Federal Trade Commission

Federal Trade Commission

Regulatory Review Plan:

Ensuring FTC Rules Are Up-to-Date, Effective, and Not Overly Burdensome

September 2011

I.

Executive Summary of Regulatory Review Plan

The Federal Trade Commission (“FTC”) has long recognized the many benefits of

periodic regulatory review. In a rapidly changing marketplace, agency regulations can become

outdated, ineffectual, and unduly burdensome. Therefore, it is important to systematically

review regulations to ensure that they continue to achieve their intended goals without unduly

burdening commerce. Since 1992, the FTC’s regulatory review program has done just that. The

FTC schedules its regulations and guides for review on a ten-year cycle; i.e., all rules and guides

are scheduled to be reviewed ten years after implementation and ten years after completion of a

regulatory review. Pursuant to this program, the FTC has rescinded 37 rules and guides

promulgated under the FTC’s general authority and updated dozens of other since the early

1990s. In all, the FTC has repealed roughly half of its discretionary trade regulatory rules and

industry guides that were in effect when the program began in 1992.

The President recently issued Executive Orders 13563 and 13579, which call upon

federal agencies including independent agencies such as the FTC, to prepare plans for the

periodic review of existing regulations in order to determine whether those regulations should be

modified, streamlined, expanded, or repealed.

The FTC shares these goals and, in light of the Executive Orders, has taken a fresh look

at its longstanding regulatory review process. The FTC is taking a number of steps to ensure

that its rules and guides are up-to-date and effective, ease burdens on business, and promote

public engagement in its regulatory review program:

– The FTC recently issued a revised ten-year review schedule and accelerated the review

of a number of rules and guides in response to recent changes in technology and the

marketplace. More than a third of the FTC’s 66 rules and guides will be under review,

or will have just been reviewed, by the end of 2011.

– The FTC is requesting public comment on the effectiveness of its regulatory review

program and suggestions for improvement.

– The FTC has launched a web page that serves as a one-stop shop to allow the public to

obtain information and provide comments on individual rules and guides under review as

well as the FTC’s regulatory review program generally.

– As a result of its retrospective review program, the FTC, working with the U.S.

Department of Justice, has revised the Hart-Scott-Rodino Transmittal Rule and

streamlined the premerger notification form pages from 15 to 10 to reduce the filing

burden on companies seeking merger approval. The changes should reduce the time

required to prepare responses for filings, with an estimated net reduction of 2 hours and

$920 in labor costs per filing.

II.

Scope of Regulatory Review Plan

The FTC’s regulatory review plan covers all of the agency’s existing regulations and

industry guides. The agency administers and enforces 15 “trade regulation rules” authorized by

the FTC Act and 35 rules authorized by other statutes. In addition, the FTC currently publishes

16 industry guides to assist businesses in understanding their compliance obligations. The

guides identify practices that the FTC considers unfair or deceptive under Section 5 of the FTC

Act and help clarify the line between deceptive and legitimate conduct, thereby giving greater

certainty to businesses.

III.

Rules for Retrospective Review

The following table lists the rules and guides that are scheduled for review in the next

two years, as well as rules and guides that are currently under review. The complete list of

reviews scheduled over the next 10 years is available at https://www.ftc.gov/regreview.

16

C.F.R.

PART

TOPIC

YEAR TO

REVIEW

254

Guides for Private Vocational and Distance Education Schools

Under Review

259

Guide Concerning Fuel Economy Advertising for New

Automobiles

Under Review

260

Guides for the Use of Environmental Marketing Claims

Under Review

306

Automotive Fuel Ratings, Certification and Posting Rule

Under Review

308

Trade Regulation Rule Pursuant to the Telephone Disclosure

and Dispute Resolution Act of 1992 [Pay Per Call Rule]

Under Review

309

Labeling Requirements for Alternative Fuels and Alternative

Fueled Vehicles Rule

Under Review

312

Children’s Online Privacy Protection Rule

Under Review

423

Care Labeling of Textile Wearing Apparel and Certain Piece

Goods Rule

Under Review

425

Use of Prenotification Negative Option Plans Rule

Under Review

429

Rule Concerning the Cooling-Off Period for Sales Made at

Homes or at Certain Other Locations

Under Review

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16

C.F.R.

