, each document filed by a party in an adjudicative proceeding 
before an ALJ shall be filed with the Secretary of the Commission, and 
shall include a paper original, 1 paper copy and an electronic copy (in 
ASCII format, WordPerfect, or Microsoft Word).
    (2) The first page of the paper original of each such document 
shall be clearly labeled either public, or in camera or confidential. 
If the document is labeled in camera or confidential, it must include 
as an attachment either a motion requesting in camera or otherwise 
confidential treatment, in the form prescribed by Sec.  3.45(b), or a 
copy of a Commission, ALJ, or federal court order granting such 
treatment. The document must also include as a separate attachment a 
set of only those pages of the document on which the in camera or 
otherwise confidential material appears.
    (3) The electronic copy of each such public document shall be filed 
by e-mail, as the Secretary shall direct, in a manner that is 
consistent with technical standards, if any, that the Judicial 
Conference of the United States establishes, except that the electronic 
copy of each such document containing in camera or otherwise 
confidential material shall be placed on a diskette so labeled, which 
shall be physically attached to the paper original, and not transmitted 
by e-mail. The electronic copy of all documents shall include a 
certification by the filing party that the copy is a true and correct 
copy of the paper original, and that a paper copy with an original 
signature is being filed with the Secretary of the Commission on the 
same day by other means.
    (4) Sensitive personal information, as defined in Sec.  3.45(b), 
shall not be included in, and must be redacted or omitted from, filings 
where the filing party determines that such information is not relevant 
or otherwise necessary for the conduct of the proceeding.
    (5) A paper copy of each such document in an adjudicative 
proceeding shall be served by the party filing the document or person 
acting for that party on all other parties pursuant to Sec.  4.4, at or 
before the time the paper original is filed.
    (d) Paper and electronic copies of all other documents filed with 
the Commission. Except as otherwise provided, each document to which 
paragraph (c) of this section does not apply, such as public comments 
in Commission proceedings, may be filed with the Commission in either 
paper or electronic form. If such a document contains nonpublic 
information, it must be filed in paper form with the Secretary of the 
Commission, and the first page of the document must be clearly labeled 
confidential. If the document does not contain any nonpublic 
information, it may instead be filed in electronic form (in ASCII 
format, WordPerfect, or Microsoft Word) by e-mail, as the Commission or 
the Secretary may direct.
    (e) Form. (1) Documents filed with the Secretary of the Commission, 
other than briefs in support of appeals from initial decisions, shall 
be printed, typewritten, or otherwise processed in permanent form and 
on good unglazed paper. A motion or other paper filed in an 
adjudicative proceeding shall contain a caption setting forth the title 
of the case, the docket number, and a brief descriptive title 
indicating the purpose of the paper.
    (2) Briefs filed on an appeal from an initial decision shall be in 
the form prescribed by Sec.  3.52(e).
    (f) Signature. (1) The original of each document filed shall have a 
hand signed signature by an attorney of record for the party, or in the 
case of parties not represented by counsel, by the party itself, or by 
a partner if a partnership, or by an officer of the party if it is a 
corporation or an unincorporated association.
    (2) Signing a document constitutes a representation by the signer 
that he or she has read it; that to the best of his or her knowledge, 
information, and belief, the statements made in it are true; that it is 
not interposed for delay; and that to the best of his or her knowledge, 
information, and belief, it complies with the rules in this part. If a 
document is not signed or is signed with intent to defeat the purpose 
of this section, it may be stricken as sham and false and the 
proceeding may go forward as though the document had not been filed.
    (g) Authority to reject documents for filing. The Secretary of the 
Commission may reject a document for filing that fails to comply with 
the Commission's rules. In cases of extreme hardship, the Secretary may 
excuse compliance with a rule regarding the filing of documents if the 
Secretary determines that the non-compliance would not interfere with 
the functions of the Commission.
0
3. Amend Sec.  4.3 by revising paragraph (b) as follows:


Sec.  4.3  Time.

* * * * *
    (b) Extensions. For good cause shown, the Administrative Law Judge 
may, in any proceeding before him or her: (1) Extend any time limit 
prescribed or allowed by order of the Administrative Law Judge or the 
Commission (if the Commission order expressly authorizes the 
Administrative Law Judge to extend time periods); or (2) extend any 
time limit prescribed by the rules in this chapter, except those 
governing motions directed to the Commission, interlocutory appeals and 
initial decisions and deadlines that the rules expressly authorize only 
the Commission to extend. Except as otherwise provided by law, the 
Commission, for good cause shown, may extend any time limit prescribed 
by the rules in this chapter or by order of the Commission or an 
Administrative Law Judge, provided, however, that in a proceeding 
pending before an Administrative Law Judge, any motion on which he or 
she may properly rule shall be made to the Administrative Law Judge. 
Notwithstanding the above, where a motion to extend is made after the 
expiration of the specified period, the motion may be considered where 
the untimely filing was the result of excusable neglect.
* * * * *
    By direction of the Commission.

Donald S. Clark,
Secretary.
[FR Doc. E9-296 Filed 1-12-09: 8:45 am]
BILLING CODE 6750-01-S