Federal Register / Vol. 60, No. 158 / Wednesday, August 16, 1995 / Notices

Federal Register / Vol. 60, No. 158 / Wednesday, August 16, 1995 / Notices

Federal Reserve System, Washington,

D.C. 20551, not later than September 8,

1995. Any request for a hearing on this

proposal must, as required by § 262.3(e)

of the Board’s Rules of Procedure (12

CFR 262.3(e)), be accompanied by a

statement of the reasons why a written

presentation would not suffice in lieu of

a hearing, identifying specifically any

questions of fact that are in dispute,

summarizing the evidence that would

be presented at a hearing, and indicating

how the party commenting would be

aggrieved by approval of the proposal.

The notice may be inspected at the

offices of the Board of Governors or the

Federal Reserve Bank of Richmond.

Board of Governors of the Federal Reserve

System, August 10, 1995.

William W. Wiles,

Scretary of the Board.

[FR Doc. 95–20232 Filed 8–15–95; 8:45 am]

BILLING CODE 6210–01–F

National Westminster Bank PLC, et al.;

Acquisitions of Companies Engaged in

Permissible Nonbanking Activities

The organizations listed in this notice

have applied under § 225.23(a)(2) or (f)

of the Board’s Regulation Y (12 CFR

225.23(a)(2) or (f)) for the Board’s

approval under section 4(c)(8) of the

Bank Holding Company Act (12 U.S.C.

1843(c)(8)) and § 225.21(a) of Regulation

Y (12 CFR 225.21(a)) to acquire or

control voting securities or assets of a

company engaged in a nonbanking

activity that is listed in § 225.25 of

Regulation Y as closely related to

banking and permissible for bank

holding companies. Unless otherwise

noted, such activities will be conducted

throughout the United States.

Each application is available for

immediate inspection at the Federal

Reserve Bank indicated. Once the

application has been accepted for

processing, it will also be available for

inspection at the offices of the Board of

Governors. Interested persons may

express their views in writing on the

question whether consummation of the

proposal can ‘‘reasonably be expected to

produce benefits to the public, such as

greater convenience, increased

competition, or gains in efficiency, that

outweigh possible adverse effects, such

as undue concentration of resources,

decreased or unfair competition,

conflicts of interests, or unsound

banking practices.’’ Any request for a

hearing on this question must be

accompanied by a statement of the

reasons a written presentation would

not suffice in lieu of a hearing,

identifying specifically any questions of

fact that are in dispute, summarizing the

evidence that would be presented at a

hearing, and indicating how the party

commenting would be aggrieved by

approval of the proposal.

Unless otherwise noted, comments

regarding each of these applications

must be received at the Reserve Bank

indicated for the application or the

offices of the Board of Governors not

later than August 30, 1995.

A. Federal Reserve Bank of New

York (William L. Rutledge, Senior Vice

President) 33 Liberty Street, New York,

New York 10045:

1. National Westminster Bank PLC,

London, England; Natwest Holdings

Inc., New York, New York; and National

Westminster Bancorp Inc., Jersey City,

New Jersey; to acquire Natwest Leasing

Corporation, New York, New York

(Company), and thereby engage in

making, acquiring, or servicing loans or

other extensions of credit for Company’s

own accounts or for the account of

others, such as would be made, acquired

or serviced by a commercial finance

company, pursuant to § 225.25 (b)(1) of

the Board’s Regulation Y; in leasing

personal and real property having a

maximum estimated residual value of

25 percent of the acquisition cost of the

property, and to act as an agent, broker

or adviser in leasing such property,

pursuant to § 225.25(b)(5)(i) of the

Board’s Regulation Y; and in high

residual value leasing of tangible

personal property, and to act as agent,

broker or adviser in leasing such

property, in transactions in which the

lessor would be allowed to rely upon an

estimated residual value in excess of 25

of the acquisition cost of the property,

pursuant to § 225.25(b)(5)(ii) of the

Board’s Regulation Y. These activities

will be conducted worldwide.

B. Federal Reserve Bank of

Philadelphia (Michael E. Collins, Senior

Vice President) 100 North 6th Street,

Philadelphia, Pennsylvania 19105:

1. Keystone Financial, Inc.,

Harrisburg, Pennsylvania; to acquire

Martindale Andres & Company, Inc.,

West Conshohocken, Pennsylvania, and

thereby engage in investment advisory

services, pursuant to § 225.25(b)(4) of

the Board’s Regulation Y.

C. Federal Reserve Bank of Cleveland

(John J. Wixted, Jr., Vice President) 1455

East Sixth Street, Cleveland, Ohio

44101:

1. First Financial Bancorp, Hamilton,

Ohio; to acquire Independent Bankers

Life Insurance Company of Indiana,

Roachdale, Indiana, and thereby engage

in underwriting credit life, accident,

and health insurance, pursuant to §

225.25(b)(8)(i) of the Board’s Regulation

Y. These activities will be conducted

within the State of Indiana.