PART

TOPIC

YEAR TO

REVIEW

435

Mail or Telephone Order Merchandise Rule

Under Review

437

Disclosure Requirements and Prohibitions Concerning Business

Opportunities Rule

Under Review

455

Used Motor Vehicle Trade Regulation Rule

Under Review

239

Guides for the Advertising of Warranties and Guarantees

Under Review

300

Rules and Regulations under the Wool Products Labeling Act of

1939

2011

301

Rules and Regulations under Fur Products Labeling Act

2011

303

Rules and Regulations under the Textile Fiber Products

Identification Act

2011

424

Retail Food Store Advertising and Marketing Practices Rule

[Unavailability Rule]

Under Review

700

Interpretations of Magnuson-Moss Warranty Act

Under Review

701

Disclosure of Written Consumer Product Warranty Terms and

Conditions

Under Review

702

Pre-Sale Availability of Written Warranty Terms

Under Review

703

Informal Dispute Settlement Procedures

Under Review

801

[Hart-Scott-Rodino Antitrust Improvements Act] Coverage

Rules

2011

20

Guides for the Rebuilt, Reconditioned and Other Used

Automobile Parts Industry

2012

23

Guides for the Jewelry, Precious Metals, and Pewter Industries

2012

233

Guides Against Deceptive Pricing

2012

238

Guides Against Bait Advertising

2012

251

Guide Concerning Use of the Word “Free” and Similar

Representations

2012

3

TOPIC

16

C.F.R.

PART

IV.

YEAR TO

REVIEW

240

Guides for Advertising Allowances and Other Merchandising

Payments and Services

2012

305

Appliance Labeling Rule

2012

433

Preservation of Consumers’ Claims and Defenses Rule [Holder

in Due Course Rule]

2012

310

Telemarketing Sales Rule

2013

500

Regulations under Section 4 of the Fair Packaging and Labeling

Act

2013

501

Exemptions from Requirements and Prohibitions under Part 500

[of the Fair Packaging and Labeling Act]

2013

502

Regulations under Section 5(c) of the Fair Packaging and

Labeling Act

2013

503

Statements of General Policy or Interpretation [under the Fair

Packaging and Labeling Act]

2013

802

[Hart-Scott-Rodino Antitrust Improvements Act] Exemption

Rules

2013

Public Access, Participation, and Publishing the Plan Outline

The FTC’s comprehensive regulatory review program is designed to foster public input and

participation. Each year, the FTC publishes in the Federal Register a notice informing the public of the

FTC’s intent to seek public comment on the rules and industry guides scheduled for review in the

coming year. This notice also provides information regarding the FTC’s long-term regulatory review

schedule, including whether the review of certain rules or industry guides has been accelerated or

postponed. Then, when initiating regulatory review of individual rules and guides, the FTC publishes

a separate Federal Register notice seeking comment on the efficiency of the rule or guide and the

potential need for revisions.

For the first time, the FTC is seeking public comments on ways it can improve its regulatory

review process to better serve consumers and businesses. The FTC wants to hear from the public

about all aspects of its regulatory review process, including how often it should review rules and

guides and how it can modify its regulatory review program to make it more responsive to the needs

of interested parties. To that end, the FTC published a notice on July 13, 2011, in the Federal

Register seeking public input on its regulatory review plan. The public can comment on the FTC’s

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plan at https://ftcpublic.commentworks.com/ftc/RegulatoryReviewSchedule/. All public comments

will be available on the FTC’s website.

To further increase transparency, public understanding, and participation in its regulatory

review process, the FTC has launched a new web page on ftc.gov that serves as a central

clearinghouse for information regarding the program. The FTC Regulatory Review page provides

the public with: (1) easy access to the FTC’s ten-year schedule of regulatory reviews, (2) links to

comment on rules that are under review, (3) a link for direct feedback on the FTC’s regulatory

review program, (4) a list of rules and guides that have been eliminated over the years,

(5) information about the newly streamlined premerger notification form, and (6) other news and

information regarding the FTC’s regulatory review program.

The FTC’s regulatory proceedings are designed to foster public participation and promote

open exchanges of information among interested parties. Under the requirements of the

Administrative Procedure Act and other relevant statutes, the FTC seeks public comment on

proposed rules and industry guides and provides ample opportunity for public participation in the

regulatory process. The FTC also reaches out to stakeholders through other means to ensure an open

exchange of ideas during rulemakings. For example, the FTC uses workshops and conferences in

its rulemaking and rule amendment proceedings, and in other contexts, to obtain valuable input

from small businesses and other industry members, consumers, federal and state law enforcement

agencies, and other experts and interested parties as well as to gather information regarding the

benefits and costs of its enforcement and regulatory programs. These workshops and conferences

also help to educate industry members about their legal responsibilities and their role in the

regulatory and enforcement processes. The FTC also actively participates in Regulatory

Enforcement Fairness (“RegFair”) programs sponsored by the Small Business Administration that

give small businesses a forum to comment directly on the enforcement and compliance activities of

federal agencies.

