M M ' % V CONGRE ONAL‘ EAR RRRRRRRR OF consumzn AFFAIRS: an ovmzvxm 0? mason ISSUES (ARCHIVED--O5/15/80) ISSUE BRIEF NUHER IB79026 ‘AUTHOR: unlock, Bruce K. Economics Division Keeffe, Mary Ann Econ on ics Division THE LIBRARY OF CONGRESS CONGRESSIONAL RESEARCH SERVICE MAJOR ISSUES SYSTEH DATE ORIGINATED ggggggzg DATE UPDATED Qgggzggg FOR ADDITIONAL INFORMATION CALL 287-5700 0515 CRS- 1 13790 26 UPDATE-O 3/17/30 l§§QE-Q§El!l$lQ_ This issue brief presents an overview of current consumer affairs and briefly discusses some of the major legislative proposals to which consumer organizations and advocates are devoting their energies during. the 96th Congress. The issues discussed include the following: Antitrust: the ;;ligQ;§_ §;;gg case (consumers' right to sue); Class Action Suits; Communications Act Reform; Congressional veto; Federal Consumer Affairs Offices; Federal Trade Commission authority; Dispute Resolution Act; Kidvid: Children's Television Advertising and Programming; No-Fault Motor Vehicle Insurance; Privacy; Public Participation. and Attorney's Fees; Trucking Deregulation; and Truth—in— Lending Simplification. Where applicable, reference is made to available Congressional Research Service reports and issue briefs. i §A§§§EQQE2-AE2_2QLlQX-A!ALZ§-§ As the second session of the 96th Congress gets into full swing, it would seem that few things could better exemplify the recent transformation in consumer oriented legislative activity at the Federal level than the Federal Trade Commissic authorization bill passed by the Senate on Feb. 7th. Among other things, the hill (5. 1991) would kill the FTC's on-going rulemaking >roceeding concerned with television advertising directed toward children; it would limit the agency's authority to require mandatory warranties in connection with the sale of used cars; it would prohibit the Commission from investigating the insurance industry; it would provide for the recovery of attorneys‘ fees by small businesses in cases where they prevail against the FTC; and it would cut back on the amount of money available for funding outside groups in rulemaking. Nevertheless, the prospects were so great that the agency's powers would be even more severly cut and that additional investigations would be stopped dead in their tracks that Congress Watch hailed as a major consumer victory the Senate's rejection of a one-house veto provision and FTC Chairman Michael Pertschuk was able to say that he was "grateful that the Senate rejected other efforts to straitjacket the Commission 's consumer protection and antitrust activities." Since the long-sought goal of’ establishing an independent consumer protection agency was crushed by the House in Feb. 1978, consumerism began a new phase. Following more than a decade of unparalleled legislative activity in the field of consumer affairs, Congressional support for new initiatives noticably diminished. Consumer advocates. both within and woutside the Federal Government, have increasingly found themselves on the defensive. In addition to the FTC's current dilemma another view of how the consumer movements fortunes have changed recently is offered by the Dispute Resolution Act which was signed into law (P.L. 96-190) on Feb. 12. It provides $10 million annually for FY81 to FY84 to provide seed money for non-profit organizations and State and local governments to establish or improve ways to attle minor disputes informally. The bill was first introduced in 1975 and never had any significant opposition (in fact, it received considerable support from the 0.3. Chamber of Commerce). It was originally called the Consumer Controversies Act but the word "Consumer" was dropped when supporters felt it was becoming a liability. It originally called for funding of $20 million the first year and $25 million the second year. CRS- 2 IB79O 26 UPDATE-0 3/17/80 Despite these accomodations it took almost 5 years to work its way throng‘ the legislative process. Perhaps most significantly, it is the majoi consumer legislative accomplishment of this Congress. With the Federal Trade Commission under siege, the defeat in the 95th Congress of the long sought goal of creating an independent consumer protection agency still.fresh in mind and the growth of anti-big Government sentiment, some observers have concluded that consumerism is on the wane. with regard to the enactment of major legislation at the Federal level, this view may be accurate. However, to conclude that consumerism has peaked ignores some important facts. First and foremost, the public, as reflected in national opinion research surveys, is still solidly behind efforts to further ensure consumers‘ rights in the marketplace. Additionally, the number of city, county, and State consumer protection offices which has increased phenomenonly during the last few years continues to grow. Also, the number and importance of the consumer affairs units in major U.S. businesses is still expanding. Finally, a number of long-time consumer advocates now hold key positions in many of the Federal regulatory agencies and commissions that most affect consumers. The number of issues to which consumer groups are devoting their energies has grown dramatically during the last five to ten years. Increasingly, the emphasis is on legislative initiatives designed to improve competition in the marketplace and otherwise bring about changes that will lower the costs of goods and services for consumers. A complete list of subjects and issues would be very extensive. Those discussed below (in alphabetical order) irepresent only some of the major ones that these groups are focusing 0 during the 96th Congress. ANTITRUST : ILLINOIS BRICK In 1977, the Supremeecourt ruled in ;lliggi§_§gigk_gg; v. Illingig (431 0.5. 