42569

D. Federal Reserve Bank of Chicago

(James A. Bluemle, Vice President) 230

South LaSalle Street, Chicago, Illinois

60690:

1. Carroll County Bancshares, Inc.,

Carroll, Iowa; to establish a wholly

owned industrial loan company, Carroll

Credit, Inc., Carroll, Iowa, which will

acquire a substantial portion of the

assets of Personal Lenders, Inc., Carroll,

Iowa, and thereby engage in operating

an industrial loan company, pursuant to

§ 225.25(b)(2) of the Board’s Regulation

Y.

Board of Governors of the Federal Reserve

System, August 10, 1995.

William W. Wiles,

Secretary of the Board.

[FR Doc. 95–20234 Filed 8–15–95; 8:45 am]

BILLING CODE 6210–01–F

FEDERAL TRADE COMMISSION

Policy Statement Regarding Duration

of Competition and Consumer

Protection Orders

AGENCY: Federal Trade Commission.

ACTION: Notice of policy statement.

SUMMARY: This notice describes the

Federal Trade Commission’s Policy

Statement regarding the duration of

future and existing administrative cease

and desist orders as well as federal

district court orders in competition and

consumer protection matters. Under this

Policy Statement, the Commission will

ordinarily terminate (‘‘sunset’’) future

competition and consumer protection

administrative orders automatically

after twenty years, unless the

Commission or the Department of

Justice has filed a complaint (with or

without an accompanying consent

decree) in federal court to enforce such

order pursuant to Section 5(1) of the

Federal Trade Commission Act

(‘‘FTCA)’’. This policy will not extend

to federal court orders. The Commission

also intends to terminate each existing

administrative order twenty years after

it was issued, unless the Commission or

the Department of Justice has filed a

complaint (with or without an

accompanying consent decree) in

federal court to enforce such order

pursuant to Section 5(1) of the FTCA

during the twenty years preceding the

adoption of the Policy Statement, or

unless such a complaint is filed after the

adoption of the Policy Statement and

within twenty years after the order’s

issuance. The Commission intends to

implement its new policy with respect

to existing administrative orders

through rulemaking.

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Federal Register / Vol. 60, No. 158 / Wednesday, August 16, 1995 / Notices

In adopting this Policy Statement, the

Commission considered comments filed

in response to the Commission’s ‘‘Policy

Statement With Request for Public

Comment Regarding Duration of

Competition Orders and Request for

Public Comment Regarding Duration of

Consumer Protection Orders,’’

published in the Federal Register on

September 1, 1994. 59 Fed. Reg. 45286.

This new Policy Statement will

supersede the Policy Statement

Regarding Duration of Competition

Orders adopted on July 22, 1994. In

addition, the Commission is publishing

and seeking comment on a Notice of

Proposed Rulemaking to implement its

policy with respect to existing

administrative orders. The Commission

is also soliciting comment regarding this

Policy Statement.

DATES: Comments must be received on

or before September 15, 1995.

ADDRESSES: Written comments should

be directed to: FTC/Office of the

Secretary, Room 159, 6th St. & Pa. Ave.

N.W., Washington, D.C. 20580.

FOR FURTHER INFORMATION CONTACT:

Donald S. Clark, Secretary, Federal

Trade Commission, (202) 326–2514;

Roberta Baruch, Deputy Assistant

Director for Compliance, Bureau of

Competition, (202) 326–2861; or Justin

Dingfelder, Assistant Director for

Enforcement, Bureau of Consumer

Protection, (202) 326–3017.

SUPPLEMENTARY INFORMATION: The

Commission adopted its existing policy

regarding the duration of competition

orders on July 22, 1994. Under that

policy, the Commission presumes that

core provisions in future competition

administrative orders and federal court

orders should ordinarily terminate

automatically after twenty years.1 The

Commission also presumes that all

supplemental provisions in future

competition orders should sunset after

no more than ten years.2 In addition, in

the context of petitions to reopen and

vacate existing competition

administrative orders, the Commission

applies a rebuttable presumption that

the public interest warrants terminating

orders that have been in force for more

than twenty years. The notice

announcing this policy also requested

1 Core provisions prohibit practices that would be

unlawful whether used by parties subject to the

order at issue or by other similarly situated persons

or entities.

2 Supplemental provisions are intended to

prevent a respondent or defendant from repeating

a law violation or to mitigate the effects of prior

illegal conduct. Such provisions either prohibit or

restrict conduct that would be lawful if engaged in

by parties not subject to the order at issue or impose

an affirmative obligation not otherwise required by

law.

public comment on whether consumer

protection orders also should be

sunsetted.

The Commission received 23

comments in response to its invitation.

The commenters expressed nearly

unanimous support for the

Commission’s current policy of

terminating competition orders.

However, most of the commenters

recommended that the Commission

amend the policy statement by

shortening the sunset period for new

competition orders and by terminating

existing orders automatically rather than

applying a presumption in favor of

termination in response to petitions to

reopen.