In addition, the FTC engages in an extensive program of consumer and business education

and outreach to further the effectiveness of its regulatory programs. For example, the FTC publishes

business compliance guidance, policy statements, and staff advice regarding the rules and laws it

administers, which help small businesses and industry members understand their responsibilities

under the law and are available on the FTC’s website. The FTC staff also responds to informal

business inquiries and meets regularly with industry groups to answer questions and promote

voluntary compliance.

V.

Current agency efforts underway independent of Executive Order 13579

As noted in the executive summary above, in 1992 the FTC adopted a comprehensive

regulatory review program that provides for retrospective review of all its rules and industry guides

over the course of a ten-year cycle. The review schedule is available in Section III above.

In recent years, the FTC has accelerated review of three rules and a guide to account for

changes in the marketplace and to reduce burdens on industry. Specifically, because of recent

increases in the use of environmental marketing claims, in 2009 the FTC accelerated review of its

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Guides for the Use of Environmental Marketing Claims, also known as the Green Guides, 16 C.F.R.

Part 260. In 2010, the FTC accelerated its reviews of the Children’s Online Privacy Protection Rule,

16 C.F.R. Part 312, to address rapid changes in technology and children’s use of online media. The

FTC also accelerated review of the Labeling Requirements for Alternative Fuels and Alternative

Fueled Vehicles (“Alternative Fuels Rule”), 16 C.F.R. Part 309, to address potentially unnecessary

or duplicative labeling requirements and to harmonize FTC rules with the rules of a sister agency.

And most recently, the FTC announced a new Premerger Notification and Report Form, which was

the result of an acceleration in 2010 of the review of the Hart-Scott-Rodino Antitrust Improvements

Act (“HSR”) Transmittal Rule, 16 C.F.R. Part 803, to more rapidly alleviate any unnecessary burden

on merger filers during these difficult economic times.

On July 7, 2011, the FTC announced it was accelerating review of additional rules. First, the

FTC is accelerating its review of portions of the HSR Coverage Rule, 16 C.F.R. Part 801, from 2013

to 2011. Second, the FTC is accelerating review of the Appliance Labeling Rule, 16 C.F.R. Part

305, from 2018 to 2012, to address rapid changes in appliance technology and the increasing cost of

energy. Of the 13 rules and guides originally scheduled to be reviewed in 2011, the FTC is

postponing review of four of them due to resource constraints resulting from the acceleration of

other reviews, and because FTC staff has determined that there is no pressing need for review this

year.

VI.

Elements of Regulatory Review Plan and Components of Retrospective Analysis

A.

Overview of Retrospective Review

The FTC’s robust and long-standing regulatory review program provides for retrospective

review of all its rules and industry guides ten years after implementation of each rule or guide and

ten years after completion of a regulatory review. Experienced, senior agency officials in the FTC’s

Bureau of Consumer Protection manage and oversee this program, which is designed to provide the

FTC with information regarding whether there is a continued need for the rules and guides under

review and whether revisions or modifications could benefit consumers and industry. The

regulatory review program also covers the Hart-Scott-Rodino rules that implement the premerger

review program.

When the FTC reviews a rule or guide, it publishes a notice in the Federal Register seeking

public comment. This notice asks all interested parties to comment on the continuing need for the

regulation or guide as well as its costs and benefits, both to consumers and businesses. Additionally,

the FTC asks whether current or impending technological or economic changes affect the need for,

or require modification of, the regulation or guide and whether the regulation or guide conflicts with

state, local, or other federal law. The FTC also asks specific questions about how the rule or guide

can be improved and for data, studies, or other evidence to support the commenter’s

recommendation. Typically, the FTC receives substantive comments from businesses, trade

associations, consumer and other public interest groups, state law enforcement, individual

consumers, and other interested stakeholders. It also often holds workshops at which interested

parties can provide relevant information and express their views to the FTC staff and respond to the

view of others.

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Using this feedback, the FTC determines whether there is continuing need for the rule or

guide, and, if so, whether it still serves its intended purpose without unduly burdening commerce.

After Commission staff analyze the comments and make a recommendation to the Commission, the

Commission either initiates a proceeding to modify or repeal the regulation or guide in question, or

determines no changes are warranted.