720) that only direct purchasers have the right to sue price fixers for civil damages. This case has been given broad application by Federal district and appeals courts. The decision appears to be having a dampening if not deadening effect upon the growing trend toward affording ultimate consumers a civil remedy for illegal practices that impair their economic interests. Furthermore, the ;l;igQ;§_§§igk decision appears to bring the Court into direct conflict with Congressional initiatives that were designed to further this trend. In the ;;;;ngi§_§;;gk case, the Court said the State of Illinois had no standing to sue on behalf of consumers the Illinois Brick Co. whose concrete blocks had been used in a building constructed for the State even though the company had pleaded no contest to a price fixing charge. only the contractor who directly purchased the bricks had the right to sue, the Court said. Since the right of a direct purchaser to sue was established in gaggygg_§hQg, 3.31.19; V- §I_1i£§<1_§L1.9§-.P!e9h';I.1.§L=1-§2£2;: 392 U-S- 481 (1978). the Court was concerned that to allow both direct and indirect purchasers to recover would be unfair to defendants by exposing them to the possibility of virtually limitless civil liability. one result of;Z_L1.i1_19;s___ §;i<_;k_ is that, for example, if thousands O1. consumers purchased a certain drug whose price had been set by a drug manufacturer in violation of antitrust laws, they would have no right to sue. only pharmacies, the direct purchasers, would have the right. ‘ , expected that S. 300 will face a tortuous battle on the Senate, floor, where CRS- 3 IB79O 26 UPDATE-03/17/80 In addition, the decision has been said to render "virtually meaningless" title III of the Hart-Scott—Rodino Antitrust Improvements Act of 1976, which grants to State attorneys general the authority to sue as pa;gn§_ patriag on behalf of their citizens for violations of the Sherman Act,p such as price fixing. A Despite the support of numerous consumer and labor groups, the governors and attorneys general of all 50 States, the FTC, the Justice Department, and President Carter, legislation to restore to indirect consumers the right to sue failed to pass in the 95th Congress. Heavy lobbying against the legislation came from the Business Roundtable, the U.s. Chamber of Commerce, National Association of Manufacturers, and the Food Marketing Institute, among others. §isr.EiJ.f.isED.t-I-.<2gi§le.t.iz.<2_A9-.i2D..iE..1:.hE..9.§:h.§9.EE.I;e§.§ On May 8 the Senate Judiciary Committee approved, by a 9-8 vote, 3. 30b which would overturn the Supreme Court's 1977 ;;;in9i§_§;ig§ decision an’ *allow consumers and other indirect purchasers to sue price-fixers. It is opponents are considered likely to launch a filibuster. The House monopolies and Commercial Law Subcommittee approved an antitrust bill that is a compromise between H.R. 2060 and H.R. 220$. The proposal was / sent to the full Judiciary Committee on Sept. 18, 1979, by a 7-5 vote. .A rlean bill, reflecting the subcommittee action, is expected to be introducedfi However, it appears that future House action will await developments in the Senate.‘ (FOR A BORE DETAILED EXAMINATION or THE ;;;Igg_§_§g;gg DECISION, SEE cns MINI-BRIEF on THIS SUBJECT, MB 78203.) CLASS ACTION SUITS For almost a decade various legislative proposals that would make it easier for consumers to bring class action suits have been debated by members of the legal profession, businessmen, and consumer spokespersons. At the present time there are a number of impediments to the use of class action suits as the result of several court decisions. The Justice Department is redrafting its class action proposal and anticipates getting white House support with the addition of further refinements designed to minimize the opposition. The class action device allows consumers to sue to redress alleged wrongs suffered by numerous persons similarly situated. It is argued that the use of this device, which spreads the costs of litigation among all members of the class represented, would make litigation practicable even though the recovery by individual members of the class may be small. In too many cases, proponents maintain, the consumer can prove that he was intentionally gdeceived, that be relied upon the misrepresentation, and that he was damaged ( 1 the deception, but economic realities prevent him from going to court to recover what he has lost. Advocates argue that allowing consumers to bring class action suits would help to deter improper business practices without requiring new government regulation, more bureaucracy, or a large increase in public spending. CBS- U IB79026 UPDATE—03/17/80 Opponents of class action suits claim that such a device is punitive in effect. They argue that fly-by-night operators are responsible for most complaints and that these people would seldom be available as defendats, and even if they were, the prospects for recovery would be remote. They contend that the result would be that lawyers seeking substantial attorneys‘ fees from successful class action settlements, would select responsible businessment for suit. Such businessmen, not able to afford adverse publicity, would be forced