State Legislators Urge U.S. Senate to Scrap Expansion of FTC Regulatory Power

April 30, 2010

WASHINGTON, D.C. – State legislative members of the American Legislative Exchange Council (ALEC) are calling on the U.S. Senate to reject sweeping new regulatory powers for the Federal Trade Commission (FTC). ALEC is opposing removal of existing legal safeguards against FTC overregulation. A letter sent on Thursday by two state legislators expressed ALEC’s views to the U.S. Senate.

“It’s disturbing to see our elected officials in Washington, DC, preparing to vote on yet another thousand-plus page bill that none of them will likely read” said Rep. Bill Hamzy (CT), public sector chair of ALEC’s Telecommunications & Information Technology Task Force. “However, we hope that members of the U.S. Senate will at least realize the consequences of creating even more burdensome regulation. The Senate should preserve existing safeguards on FTC power and resist any amendments to the bill that will give it even more power.” 

As the U.S. Senate considers S.3217, its 1,400 page “financial reform” bill, concerns exist that it will take up amendments to significantly increase the authority of the FTC. Legislation recently passed by the U.S. House of Representatives, H.4173, contains provisions expanding the authority of the FCC to unilaterally declare accepted business practices “unfair,” including longstanding retailer relationships that deliver free services to consumers. 

The current process for FTC rulemaking is limited by the 35 year-old Magnuson-Moss Act. The Act’s procedural safeguards includes enhanced stakeholder participation, detailed evidentiary record requirements for the creation of new FTC rules, and enablement of judicial scrutiny of FTC rulemakings to ensure proper process and evidentiary support. However, provisions contained in S.3217 would undermine those safeguards and expand FTC authority, for instance, to ban broad categories of online advertising. 

“ALEC believes that expanding the power of the FTC to regulate the consumer marketplace will harm consumers and the economy,” said Rep. Ed Emery (MO), also a member of ALEC’s Telecom & IT Task Force. “Now is not the time for increasing FTC regulations that will serve only to tie down the free market.  The FTC already has adequate authority to adopt and enforce regulation, and it is particularly important to limit the powers given to so-called independent commissions that possess both rulemaking and enforcement powers.”

On Friday, April 23, ALEC’s Telecommunications & Information Technology Task Force met in St. Louis, Missouri and passed a Resolution Opposing the Expansion of the Federal Trade Commission's Rulemaking Authority. The Resolution “urges Congress to refrain from granting the Federal Trade Commission streamlined rulemaking authority as it is unnecessary, could harm legitimate and successful business practices and would usurp the state and federal legislative roles.”

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