Of the 23 commenters, 19 supported

adopting a sunset policy for both future

and existing consumer protection

orders, three opposed it, and one did

not address the issue. The three

commenters opposing sunsetting

consumer protection orders were the

FTC-Working Group of the National

Association of Attorneys General

(‘‘NAAG’’), the American Association of

Retired Persons (‘‘AARP’’), and the

Center for Science in the Public Interest

(‘‘CSPI’’).

The three commenters who opposed

sunsetting consumer protection orders

argued that such action is unnecessary

because consumer protection orders

merely require respondents to refrain

from unfair or deceptive behavior that is

unlawful under any circumstances,

without respect to changes in market,

organizational, or other conditions.

AARP asserted that the absence of

Commission action in a particular area

does not necessarily indicate that the

practices proscribed by earlier orders in

that area have ceased to be illegal. CSPI

asserted that the reopening process

serves as an effective procedure for

relief for companies and individuals

that find themselves subject to outdated

orders. The FTC–NAAG Working Group

suggested that the requirements of

complying with Commission orders

might have the potential to reduce

company costs by heightening the

sensitivity of company personnel to

consumer protection law issues, thus

reducing the likelihood of having to

defend against allegations regarding

future violations.

The commenters who favored

sunsetting consumer protection orders

advanced considerations that are

essentially the same as those that the

Commission considered in deciding to

sunset competition orders. In their view,

changes in legal and market

circumstances over time reduce the

need to maintain orders to deter

recidivism, and make continued

existence of these orders burdensome

and anti-competitive. Several

commenters asserted that the

enforcement options available to the

Commission for deterring violations of

law have expanded significantly over

the years, making it unnecessary to rely

on perpetual order restrictions. Finally,

some commenters recommended

automatically terminating consumer

protection orders after ten years, while

others recommended automatically

terminating them after twenty years and

applying a presumption for terminating

these orders after ten years in response

to a petition to reopen.

On the basis of the comments

received and other considerations, the

Commission has concluded that the

existing policy regarding the duration of

competition orders should be revised in

three key respects. First, the new Policy

Statement explicitly sets forth a

circumstance in which future

competition orders would endure more

than twenty years. Whereas the existing

policy states that core provisions in

future orders ‘‘ordinarily’’ will sunset in

twenty years, the new Policy Statement

provides that core provision in future

competition administrative orders will

ordinarily sunset in twenty years, unless

either the Commission or the

Department of Justice has filed a

complaint (with or without an

accompanying consent decree) in

federal court to enforce such order

pursuant to Section 5(1) of the FTCA.3

Second, the new Policy Statement sets

forth the Commission’s intention to

dispense with the petitioning process to

sunset existing competition orders and

instead sunset such orders through

rulemaking. The rule, proposed

elsewhere in the Federal Register,

would automatically sunset each

existing administrative order twenty

years after it was issued, unless the

Commission or the Department of

Justice has filed a compliant (with or

without an accompanying consent

decree) in federal court to enforce such

order pursuant to Section 5(1) of the

FTCA during the twenty years

preceding the adoption of the Policy

Statement, or unless such a compliant is

filed after the adoption of the Policy

Statement and within twenty years after

the order’s issuance. Third, the new

Policy Statement will not apply to

Federal court orders.

The Commission’s present policy

regarding the duration of consumer

3 The filing of such a complaint will not affect the

duration of the order if the complaint is dismissed

or the court rules that the respondent did not

violate any provision of the order and the dismissal

or ruling is either upheld on appeal or not

appealed.

Federal Register / Vol. 60, No. 158 / Wednesday, August 16, 1995 / Notices

protection administrative orders and

federal court orders is that core

provisions and some type of

supplemental provisions continue in

effect indefinitely and that certain other

types of supplemental provisions

terminate after a specified period of

time, usually five or ten years. On the

basis of comments received and other

considerations, the Commission has

concluded that consumer protection

administration orders, like competition

administration orders, ordinarily fulfill

their remedial purposes within twenty

years. Accordingly, the Commission

will presume that core provisions and

supplemental provisions that would

otherwise be perpetual in future

consumer protection administrative

orders should terminate (or ‘‘sunset’’)

automatically within twenty years after

the order’s issuance, unless either the

Commission or the Department of

Justice has filed a compliant (with or

without an accompanying consent

decree) in federal court to enforce such

order pursuant to Section 5(1) of the

FTCA. This will not affect the current

practice of terminating certain

supplemental provisions earlier than

twenty years (e.g., provisions requiring

distribution of the order). The

Commission intends to implement its

new policy with respect to existing

orders through rulemaking. The

Commission’s new policy with respect

to future administrative orders will be

effective immediately.

However, the Commission has

determined that it will not extend the

policy of sunsetting consumer

protection orders to federal court orders

at this time. As discussed in the Policy

Statement, many consumer protection

federal court orders (e.g., fraud orders

entered under section 13(B) of the

FTCA) pose significantly different

considerations than either competition

or consumer protection administrative

orders. In addition, the Commission has

significantly less experience on which

to conclude that such orders serve their

purpose after twenty years. For

example, most section 13(b) fraud

orders first originated in the 1980s.