to settle out of court. In addition, opponents argue that these complex and unwieldly suits would unduly burden the Federal courts. (A MORE DETAILED EXAMINATION OF THE ISSUE OF CLASS ACTION SUITS IS AVAILABLE IN CBS REPORT 78-1HflA.) COMMUNICATIONS ACT REFORM The general trend toward trying to get the Federal Government out /of the business of regulation together with rapid technological advances in the broadcasting and telephone industries, and a steady flow of court decisions- overturning (key Federal Communications Commission (FCC) policies, have combined to increase- the chances that major revisions of the 1939 Communications Act will.be made by the 96th Congress. while some opposition appears to be slowly melting as industry recognizes that certain trade-offs could offset the potential disadvantages to them that might result from increased competition, a number of consumer‘ leaders are apprehensive thaf many important rules may be changed at a time when they were finally learning how to play the game. 9 Last year, a 217—page bill (H.R. 13015) to allow competition to replace much of the existing Federal regulation pertaining to the communications industry was proposed by the chairman and ranking minority member of the House Commerce Subcommittee on Communications. The legislation was the final product of about 20 months of subcommittee oversight hearings, panel discussions, meetings and staff study of the telecommunications /industry. Much of it was strongly opposed by many witnesses, especially those from the broadcast industry, during 35 days of hearings last summer. . This year Congressman Van Deerlin, the Chairman of the House Communications Subcommittee of the Interstate and Foreign Commerce Committee, and Congressmen Collins and Broyhill, the two ranking Republicans of the subcommittee, introduced H.R. 3333. This bill, known as "The Communications Act of 1979," is a redraft of last year*s legislation. In the Senate, legislation was introduced on Mar. 12, 1979, to amend the Communications Act (the Senate did not consider any similar legislation during the 95th Congress). Unlike the House legislation, however, which‘ received bipartisan subcommittee support, disagreement among the Senate subcommittee members resulted in the introduction of two proposals: S. 611 (Senator Hollings), "The Communications Act Amendments of 1979" and S. 622 (Senator Goldwater), “The Telecommunications Competition and Deregulation Act of 1979." Simultaneous hearings continued throughout June 1979 and initial markup sessions for the House version were held during mid-July. However, the apparent lack of consensus (particularly concerning the boradcast provisions) that was displayed during these sessions prompted Representative Van Deerlin CRS- 5 IB79026 UPDATE’03/17/80 ’ Ito table the legislation. Because of conflicts over the various provisions ( and uncertainty among subcommittee members over the effects of the proposals, major revisions occurred in the legislation. As a result of unresolved differences H.R. 3333 was tabled and a more limited and solely addressing common carrier issues, was introduced in Dec. 1979. A similar fate occurred to the broadcast provisions in S. 611 when a new working draft was also introduced in December. However 5. 622, the Senate minority legislation, while also revised, continues to contain extensive provisions that, address both the broadcast and common carrier industries. The House proposal (actually an amendment, introduced by Representative Wirth) which was substituted for H.R. 6121 has already been before the House Communications Subcommittee for markup. (Representative Wirth's substitute, while largely containing technical changes, did include a labor protection amendment for employees of A.T-8T. and included more detail regarding A.T.8T. and competitive services.) Despite some reservations by individual subcommittee members regarding selected provisions and possible omissions, the legislation with additional amendments was passed on Jan. 29, 1980, and sent to the full committee for consideration. w Companion proposals in the Senate (5. 611, and S. 622) have also been redrafted and are (presently under consideration. Unresolved differences between subcommittee members have resulted in the redrafting of two separate legislative initiatives. As in H.R. 6121, Senator Hollings' redrafted S. 611 eliminates the broadcast provisions found in the original S- 611 and is olimited to common carrier provision. On the other hand, Senator Goldwater's tedrafted S. 622 continues to incorporate both common carrier and broadcast provisions. . v While some observerscdoubt that comprehensive communications legislation can be enacted during this Congress, Representative Van Deerlin continues to be optimistic that a bill will be formulated and that the House and Senate will be able to resolve their differences. Meanwhile, Senate staffs hope to meet to resolve differences in their own initiatives. While consumer leaders have long advocated changes that would afford the public (consumers) a greater opportunity to»choose from and have access to a variety of high quality communications services at reasonable costs, they expressed an number of reservations during testimony last year on the legislation. (MORE DETAILED INFORMATION ON THIS SUBJECT IS AVAILABLE IN THE CRS MINI‘BRIEF "THE COHMUNICATIONS ACT OF 193R - PROPOSALS FOR REVISION" MB 79210.) ‘ CONGRESSIONAL VETO Fueled by last year's anti-regulation revolt,‘ the concept of allowing either house of Congress to veto Federal agency regulations gained substantial support in the House in a short period of time. _/ Under the veto concept, Federal agencies, upon promulgating a new rule or regulation, would be required to submit it to the Senate and House for review. A rule would not become effective if both houses vetoed it, or if one body vetoed it and the other body did not reject the veto. Thus, an opportunity for a one-house veto is provided. . 