Sen. Byron Dorgan (D-N.D.) introduced legislation to reauthorize the Federal Trade Commission that would make significant changes to the FTC’s regulatory authority.  The bill is co-sponsored by Sen. Daniel Inouye, (D-Hawaii), Chairman of the Senate Commerce Committee, which has jurisdiction over the FTC.

The FTC Reauthorization Act of 2008 authorizes a 10 percent increase in the FTC’s appropriations each year over the next seven years; grants the FTC greater civil penalty and independent litigation authority; streamlines the process of creating rules against deceptive practices in the subprime mortgage lending arena; and clarifies that state law with more restrictive requirements for intrastate or interstate telemarketing will not be preempted.  Key provisions include:

• Independent Litigation Authority:  The bill provides the FTC with the authority to litigate any civil action involving the Federal Trade Commission Act (FTC Act).  Under current law, the Commission may litigate certain cases in its own name, but many cases are brought by attorneys at the Department of Justice, often with the assistance of FTC attorneys.
• Civil Penalty Authority:  The bill expands the Commission’s authority to recover civil penalties for any violation of the FTC Act.  Currently, the FTC is limited to recovering civil penalties for violations of a rule or a final cease-and-desist order with respect to an unfair or deceptive act or practice.
• Application of the FTC Act to Nonprofits:  The bill expands the Commission’s authority to regulate nonprofits for unfair or deceptive acts or practices.  Currently, some nonprofits have used their tax-exempt status as a shield to block FTC enforcement action.
• Makes Aiding and Abetting a Violation:  The bill allows the Commission to hold accountable entities that aid or abet another in violating any law enforced by the FTC.
• Streamlines Rulemaking Process:  The bill allows the Commission, by majority vote of the full Commission, to promulgate rules under the Administrative Procedure Act (APA) instead of the lengthy procedure set forth in the Magnuson-Moss Act. This provision would help the Commission to conduct, at a more expedited pace, rulemakings with respect to any consumer protection matter.
• Inclusion of All Banking Agencies Under the FTC Act:  The bill increases the number of federal agencies permitted to promulgate rules regarding unfair or deceptive financial acts or practices under the FTC Act.
• Enforcement of State Attorneys General:  The bill allows state attorneys general (AGs) to bring cases under the FTC Act to seek civil penalties, disgorgement or injunctions against bad actors.  State AGs must provide notice to the FTC regarding their intent to bring suit, and may not bring a case if the FTC has initiated a civil action or an administrative action.
• Common Carrier Exception:  The bill repeals the telecommunications common carrier exemption.  Currently, common carriers subject to the Communications Act of 1934 are exempt from the requirements of the Federal Trade Commission Act.  The legislation repeals this exemption, allowing the Commission to investigate unfair and deceptive acts or practices by telecommunications common carriers, particularly in the areas of advertising, marketing, and billing.

On April 8, 2008, the Senate Commerce Committee held a hearing on the bill.  The only witnesses at that hearing were the Commissioners of the FTC.  The Prepared Statement of the Commission for the hearing displayed obvious enthusiasm with the bill, noting, “[w]e thank you for your proposed legislation, which is designed to ensure that the FTC can effectively confront the challenges of the 21st century.”