If the FTC determines that a rule should be modified, it issues either an Advance Notice of

Proposed Rulemaking or a Notice of Proposed Rulemaking, in which it summarizes the public

comments, sets forth the proposed modifications, explains the costs and benefits of the proposed

modifications and why they are justified, and seeks additional public comment. At the same time, it

also publishes a burden estimate under the Paperwork Reduction Act and seeks comment on that

estimate. The FTC actively looks for means to reduce burden while preserving the effectiveness of a

rule. For example, as part of its ongoing review of the Business Opportunity Rule, 16 C.F.R. Part

437, the FTC approved issuance of a Staff Report recommending changes designed to significantly

decrease the disclosure burdens on covered sellers of business opportunities, reducing the categories

of information they must provide from 23 to five.

B.

Use of Rigorous Consumer Surveys and Technological Information

The FTC relies upon rigorous consumer surveys and technological information in

formulating its regulatory initiatives and industry guidance. To that end, the FTC conducts

consumer surveys and advertising copy tests in connection with some consumer protection

rulemakings and guidance to evaluate consumer reaction to, and understanding of, marketing claims

and required disclosures. For example, the FTC conducted a study to assess consumer

comprehension of its labeling mandates for appliances and light bulbs under the Appliance Labeling

Rule. The economists in the FTC’s Bureau of Economics have substantial expertise in the use of

survey methodology and assist Bureau of Consumer Protection staff in assessing the impact of

marketing claims on consumers and evaluating the effectiveness of potential disclosure obligations

in preventing deceptive practices.

The FTC also uses industry-leading consumer research firms, like Harris Interactive Inc. and

Synovate, to perform consumer surveys to ensure the effectiveness of its regulatory and industry

guidance programs. For example, the FTC commissioned a study by Harris Interactive Inc. to help

ensure that the FTC, in its ongoing review of the “Green Guides,” can appropriately respond to any

changes in consumers’ perception of environmental marketing claims. The FTC has also used

consumer surveys in its efforts to address important consumer protection issues such as the

prevalence of identity theft and consumer fraud. In addition, the FTC relies on technical information

received from industry, consumers, academics and non-governmental organizations.

Moreover, the FTC works with other expert agencies to ensure its regulatory and industry

guidance programs are based on robust scientific and technical information. For example, the

Appliance Labeling Rule’s disclosure requirements, which help consumers compare similar

appliance models by requiring manufacturers to disclose energy usage information, are derived from

U.S. Department of Energy (“DOE”) test procedures. The Rule also allows manufacturers to place

the U.S. Government ENERGY STAR logo, a joint program of the U.S. Environmental Protection

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Agency (“EPA”) and DOE, on EnergyGuide labels for qualified products to ease burdens on

businesses and provide consumers with additional information to facilitate product comparisons. By

leveraging the expertise of other expert agencies and harmonizing regulatory requirements, the Rule

facilitates consumer choice without imposing conflicting mandates on industry.

C.

Harmonization with other federal agencies

The FTC works with other federal agencies to harmonize rules and avoid duplicative or

conflicting requirements. For example, in connection with its rule concerning the Alternative Fuels

Rule, the FTC recently issued an enforcement policy to “help eliminate consumer confusion and

industry burden caused by inconsistent FTC and [EPA] requirements for cruising range disclosures”

for electric vehicles. Specifically, the FTC announced it would forbear from enforcing current FTC

labeling requirements for electric vehicles (including plug-in hybrid electric vehicles) that are

labeled in accordance with EPA requirements. The FTC is also accelerating review of the

Alternative Fuels Rule to help ensure harmonization of the two agencies’ regulations.

As noted above, the FTC has also worked to harmonize its Appliance Labeling Rule with the

regulatory programs of other federal agencies. The Rule allows manufacturers to provide energy

usage information derived from established DOE test procedures and display the ENERGY STAR

logo, developed jointly by the EPA and DOE, on qualified products. As a result, the Rule helps

ensure that consumer can make informed purchasing decisions, while avoiding duplicative

regulatory requirements and easing compliance burdens on regulated manufacturers.

VII.

Conclusion

Comprehensive regulatory review has long been a key priority for the FTC. In the spirit of

Executive Orders 13563 and 13579, the FTC is pleased to reiterate its continuing commitment to

regulatory reform and introduce new initiatives to help ensure the effectiveness of its regulatory

programs and industry guidance while minimizing burdens for U.S. businesses.

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