033- 6 IB’79026 UPDATE-03/17/80 While some view the congressional legislative veto as a way to block "bad" regulations and prevent the "unelected bureaucracy" from making decisions that interfere with our lives, others see it as a way for big business to be able to salvage as a matter of politics in Congress what they lose on the merits at the administrative rulemaking level. Those who support the use ofaa congressional veto, including the Chamber of Commerce of the United States, maintain that while normal judicial review of regulations affords some protection against regulatory excesses, an additional safeguard is needed to restore responsibility to the bureaucracy and the rulemaking process. They say that Congress, as a whole, is better ‘able to reflect the views of the community at large than an unchecked regulatory process. Qpponents, including President Carter, say the congressional veto is unconstitutional, that it would politicize the agency process and that it would pose enormous practical problems of delay and uncertainty. They say that Congress lacks the expertise to evaluate proposed regulations which are usually the result of many months, if not years, of detailed proceedings. During the 1st session of this Congress, eight bills with legislative veto provisions were signed into law. Additionally, about 100 bills or amendments with veto provisions were introduced or'reported during the first 13 months ,of the 96th Congress. Nevertheless, while an increasing nuber of public laws in recent years have included congressional veto provisions, Congress has not yet. approve? legislation to arm itself with an across—the-board veto on all executivt branch actions. And sozfar, it has not passed any law empowering Congress to veto the actions of an independent or economic regulatory agency such as the Federal Trade Commission. However, pending bills that address each of these matters are rated as having a good chance to gain passage this year. (FOR ADDITIONAL INFORMATION, SEEF THEE CR5 ISSUE BRIEF ENTITLED "CONGRESSIONAL VETO OF EXECUTIVE ACTIONS," IB 76006.) FEDERAL CONSUMER AFFAIRS OFFICES AThe most dramatic debate in the consumer area in the past eight years has been over establishing an independent consumer protection agency, (CPA). Known also as the Agency for Consumer Advocacy (ACA) and the Agency for Consumer Protection (ACP), the principle of the legislation was always the same: an independent agency with considerable powers in representing and advocating consumer interest before government agencies and the courts. vigorously sought by consumer groups, the legislation has been just as vigorously opposed by business in general (and the 0.5. Chamber of Commerce A in particular), which sees the idea as nothing more than further government intrusion into the workings of the private sector. In Congress after Congress, CPA bills failed to pass both Houses until the 9uth Congress when a bill did pass both House and Senate, but with too small a margin to overcome President Ford's promised veto. In spite of Preside? Carter's strong support for creating a consumer advocacy agency, th- legislation ran into rough going early in the 95th Congress and on Feb. 8, 1978, the House defeated the bill, dashing consumer advocates’ hopes for that Congress and possibly forever of creating a consumer agency. CRS- 7 IB79026 UPDATE-O3/17/80 Since Congress failed to pass a consumer agency bill, President Carter decided to use what means he had available to better protect consumers, and on Sept. 26, 1979 he signed an executive order E.0. 12160, that substantially upgrades consumer programs in all federal departments and agencies. White House consumer advisor Esther Peterson has been working since 1978 to improve and coordinate consumer programs in Federal agencies and give form and direction to meaningful.consumer participation in agency decisions. This executive order seeks to accomplish that goal by setting the specifics. The order creates a Consumer Affairs Council made up of representatives of all executive departments and chaired by Esther Peterson. Each federal entity will be required to develop a consumer program that meets the following five elements: (1) A professional consumer affairs staff authorized to participate in the development and review of all agency rules, policies and legislation; (2) effective procedures to assure that consumers are able to participate in the development and review of all agency rules to guarantee that consumer concerns are addressed by each agency; (3) development of informational materials for consumers; (a) training for agency consumer staff members and, where appropriate, technical assistance to consumers and their organizations; and (5) procedures for systematically investigating and responding to consumer complaints and for incorporating analysis of those complaints into the agency's policies. Each agency also will be required to designate a seniorélevel official whose~sole responsibility