Statement of Policy with Respect to

Duration of Competition and Consumer

Protection Orders

This statement describes the policies

that the Commission has adopted with

respect to the duration of competition

and consumer protection administrative

orders and federal court orders. This

new Policy Statement supersedes the

Policy Statement Regarding Duration of

Competition Orders adopted on July 22,

1994.

Competition Administrative Orders

The injunctive provisions in

competition administrative orders may

proscribe future violations of statutory

prohibitions—and secure adherence to

statutory requirements—including the

prohibition of unfair methods of

competition embodied in section 5 of

the FTCA, 15 U.S.C. 45, and the

prohibitions and requirements

embodied in sections 2, 3, 7, 7A, and 8

of the Clayton Act, 15 U.S.C. 13, 14, 18,

18a, and 19.4

As a matter of law, the remedial

provisions of Commission orders must

bear a reasonable relationship to the

unlawful practices found to exist, and

must be sufficiently clear and precise to

be easily understood by the respondents

or defendants.5 Particular order

provisions may prohibit both the

specific illegal practices alleged in the

associated complaint and ‘‘like and

related’’ practices.6

Where such a provision has been

included in an order, the Commission

may prevail in a subsequent

enforcement proceeding simply by

establishing that the respondent or

defendant did not comply with the

terms of the provision, without having

to also establish that the conduct

prohibited by the provision is illegal, or

that the conduct required is reasonably

related to the prevention of illegal

practices.

Future Orders

The Commission announced its

current policy of sunsetting competition

4 Competition administrative orders may include

types of relief that are not addressed in this

statement because they have no further effect once

the actions they require have been taken. For

example, some orders require divestitures, revisions

to bylaws, or publication of the administrative

compliant and order.

5 See, e.g., FTC v. Colgate-Palmolive Co., 380 U.S.

374, 392–95 (1965); FTC v. National Lead Co., 352

U.S. 419, 428–30 (1957); FTC v. Ruberoid Co., 343

U.S. 470, 473 (1952); FTC v. Cement Inst., 333 U.S.

683, 726 (1948); Jacob Siegel Co. v. FTC, 327 U.S.

608, 611–13 (1946).

6 See FTC v. Mandel Bros., Inc., 359 U.S. 385, 393

(1959); Consumers Products of America, Inc. v.

FTC, 400 F.2d 930 (3d Cir. 1968), cert. denied, 393

U.S. 1088 (1969); Nirsk Indus. v. FTC., 278 F.2d

337, 343 (7th Cir.), cert denied, 364 U.S. 883 (1960).

For example, in FTC v. Colgate-Palmolive Co., 380

U.S. 374, 395 (1965), the Supreme Court reviewed

a Commission order that prohibited a particular

advertising practice not only for the product at

issue in the case, but also for any other product.

The Court sustained the scope of the order

provision, stating that

[t]he Commission is not limited to prohibiting the

illegal practice in the precise form in which it is

found to have existed in the past. Having been

caught violating the Act, respondents ‘must expect

some fencing in.’

Id. at 395, quoting FTC v. National Lead Co., 352

U.S. at 431, and FTC v. Ruberoid Co., 343 U.S. at

473.

42571

orders on September 1, 1994. 59 Fed.

Reg. 45,286 (1994). Under that policy,

core provisions of future competition

orders are ordinarly sunsetted at twenty

years, and supplemental provisions are

sunsetted at up to 10 years.

After reviewing the comments and

considering other available information,

the Commission continues to believe

that core provisions of competition

administrative orders should ordinarily

sunset after twenty years and that

supplemental provisions should sunset

after up to ten years.7 None of the

comments supplied information that the

Commission had not already considered

in choosing ordinarily to sunset core

provisions in competition orders after

twenty years and supplemental

provisions after up to ten years.

Therefore, the Commission is not

changing the sunset periods for core or

supplemental provisions in future

competition orders.

However, the Commission has

determined that the duration of future

orders should be extended in instances

where a complaint has been filed in

federal court pursuant to section 5(1) of

the FTCA, 15 U.S.C. 45(1), while the

order remains in force, alleging a

violation of such order. The twenty year

sunset period will start anew on the

date of the complaint is filed in federal

court. However, the filing of such a

complaint will not affect the duration of

any supplemental order provision that

terminates before twenty years. In

addition, the filing of such a complaint

will not affect the duration of the order’s

application to any respondent that is not

named as a defendant in such

complaint.8 Furthermore, the filing of

7 Only in an exceptional case will the

Commission adopt a sunset period longer or shorter

than twenty years for core provisions. The

Commission does not intend to change, in general,

the expirtation periods of particular types of

supplemental provisions that, as a matter of policy,

have been set to expire by their own terms after

periods of up to ten years.

