Alert:Proposed New Federal Trade Commission Powers

To: AAF Members
From: Clark Rector, Executive Vice President-Government Affairs
Re: Proposed New Federal Trade Commission Powers

Congress is on the verge of giving the Federal Trade Commission sweeping new powers making it much easier to enact industry-wide rules limiting advertising.  This would give the agency dramatically increased power over advertising.  It is very important that advertising professionals contact their Senators and urge them not to change the FTC’s rulemaking procedures.

Background

Language buried in the House-passed version of financial regulation reform (H.R. 4173) would repeal safeguards that have governed FTC rulemaking for more than three decades.  Under current law, before enacting industry-wide rules, the commission must
 

  1. hold hearings on the proposed rules,

  2.  prepare a statement of basis and purpose including the economic impact of a rule, and

  3.  identify an actual harm that a proposed rule is designed to address (show prevalence).

The House bill would authorize the FTC to issue rules by simply publishing them in the Federal Register, wait 60 days for comments, and then issue a final rule.  The most serious proposed change would require a court to determine that the FTC was arbitrary or capricious or abused its discretion before the court could overturn a rule, which is an almost impossible standard to meet if challenging a rule. Today courts may send a rule back to the FTC if the rulemaking record lacks substantial evidence to uphold the rule.

The danger is very real.  In December, the FTC and three other agencies (CDC, FDA and USDA) announced new “voluntary” federal guidelines dictating which foods may be advertised to children and youths under 18 years of age. For the first time, the proposal raises the age of who is a child from someone under 12 to somebody under 18 years of age.  The standards are so strict they would virtually ban the advertising of many familiar products including yogurt, vegetable soup, peanut butter and most breakfast cereals. All media would be subject to the ban, including television and radio, newspapers and magazine, outdoor and online.  Because of the age range, the "ban" would extend to advertising that supports more than 1,700 television programs.

While the standards were issued as "voluntary," if the new rulemaking procedures passed, the FTC could very easily and quickly make them mandatory.

The FTC has been down this road before.  In 1978 it proposed the "Kid Vid" rule, which would have banned advertising of many cereals to children in an attempt to reduce dental cavities. After three contentious years – and enormous Congressional backlash – the FTC withdrew the rule. The aftermath of the experience seriously debilitated the agency for two more decades. The proposal recommended by the four federal agencies would be "Kid Vid" on steroids.

It is urgent that you contact your United States Senators.  The Senate Banking Committee passed the financial reform legislation and sent it to the full Senate.  The FTC provisions are being considered in the Commerce Committee.  It is very important that you contact your Senators and tell them that you oppose the new authority given to the FTC in the House financial regulatory reform bill and you oppose adding that authority to the Senate bill.  It is particularly important that you contact your Senator if he or she sits on the Commerce Committee (see list below).  All Senators can be reached through links on the U.S. Senate web page at http://www.senate.gov/.

Thank you for your assistance on this urgent matter.

Senate Commerce Committee
Democratic Members
John D. Rockefeller, IV, West Virginia (Chairman)
Daniel K. Inouye, Hawaii
John F. Kerry, Massachusetts
Byron L. Dorgan, North Dakota
Barbara Boxer, California
Bill Nelson, Florida
Maria Cantwell, Washington
Frank R. Lautenberg, New Jersey
Mark Pryor, Arkansas
Claire McCaskill, Missouri
Amy Klobuchar, Minnesota
Tom Udall, New Mexico
Mark Warner, Virginia  
Mark Begich, Alaska

Republican Members

Kay Bailey Hutchison, Texas (Ranking Minority Member)
Olympia Snowe, Maine
John Ensign, Nevada
Jim DeMint, South Carolina
John Thune, South Dakota
Roger Wicker, Mississippi
George S. LeMieux, Florida
Johnny Isakson, Georgia
David Vitter, Louisiana
Sam Brownback, Kansas
Mike Johanns, Nebraska