is to provide consumer policy direction for the entire agency. President Carter noted that these new programs must not "supplant" the idea of creating a separate consumer protection agency and said that Congress should still work towards oassage of such an agency. a A The Administration issued draft consumer protection programs for 30 Federal departments and agencies on Dec. 10, 1979. The publication of these programs carries out Executive Order 12160. Administration officials said the public is urged to comment on the draft programs, published in the Dec. 10, 1979 Federal Register. After a review of these comments, final agency programs will be published in June, 1980. (FOR ADDITIONAL INFORMATION ON THE CONSUMER PROTECTION AGENCY, SEE THE CR5 ISSUE BRIEF "CONSUMER PROTECTION AGENCY," IB 7HO83 AND CBS REPORT 77-113E.) DISPUTE RESOLUTION ACT The first, and to date the only, significant consumer legislation of the 96th Congress was signed into law by President Carter on Feb. 12, 1980. This law will establish a program under the Department of Justice to encourage the development of inexpensive and expedient local mechanisms to settle disputes between consumers and sellers, landlords and tenants, and others. It will also set up a Resource Center to serve as an information clearinghouse and a source of technical assistance, research, and evaluation. Grant program money authorized at $10 million annually for FY81 to FYBH will provide seed money for nonprofit organizations and State and local governments to establish or improve ways to settle minor disputes informally. Finally, the Act creates a National Dispute Advisory Board to provide advice to the ‘ttorney General regarding the operations of the program. ‘ On the occasion of the signing of the bill, the President stated, "Many disputes generated in.cmr modern society are often ill-suited for referral to costly formal adjudication, and as a consequence are frequently never resolved. While such disputes may be minor in terms of the money or issues involved, they are of major significance to the people involved. Frustration CRS+ 3 IB79026 UPDRTE-03/17/80 and alienation result when legitimate grievances go unheard for want of readily available, easy-to-use mechanisms for resolution of conflict. It it most appropriate that we are taking action to address this national problem." Although the Resource Center will beyestablished immediately, the grant program will not be in operation until FY81 at which time public solicitation for grant applications will be announced. gggg;g§§;gga;_ §g§ign_ Lggd;gg_ tg 2e§§§9s-2£-2;L=.2§:12Q Legislation to promote effective complaint resolution was first introduced in January 197fl as a result of studies made~in 1972 and 1973, that pointed out existing problems with small claims courts. In the 95th Congress, 5. 957 (known as the Consumer Controversies Resolution Act) passed the Senate June 29, 1978, but failed in the House October 12, 1978, basically because time ran out before adjournment for proper debate of the measure. The concept of this legislation has had widespread and overwhelming support from such diverse organizations as the American Bar Association, Chamber of Commerce, Conference of State Chief Justices, Congress watch, and Consumers Union. Senate hill 5. H23 was introduced February 9 (legislative day, January 15), 1979, and was identical to S. 957 of the 95th Congress. 5. #23 was placed on the calendar when it was introduced and passed the Senate by voice vote on April 5, 1979. In the House, fbur days of joint hearings were held in June by the Interstate and Foreign Commerce and Judiciary subcommittees or 5. H23, H.R. 2863 and H.R. 3719. x The committees approved nearly identica1.bills. On Sept. 16, 1979 the Commerce Committee ordered 5. #23 reported by a 19-7 vote. The Judiciary Committee ordered the bill reported on Sept. 25, 1979 by a 23-7 vote. The House passed 3. #23 on Dec. 12, 1979 by a vote of 207 to 195. The bill faces further refinement by conferees from the House and Senate before enactment but passage was never in doubt. President Carter signed the Dispute Resolution Act into law on Feb. 12, 1980. FEDERAL TRADE COMMISSION only a decade ago the Federal Trade Commission was under heavy attack for not doing enough. The American Bar Association Commission to Study the Federal Trade Commission went so far as to say that "(n)otwithstanding the great potential of the FTC in the field of antitrust and consumer protection, if change does not occur, there will be no substantial purpose to be served by its continued existence." Now the FTC again finds itself the subject of widespread criticism; this time, however, not for doing too little but rather for doing too much. There is a common refrain eminating from a number of powerful segments of the business community and others that the Commission has roamed far beyond its congressional mandate with sweeping efforts to regulate many busines activities that should not be the concern of the Federal government.9 Leaving aside the merits of the criticisms being leveled against the FTC, the result is that the House and Senate have passed widely differing bills that would significantly reduce the Commission's powers in several areas and { CRS- 9 IB79026 UPDATE-O3/17/80 vould curtail several of its rulemaking proceedings and antitrust cases. .2u§s..A.c:c..:L22 In the House, an authorization bill (H.R. 2313), was passed by a 321-63 vote which, among other things, would establish