8 To implement this policy, new Commission

administrative orders will include a provision

similar to the following:

This order will terminate twenty years from the

date of its issuance, or twenty years from the most

recent date that the United States or the Federal

Trade Commission files a complaint (with or

without an accompaning consent decree) in federal

court alleging any violation of the order, whichever

comes later; provided, however, that the filing of

such a complaint will not affect the duration of:

A. Any paragraph in this order that terminates in

less than twenty years;

B. This order’s application to any respondent that

is not named as a defendant in such complaint; and

C. This order if such complaint is filed after the

order has terminated pursuant to this paragraph.

Provided further, that if such complaint is

dismissed or a federal court rules that the

respondent did not violate any provision of the

order, and the dismissal or ruling is either not

Continued

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Federal Register / Vol. 60, No. 158 / Wednesday, August 16, 1995 / Notices

such complaint will not affect the

duration of the order if the complaint is

dismissed or if a court rules that the

defendant did not violate any provision

of the order, and the dismissal or ruling

is either not appealed or upheld on

appeal.

The filing of a complaint (with or

without an accompanying consent

decree) under section 5(1) of the FTCA

indicates that the Commission had

reason to believe the order was violated.

This finding undermines the ordinary

presumption that there is no need for

further order coverage with respect to

that respondent beyond twenty years.9

Existing Orders

Under existing policy, respondents

under competition administrative orders

twenty years old may have their orders

sunsetted through the order

modification process, absent recidivist

conduct or extraordinary

circumstances.10 Many commenters

recommended that the Commission

modify its policy with respect to the

duration of existing administrative

orders that have remained in force for

twenty or more years. They

recommended that the Commission

appealed or upheld on appeal, then the order will

terminate according to this paragraph as though the

complaint was never filed, except that the order

will not terminate between the date such complaint

is filed and the later of the deadline for appealing

such dismissal or ruling and the date such

dismissal or ruling is upheld on appeal.

A five year statute of limitations applies to civil

penalty actions filed in federal court pursuant to

section 5(1) of the FTCA. See 28 U.S.C. 2462.

Therefore, it is conceivable that the government

could file a complaint up to five years after an order

has terminated challenging violations that occurred

while the order was in force. Under the Policy

Statement, the filing of a complaint after the order

has terminated will not affect the duration of the

order.

9 The Commission retains the discretion to

change the duration of an order pursuant to 16 CFR

2.51 or 3.72. Unless an order modification expressly

changes the duration of an order, such modification

will not affect the duration of the order as

determined by this Policy Statement. Nothing in

this Policy Statement will affect the Commission’s

standards for reopening and modifying or vacating

orders pursuant to 15 U.S.C. 45(b) or 16 CFR 2.51.

10 The Commission states as follows in its 1994

Policy Statement regarding the duration of

competition orders:

If, however, public comments, the Commission’s

experience enforcing the order, an ongoing antitrust

investigation of the petitioner or the industry in

which the petitioner competes at the Commission

or the Department of Justice, or other readily

available information raised substantial concerns

about whether the public interest warrants retaining

the order, such further review will be conducted as

necessary to determine whether the public interest

is best served by setting aside the order, modifying

it, or retaining it as written. The Commission

anticipates that, absent extraordinary

circumstances, the basis for rebutting the

presumption will be information that the petitioner

has engaged in recidivist conduct.

Id. at 45,286–87 (emphasis added).

terminate such orders automatically

without engaging in a case-by-case

review of each order through the

petitioning process.

The Commission has concluded that

these recommendations have merit. The

new Policy defines in bright-line

fashion the principal circumstances in

which extended order coverage is

required (the filing of an order

enforcement action). The cost of the

Commission retraining added discretion

as to whether it should retain older

orders, thereby requiring a case-by-case

analysis with respect to each petition,

likely exceeds the benefits of retaining

older orders in extraordinary

circumstances. By adopting a policy that

does not require the Commission to

exercise discretion with respect to

individual orders, the Commission will

conserve scarce resources and ensure

equitable treatment of similarly situated

respondents now subject to

administrative orders.

The new Policy Statement sets forth

the Commission’s intention to dispense

with the petitioning process to sunset

existing competition orders and instead

sunset such orders through rulemaking.

The proposed rule, published elsewhere

in the Federal Register, would

automatically sunset each existing

administrative order twenty years after

it was issued, unless the Commission or

the Department of Justice has filed a

complaint (with or without an

accompanying consent decree) in

federal court to enforce such order

pursuant to Section 5(1) of the FTCA

during the twenty years preceding the

adoption of the Policy Statement, or

unless such a complaint is filed after the

adoption of the Policy Statement and

within twenty years after the order’s

issuance. Under the proposed rule,

existing orders that do not terminate

twenty years after they are issued due to

the filing of a section 5(1) complaint

would terminate twenty years after the

filing of the most recent complaint to

enforce the order. However, the filing of

such a complaint would not affect the

order’s duration unless the order is in

force on the date the complaint is

filed.11 In addition, the filing of such a

complaint will not affect the duration of

the order’s application to any

respondent that is not named as a

defendant in the complaint. The filing

of such a complaint will only extent the

duration of those order provisions not

set to expire by their own terms. For

example, a reporting requirement in an

existing order that terminates ten years

11 As discussed in fn. 8, supra, a five year statute

of limitations applies to civil penalty actions filed

under section 5(1) of the FTCA.

after the order’s issuance will not be

extended by the filing of such a

complaint, even if the section 5(1)

complaint is filed within that first ten

years after the order’s issuance. In

addition, the filing of such a complaint

will not affect the duration of the order

if the complaint is dismissed or the

court rules that the respondent did not

violate any provision of the order, and

the dismissal or ruling is either not

appealed or upheld on appeal.

