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

> Briefs, arguments, decisions, and more.

URL: https://www.frixlaw.com/law-library/documents/agency%3Aftc%3Aacd26f461a2ff32c

## Record

- **Collection:** Agency decision
- **Document type:** Agency decision

## Text

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.

42570

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

42572

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

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/agency%3Aftc%3Aacd26f461a2ff32c. Public record. Not legal advice.