a one-house legislative veto mechanism, prevent the FTC from regulating the funeral home industry, and prohibit the Commission from investigating or prosecuting antitrust cases against‘ agricultural cooperatives. A Lsgislatizslete For the last three years, authorization legislation for the FTC has failed to be enacted because the Senate would not agree to a legislative veto provision. (The Commission has continued to operate as a result of interim appropriations.) Once again the House has demonstrated by a decisive margin that it favors this form of congressional oversight. As passed by the House, the bill would allow Congress, with the«concurrence of both chambers, to kill any Commission rule within 90 days after it is issued. Proponents say the veto is particularly needed for the FTC because the agency's charter is so broad. Opponents argue that the veto procedure may be unconstitutional and that it would be a bad way to make policy in any event.. " £une§al-§ule The proposed funeral.industry trade regulation rule would require minimum pre-sale price disclosures, the obtaining of permission for embalming, a prohibition against false statements regarding state laws affecting funerals, and price information by phone upon request. The funeral industry rulemaking proceeding was officially begun in 1975. In all, 52 days of hearings were held in six major cities. Input from the funeral industry and from consumer organizations and inividual consumers was substantial. The industry claims that the funeral.ru1e is a prime example of the FTC's penchant for overregulating. It says that the impact of the rule in terms of the cost of compliance would be great, that the proceedings were improperly conducted, and that action on the rule is based on a small number of complaints. Those favoring the rule say it would impose only a minimal burden on the industry and that all parties to the proceedings were provided a fair opportunity to present evidence. They also say that the relatively low number of complaints is attributalbe to consumers lack of experience in arranging funerals (they are not aware of alternatives and when they have been overcharged). they don't know A £+.q£is2J.£2ral-Q9_°2§ Agricultural cooperatives are formed by farmers banding together for production and marketing purposes. The«cooperatives were allowed a measure Since that time of antitrust immunity under the 1922 Capper—Volstead Act. CR3-10 lB79026 UPDATE—03/17/80 the number of cooperatives has grown significantly as has their average size There are currently about 3,500 in the Nation and six of them are in the E2r:22e-§QQ- Proponents of the amendment to stop the FTC from investigating or prosecuting antitrust cases against agricultural coops argued that the Commission lacks authority because of the aforementioned Act. The amendment was accepted by a 245-139 vote. Opponents contended that agricultural coops and their activities have grown beyond the scope envisioned by Congress when they passed the Act. The FTC has uncovered several possible violations by Sunkist Growers, including exclusive contracts with processors to perpetrate its near—monopoly (the coop controls about 75% of western state fruit production). §2Iia.t§...AQ2'-.2I.I. On Feb. 7, 1980, the Senate passed its version (5. 1991) by a vote of 77-13. Among other things, it would kill the FTC's on-going rulemaking proceeding concerned with television advertising directed toward children; it would limit the agency's authority to require mandatory warranties in connection with the sale of used cars; it would prohibit the Commission from investigating the insurance industry; it would provide for the recovery of attorneys’ fees by small businesses in cases in which they prevail against the FTC; and, it would cut back on the amount of money availalbe for fundinr outside groups in rulemaking. §hilQ2e2:§-Aézer:;§in9 As passed by the Senate, the FTC bill mandate that the Commission may write rules governing only false or deceptive advertising - not. "unfair" advertising, a standard.on which the children's advertising inquiry is based. An amendment offered on the Senate floor by Senators Magnuson and Packwood would have removed that section from the bill, but it was rejected by a vote of 67 to 30. E£9§EE£_§£§EQ§£§§ Another Magnuson-Packwood amendment would have allowed the FTC to regulate trade groups that set product and other industry standards. The amendment was rejected by a 28-70 vote. The bill would halt a rulemaking proceeding concerned with alleged anti-competitive activities by standard-setting organizations. Those in favor of allowing the rulemaking to proceed contended that the standards set by many groups have resulted in inflated costs (especially in the construction field), health and safety risks, and the exclusion of small business and innovative ideas from the market place. Opponents claimed the Commission discovered few cases of abuse and that regulation is unwarranted. They maintained that the FTC could still bring action against individual groups found guilty of abuse. CR5-‘I1 723790 26 UPDATE-O 3/17/80 with the differences between the House and Senate bills somewhere between substantial and vast, Members and aides quickly predicted a long and difficult conference. House insistence on a legislative veto mechanism that would allow either Qhamber to kill an agency rule and Senate opposition to such a provision is likely to be the major obstacle. Furthermore, each side objects to