The Commission intends to

implement this policy with respect to

existing administrative orders through

rulemaking rather than through

adjudication.12 The proposed

rulemaking contemplates that

respondents will receive notice through

the rulemaking process and will not

receive individual notice that their

orders have been terminated. Until this

rulemaking is completed, the

Commission will leave in place its

current policy regarding the duration of

existing competition administrative

orders.

Consumer protection administrative

orders

Like competition orders, consumer

protection orders perform several

functions. First, they may proscribe

future violations of statutory

prohibitions—and secure adherence to

statutory requirements—including the

prohibition of unfair and deceptive acts

or practices embodied in Section 5 of

the FTCA, and the prohibitions and

requirements embodied in other statutes

intended to protect consumers, such as

the Fair Credit Reporting Act, 15 U.S.C.

1681, the Truth-in-Lending Act, 15

12 The Commission has the discretion to regulate

parties through issuance of a rule of general

applicability as opposed to adjudication of

individual cases. SEC v. Chenery Corp., 332 U.S.

194 (1947); Heckler v. Ringer, 446 U.S. 602, 617,

(1984); Nat’l Small Shipments Traffic Conf., Inc. v.

ICC, 725 F. 2d 1442, 1447 (D.C. Cir. 1984). This is

so even if the rule may effectively limit or terminate

rights or obligations in a specific case. United States

v. Storer Broadcasting Co., 351 U.S. 192, 205 (1956).

An agency may properly rely upon rulemaking to

resolve certain classes of issues that the agency

might otherwise adjudicate on an individual basis.

Heckler v. Campbell, 461 U.S. 458, 467 (1982). As

the court explained:

[E]ven where an agency’s enabling statute

expressly requires it to hold a hearing, the agency

may rely on its rulemaking authority to determine

issues that do not require case-by-case

consideration. * * * A contrary holding would

require the agency continually to relitigate in a

single rulemaking proceeding.

Id. Under the Policy Statement, the Commission

does not propose to exercise any discretion

regarding the termination of existing orders. To

apply the proposed criteria for terminating existing

orders to any particular order, one need only

ascertain a few facts, all of which are easily

ascertained and present no issues of fact requiring

case-by-case examination.

Federal Register / Vol. 60, No. 158 / Wednesday, August 16, 1995 / Notices

U.S.C. 1601–1667, and the Wool

Products Labeling Act, 15 U.S.C. 68.

Second, orders may require those

subject to them to keep records,

distribute the order, or file reports with

the Commission to facilitate

Commission efforts to monitor or

enforce compliance with the order.

Under the Commission’s existing

practice, Commission order provisions

that prohibit or require particular types

of conduct to prevent ‘‘unfair or

deceptive acts or practices’’ have

different durations depending on their

type. Core provisions prohibit practices

that would be unlawful whether

engaged in by parties subject to the

order at issue or by other similarly

situated persons or entities. Under

current policy, core provisions in

consumer protection orders typically

continue in force indefinitely, and a

respondent bears the burden of

establishing (in the context of a petition

to reopen) that such a provision should

be modified or set aside.

All other provisions in consumer

protection orders may be categorized as

supplemental provisions,13 which are

intended to prevent a respondent or

defendant from repeating a law

violation or to mitigate the effects of

prior illegal conduct. Under existing

policy, some supplemental provisions

in consumer protection orders terminate

automatically after different prescribed

periods. For example, some advertising

disclosure, order distribution, and

reporting requirements expire in five or

ten years.

Future Orders

The Commission has concluded that

there also is reason to sunset consumer

protection orders. As commenters

noted, many older orders contain

supplemental relief that could become

over-regulatory over time or impose

requirements that the Commission

would not adopt under current practice.

There also are costs to perpetual core

provisions in consumer protection

orders. Basic prohibitions against

misrepresenting or failing to have

substantiation still require

interpretation and may induce some

companies to be more cautious than

their competitions within the range of

permissible advertising practices. Over

time, changes in management or

13 The Commission may also impose or seek types

of relief in administrative orders that are not

addressed in this statement because they have no

further effect once the actions they require have

been taken. For example, some orders require the

payment of redress to consumers, the payment of

disgorgement to the United States Treasury, or the

dissemination of corrective advertising for a limited

time.

corporate culture may no longer warrant

this extra caution and result in

competitive imbalances.14

At the same time, it can be argued that

consumer protection orders should

remain in effect for a longer period than

competition orders. A principal

rationale for sunsetting competition

orders was that even the core relief in

such orders may become outdated or

inhibit pro-competitive conduct if, due

to changes in market conditions, the

prohibited conduct no longer

unreasonably restrains competition.15 A

number of commenters noted that

consumer protection orders, by contrast,

contain core prohibitions that remain

valid regardless of marketing conditions

(e.g., ‘‘cease misrepresenting’’).16

Although supplemental relief in

consumer protection orders may share

some attributes of supplemental relief in

competition order,17 it often does not

share the added problem of the related

core relief becoming invalid due to

changed market conditions.

