FTC Enhances Longstanding Regulatory Review Program to Increase Public Participation and Reduce Burden on Business

The Federal Trade Commission today told Congress it is taking steps to enhance the agency’s longstanding program to review rules and guides, which will promote greater efficiency, transparency, and public participation. The FTC announced several initiatives to ensure its regulations are up-to-date, effective, and not overly burdensome, including: updating its schedule of rule and guide reviews for the next decade; seeking public comments to improve its regulatory review process; launching a new regulatory review web page; and streamlining the form and information that companies must submit when seeking antitrust clearance for proposed mergers or acquisitions.

In testimony to the House Committee on Energy and Commerce Subcommittee on Oversight and Investigations, Chairman Jon Leibowitz and Commissioner William E. Kovacic said that since 1992, the FTC has had a systematic and rigorous process in place to review its rules “to ensure that they enhance consumer welfare without imposing undue burdens on business.” As a result of that program, “the Commission has rescinded 37 rules and guides and updated dozens of others since the early 1990s.”

“The Commission will continue to strive to improve techniques for measuring the effectiveness of all aspects of its operations,” said Commissioner Kovacic.

The FTC is announcing an updated regulatory review schedule for the next 10 years. To address changes in technology and the marketplace, the FTC has accelerated the review of six rules and guides from their previously scheduled dates. The Commission’s robust regulatory review docket includes 13 rules and guides currently under review and 10 additional rule reviews scheduled to start this year. In sum, more than a third of the Commission’s 66 rules and guides will be under review, or will have just been reviewed, by the end of 2011.

For the first time, the FTC is seeking public comments on ways it can improve its regulatory review process to better serve consumers and businesses. The FTC wants to hear from the public about all aspects of its regulatory review process, including how often it should review rules and guides and how it can modify its regulatory review program to make it more responsive to the needs of consumers and businesses.

To increase transparency and foster public participation, the FTC is launching a new web page on FTC.gov dedicated to its regulatory review program. The website contains links for the public to comment on ongoing regulatory reviews and on the FTC’s regulatory review process itself.

The testimony notes that because the FTC is an independent agency, it is not bound by the President’s January 2011 Executive Order directing all executive agencies to institute regulatory reviews. However, the agency fully supports the goals of that Order. “In a rapidly changing marketplace, effective regulations and industry guidance can become outdated, ineffectual, and unduly burdensome. To ensure that the Commission’s regulations and compliance advice remains cost-effective, the FTC has engaged in a systematic review program for the last two decades, scheduling all rules and guides for review on a ten-year cycle.”

The testimony notes that in conjunction with its 20-year-old program for reviewing regulations, the FTC actively looks for ways to reduce the burden of rules while preserving their effectiveness. “For example, as part of its recent review of the Business Opportunity Rule the Commission approved issuance of a Staff Report recommending changes designed to significantly decrease the disclosure burden on covered sellers of business opportunities, reducing the categories of information they must provide from 23 to five.” The Commission also accelerated review of the Alternative Fuels and Alternative Fueled Vehicles Rule, to coordinate with a sister agency and harmonize the agencies’ rules and to ensure that automobile manufacturers need not apply redundant labels to electric cars.

As part of its review, the agency also is streamlining the form that businesses must file to obtain agency clearance for mergers or acquisitions valued at more than $66 million. The congressionally mandated filings allow the FTC or Department of Justice to assure that the merger or acquisition would not violate the antitrust laws. The revised rule “reduces the filing burden on companies seeking to merge and streamlines the premerger notification form from 15 to 10 pages.”

Furthermore, consistent with the goal of reducing unnecessary burdens within and outside the government, Commission staff are in the process of identifying reports required by statute, as well as statutes themselves that appear to be of limited value, but that divert business or Commission resources from more pressing work. The testimony states that the staff has identified two congressionally mandated reports. The first is an annual report on concentration in the ethanol market. “The Commission has found each year that the market is extremely unconcentrated, and that entry is easy and ongoing. Therefore, this report seems to
provide little useful information.” The second report is prepared by the Commission together with the Department of Justice and the Department of Education, and simply describes actions taken to address scholarship scams. “Though stopping scholarship scams is an important priority, the report appears to provide little valuable information.”

The FTC testimony states that its ongoing regulatory review and new initiatives will “help maximize effectiveness for American consumers while minimizing the burden for U.S. businesses.”

The Commission vote to issue the testimony was 5-0.

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