restrictions in the other's bill. Disagreement concerning what type of legislative veto should be included has prevented Congress from approving an FTC authorization since FY77. The agency has been funded by resolutions since then, but Congress has set a Mar. 15th deadline on FTC funding this year in an attempt to force an agreement. In 1978, House members rejected a plan similar to the congressional review provision contained in the recently passed Senate version which would require both houses and the President to take action before an agency rule could be overturned. Hanging over this year's conflict is the threat of a presidential veto. President Carter drew his largest applause of the day when he told a group at the Consumer Federation of America's annual assembly on Feb. 7th that he would veto any bill that "cripples" the FTC. While he has made clear his strong opposition to the legislative veto concept, however, the President did not say what aspects of a bill would be so offensive that he would veto it. KIDVID: CHILDREN'S TELEVISION ADVERTISING AND PROGRAMMING In recent years, the effects of television advertising directed towards children have concerned citizens and their governments in most industrialized countries. In the United States, this concern has primarily centered around a Childrens Advertising rulemaking proceeding (often referred to as "kidvid") that is being conducted by the Federal Trade Commission. In a staff report issued by the Commission in Apr. 1978, FTC attorneys concluded that television commercials aimed at children may be unfair because, among other factors, youngsters frequently are not yet capable of differentiating between programming and commercials. Furthermore, even for those children who do understand the difference, there may exist a basic "unfairness" in matching sophisticated advertising and marketing people against children. Consequently, the staff proposed a range of possible remedies, including limiting the number of such ads directed at children, controlling advertising techniques, requiring the disclosure of nutritional information, and -e most drastic of all-— banning all advertising directed at children. Those who are in favor of imposing restrictions on television advertising to children have a variety of concerns about the effects of the 20,000-plus commercials to which the average child aged 2 through 11 is exposed each vear. Many believe that children are being exploited by the sophisticated ommercials produced by the formidable array of highly-skilled communications experts found in today's advertising business. They maintain that broadcasters and advertisers have had ample oportunity to make self-regulation work and now it is time for the Federal government to step in. I CRS—12 IB79026 UPDATE-03/17/80 Opponents contend that the Federal Trade Commission is overstepping it jurisdiction and trying to act as a "national nanny." Advertisers say that children's advertising benefits children because it gives product information to the child to help him make up his mind, allows for greater diversity of selection, helps prepare the child for later adult roles in society "based on individual choice and individual responsibility," and insures through advertising dollars that networks have the incentive and resources for continuing child programming. ' Many observers think that advertisers and broadcasters will be able to draw upon the growing public sentiment against government regulation and force the adoption of some compromise measure involving public service announcements and counter-advertising measues. Another possibility is that the FTC's involvement may be ended entirely. The Senate's version of the FTC's authorization bill (S. 1991) would force the agency to begin its rulemaking proceeding from scratch if it chose to continue its efforts. As presently written, the bill bars the Commission from writing industrywide irules that prohibit "unfair" ads. The present FTC law permits the Commission to regulate "unfair or deceptive" acts or practices, either through actions against individual companies or through industrywide rules. The immediate (and only) victim of the change, is the childrens advertising proceeding. (FOR HORE DETAILED INFORMATION ON CHILDREN'S ADVERTISING, SEE ISSUE BRIEF IB78089 ENTITLED "CHILDREN'S ADVERTISING.") NO-FAULT MOTOR VEHICLE INSURANCE A major debate has developed over the best mechanism for the equitable and efficient compensation of losses to victims of motor vehicle accidents. The "motor vehicle reparations systems" is the mechanism by which persons who have suffered loss as a result of motor vehicle accidents are compensated. Within the system some types of compensation are paid on a contractual rather than a fault basis, e.g., collision insurance, but the principal means of compensation is the liability or fault system. The liability system is composed of both a legal element and an insurance element. The legal element consists of the tort law principle of negligence, which is used to determine the liability for loss. The insurance element consists of liability insurance, which was originally intended to indemnify negligent drivers for their liability, but which is now recognized as a device to assure the victims of negligent drivers their compensation. In 1970, Senator Philip Hart of Michigan introduced the first "no-fault" auto insurance bill to reform the auto accident reparation system. Each Congress since has had proposed