Thus, the Commission reasonably also

could have decided that the core and

supplemental relief in consumer

protection orders should remain in

effect longer than that in competition

orders (e.g., thirty years for core and

twenty years for supplemental).

However, the distinctions between

supplemental and core provisions in

consumer protection orders are not

always clearly delineated, suggesting

the need for a uniform sunset period.

For example, a provision may bar a

deceptive claim as deceptive, unless the

claim is followed by a disclosure. It

could be argued that such ‘‘triggering’’

provisions have both a core relief

component to them (barring a claim as

deceptive) and a supplemental relief

aspect to them (requiring a disclosure if

the claim is made). There may be

disagreements over whether to

characterize such disclosures as

supplemental or core relief if the policy

were to distinguish between the two,

leading to anomalous results.

This resulting ambiguity regarding the

characterization of particular provisions

14 Although it is true, as some comments point

out, that respondents subject to orders containing

over-regulatory provisions can petition the

Commission to reopen and vacate such orders, the

filing of petitions entails costs for both respondents

and the Commission.

15 This is not true of those competition orders

based on per se violations, such as price-fixing.

However, a much larger proportion of consumer

protection orders are based on core concepts that

remain valid despite changes in market conditions.

16 See comments of NAAG, AARP, and CSPI.

17 Supplemental relief in consumer protection

orders tends to be more detailed in its prohibitions

than core relief, and thus more potentially

burdensome. However, that is equally true of

supplemental relief in competition orders.

42573

in consumer protection orders could

undermine the clarity of Commission

orders, raising respondents’ cost of

compliance and negotiating settlements

and Commission costs in ensuring the

enforceability of its orders. By contrast,

as a general matter, competition orders

differentiate between core and fencingin and supplemental relief.

Consequently, the Commission has

determined that it is appropriate to

differentiate between consumer

protection and competition orders in

this respect by ordinarily sunsetting

both core and supplemental relief in

consumer protection administrative

orders after twenty years.18

Existing Orders

The Commission has determined that

the new policy for terminating existing

competition administrative orders

described above will also apply to

consumer protection administrative

orders.19

Competition and Consumer Protection

Federal Court Orders

This new policy shall not apply to

either competition or consumer

protection federal court orders. The

Commission has determined not to do

so for several reasons. Many consumer

protection federal court orders obtained

since the early 1980s pursuant to

Section 13(b) of the FTCA address

particularly egregious conduct such as

hard core fraud. Given that none of

these orders have been in force for

twenty years, the Commission lacks

sufficient information to determine

whether their remedial purposes will be

served within twenty years.20 Therefore,

the Commission has determined, at least

of now, not to sunset the core provisions

18 Only in an exceptional case will the

Commission adopt a sunset period longer or shorter

than twenty years for core provisions The

Commission does not intend to change, in general,

the expiration periods of particular types of

supplemental provisions that, as a matter of policy,

have been set to expire by their own terms after

periods of up to ten years such as: (1)

Administrative boilerplate (e.g., recordkeeping,

order distribution, and reporting requirements); and

(2) some types of disclosure requirements (e.g.,

informercial disclosures that sunset after ten years;

See TV Inc., Docket No. C–3296 (1990)).

19 The termination under the policy Statement of

an order issued in connection with a determination

by the Commission that the respondent had

engaged in an unfair or deceptive practice would

not affect the ability of the Commission to recover

a civil penalty based on that determination

pursuant to Section 5(m)(1)(B) of the FTCA, 15

U.S.C. 45(n)(1)(B).

20 The Commission notes that it does not have the

power to unilaterally sunset federal court orders.

Every federal court order must be entered by federal

court to become effective. In order to sunset an

existing federal court order, one or more parties

thereto would have to file a motion with the court

seeking termination of the order.

42574

Federal Register / Vol. 60, No. 158 / Wednesday, August 16, 1995 / Notices

and some supplemental provisions in

these orders.

In addition, many consumer

protection federal court orders simply

prohibit violations of Commission trade

regulation rules (e.g., Disclosure

Requirements and Prohibitions

Concerning Franchising and Business

Opportunity Ventures, 16 CFR 436) or

statutes otehr than the FTCA enforced

by the Commission (e.g., Equal Credit

Opportunity Act, 15 U.S.C. 1691). The

core provisions in such orders are

presumptively valid beyond twenty

years in that they require adherence to

regulations and statutes that are already

binding on the defendants as well as

their competitors. Moreover, many of

these order do not contain supplemental

provisions other than those that, as a

matter of Commission policy, normally

terminate after up to ten years.