no-fault legislation pending, but has not succeeded in getting a bill through both the House and Senate in the same Congress. In the 95th Congress, the House Committee on Interstate and Foreign Commerce rejected a no-fault bill, although the Senate Committee on Commerce had favorably reported a bill. No further action took place in the last Congress. At the State level, 16 States have enacted what have been characterized as genuine no-fault laws -- that is, plans with comprehensit first—party benefits and significant restrictions on tort liability. The battle over no-fault insurance has been waged on philosophical, constitutional, and economic grounds for more than a decade. The diversity of views and convictions is matched only by the variety of approaches and CRS-13 IB79026 UPDATE-O3/17/80 plans. Opponents of no-fault say that it really does not deal effectively with reckless drivers but rather becomes a welfare plan for the irresponsible. As to the argument that no-fault would substantially reduce lawsuits, opponents feel that this is often not the case but rather it has encouraged fraud and misrepresentation in many instances. Proponents, on the other hand, believe no-fault to be the most efficient, humane, and cost-effective means of compensating the victims of accidents. They feel it saves a great deal of money which went mostly to lawyers and years and years of litigation to settle a single claim. Even among the supporters of a no—fault system there are many questions involving specifics in such a plan such as (1) should it be instituted at the Federal or State level? (2) should no-fault benefits cover only personal injury loss or also property damage? (3) should there be durational and/or dollar limits on no-fault benefits? (4) should tort liability be preserved for general damages and/or damages exceeding no—fault benefits? and, (5) should no-fault benefits be primary or secondary to other sources? To date in the 96th Congress, there has been no action by either the House or Senate on No-Fault legislation. The Administration was expected to introduce a bill but has not done so and there is no indication when or if they will. (FOR MORE DETAILED INFORMATION ON THIS SUBJECT, SEE THE CRS ISSUE BRIEF ENTITLED "NO-FAULT HOTOR VEHICLE INSURANCE IB73022, AND CRS REPORT 77-TQOA.) PRIVACY Hodern technology, and most specifically computers, has given rise to a concern for individual privacy. Since the mid 1960s, awareness has grown that the privacy, security, and confidentiality of personal information have been seriously eroded. The increase of large government and private record-keeping systems, compounded by the extensive use of ‘automated data processing, has been viewed as .a threat. The increased collection of personal information in both the publicaand private sectors, coupled with the impact of technological innovations, has increased concerns. It has been suggested that the problem of providing privacy and security of information requires better management of information, an assessment of costs, the establishment of procedures, guidelines, and safeguards, and the continued development of management and product technologies. In recent years, new legislation and.regulations have been proposed and implemented to provide some security and confidentiality in the management of personal data systems. Since 1970 some of the key legislation enacted that addresses problems.of privacy are the Fair Credit Reporting Act, Crime Control Act of 1973, Family Educational Rights and Privacy Act of ,197u, Privacy Act of 197a, and Section 1202 of the Tax Reform Act of 1976. In the 95th Congress, over 100 bills on privacy and related issues were introduced. Three of these hills which became law are The Right of Financial Privacy Act of 1978, which protects personal financial transactions in bank-held records; the Foreign Intelligence Surveillance Act of 1978, which limits surveillance .nd disclosure; and the Privacy Protection for Rape Victims Act, which amends the Federal Rules of Evidence to protect the privacy of rape victims. CRS-TH IB79026 UPDATE-03/17/80 New versions of several legislative proposals that did not hreceive finaT action in the last Congress are likely to be considered again. On April 2, 1979, President Carter sent a message to Congress announcing a wide range of initiatives to protect individual privacy in an information society. This was followed on Oct. 2, 1979 by the Administration unveiling its proposed legislation to implement President Carter's policy announcement in April. The legislative package consists of two proposals: the Fair Financial Information Practices Act and the Privacy of Electronic Fund Transfers Act. H.R. 5559, introduced by Representative John Cavanaugh, and S. 1928, introduced by Senator Proxmire are the Fair Financial Information Practices Act bills. They would give consumers increased rights to examine, copy and correct their credit files kept by consumer reporting agencies and insurance companies; require creditors to inform credit applicants about information collection and disclosure practices and inform individuals of reasons for any adverse actions on their credit applications; create a ,procedure permitting credit applicants to block access to their records which are sought under certain circumstances, such as for marketing purposes; ensure the accuracy of credit and check authorization series which verify check and credit card purchases for retailers; and, limit the