Therefore, there is no compelling reason

to sunset such orders.

Finally, most competition and some

consumer protection federal court

orders simply prohibit violations of

Commission administrative orders.

These federal court orders will cease to

have any effect once the underlying

administrative orders are terminated

pursuant to this Policy Statement.

Therefore, there is no compelling reason

to sunset these federal court orders.

By direction of the Commission.

Issued: August 7, 1995

Donald S. Clark,

Secretary.

Concurring Statement of Commissioner

Mary L. Azcuenaga Concerning Revised

Statement of Policy On Duration of

Commission Orders

August 1995.

The Commission today has approved a

revised statement issued in July, 1994, that

applied only perspectively and did not apply

to consumer protection orders. In 1994, when

the Commission issued its statement, I wrote

separately to say that the Commission should

apply a sunset policy to all its administrative

orders, both consumer protection and

competition orders and existing and future

orders. I also expressed the view that the

Commission need not issue individual orders

modifying or vacating existing orders but

easily could accomplish the same goal

through publication of an appropriate notice

in the Federla Register. I am gratified that

today’s statement is fully consistent with

myv laws of a year ago and now, I am pleased

to join the Commission in its current

decision.

[FR Doc. 95–20144 Filed 8–15–95; 8:45 am]

BILLING CODE 6750–01–M

DEPARTMENT OF HEALTH AND

HUMAN SERVICES

Administration for Children and

Families

Aid to Families With Dependent

Children Program: Demonstration

Projects Under Section 1115(a) of the

Social Security Act

AGENCIES: Office of the Secretary;

Administration for Children and

Families (ACF), HHS.

ACTION: Public Notice.

SUMMARY: This public notice invites

States to submit demonstration project

applications under section 1115(a) of

the Social Security Act to test welfare

reform strategies in various areas. It

further advises that the Department

would commit to approving

applications that comply with the

demonstration components within 30

days of receipt.

FOR FURTHER INFORMATION CONTACT:

Howard Rolston, Administration for

Children and Families, Department of

Health and Human Services, 370

L’Enfant Promenade, 7th Floor, West

Wing, Washington, DC 20447, (202)

401–9220.

SUPPLEMENTARY INFORMATION:

I. General

Under Section 1115, the Department

of Health and Human Services (HHS) is

given latitude, subject to the

requirements of the Social Security Act,

to consider and approve demonstration

proposals that are likely to assist in

promoting the objectives of titles IV–A

and B and XIX of the Act. The

Department believes that State

experimentation provides valuable

knowledge that will help lead to

improvements in achieving the

purposes of the Act. Since January 1993,

HHS has approved 33 welfare reform

demonstration projects testing a broad

range of strategies designed to promote

the objectives of title IV.

The Department has reviewed the

provisions of these projects, as well as

those of prior projects, data from

completed and continuing projects,

other literature evaluating the welfare

system, and the welfare reform

proposals being considered by Congress.

Based on this review, and our

commitment to transform the Aid to

Families With Dependent Children

system into one that provides maximum

opportunities and incentives for

families to achieve financial

independence, we have identified five

strategies for improving the efficacy of

the welfare system in helping recipients

become self-sufficient for which we

believe additional experimentation

would be especially useful. We have

concluded that demonstrations testing

these strategies are likely to provide

important new information on ways to

accomplish the objectives of the Social

Security Act more effectively and

efficiently. This information can guide

the development of both national and

state policy.

These strategies are: (1) Work

requirements, including limited

exemptions from such requirements; (2)

time-limited assistance for those who

can work; (3) improving payment of

child support by requiring work for

those owing support; (4) requirements

for minor mothers to live at home and

stay in school; and (5) public-private

partnerships under which AFDC grants

are diverted to private employers to

develop jobs and training programs.

These areas, and approvable

demonstration project provisions, are

discussed in detail in section II below.

To date, the Department has approved

a number of demonstration projects

including components using one or

more of these strategies. We have

reviewed comments submitted

regarding each of these strategies. Our

overall judgment is that testing

additional demonstrations in each of

these areas would likely promote

financial security for dependent

children within a stable family and,

thus, further the objectives of the Social

Security Act. (Specific rationales

justifying demonstrations in each policy

area are set out in section II.) Moreover,

in view of every state’s unique

circumstances, the Department believes

that it is critically important that each

state be given the opportunity to test

combination(s) of these strategies that

are designed to address the needs of the

recipients in that state.

Accordingly, we plan to approve

within 30 days of receipt demonstration

project applications that States submit

which would implement, on a statewide

or substate basis, any (or any

combination) of the provisions

discussed in section II. Further, because

such projects may incorporate only the

provisions already announced in this

notice, which have been found by the

Secretary to further the objectives of the

Social Security Act, the Department will

not apply its ‘‘Federal Notice’’

procedures generally applicable to

demonstration projects. 59 Fed. Reg.

49250 (1994). Other policies and

procedures stated in that notice remain

applicable, including state public notice

requirements, rigorous evaluation, and

cost neutrality, except that the

application and review process with