Administrative Interpretations, General Policy Statements, and Enforcement Policy Statements

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FEDERAL TRADE COMMISSION 16 CFR Part 14 Administrative Interpretations, General Policy Statements, and Enforcement Policy Statements AGENCY: Federal Trade Commission. ACTION: Final amendments to interpretations and policy statements. SUMMARY: The Federal Trade Commission (‘‘Commission’’) is rescinding certain unnecessary or superfluous interpretations and policy statements in the Administrative Interpretations, General Policy Statements, and Enforcement Policy Statements (‘‘Interpretations and Policy Statements’’) and revising one policy statement to bring it up to date. EFFECTIVE DATE: August 15, 1995. ADDRESSES: Requests for copies of this notice should be sent to the Federal Trade Commission, Public Reference Branch, Room 130, Sixth Street and Pennsylvania Avenue, NW., Washington, DC 20580.

FOR FURTHER INFORMATION CONTACT: Kent C. Howerton, Attorney, Federal Trade Commission, Bureau of Consumer Protection, Division of Enforcement, Room S–4302, Sixth Street and Pennsylvania Avenue NW., Washington, DC 20580, (202) 326–3013. SUPPLEMENTARY INFORMATION: I. Background As a part of its ongoing program to review all of its mandatory rules and voluntary guides, the Commission has determined to amend 16 CFR part 14, Administrative Interpretations, General Policy Statements, and Enforcement Policy Statements (‘‘Interpretations and Policy Statements’’).1 In this notice, the Commission announces its determinations to repeal §§ 14.2, 14.4, 14.7, 14.11 and 14.17, and to revise § 14.16.2 As explained below, the Commission is rescinding certain interpretations, guidelines and policy statements that are unnecessary, superfluous or obsolete and revising one policy statement to reflect current law and policy. Sections 14.9, 14.12 and 14.15 remain in effect and are not

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42032 Federal Register / Vol. 60, No. 157 / Tuesday, August 15, 1995 / Rules and Regulations 3 See section 553(b)(A) of the Administrative Procedure Act, 15 U.S.C. 553(b)(A). 4 See Rules and regulations under the Textile Fiber Products Identification Act, 16 CFR part 303. 5 Section 14.7 is, in all substantive respects, identical to § 248.8 of the Commission’s Guides for the Beauty and Barber Equipment and Supplies Industry (‘‘Beauty/Barber Guides’’), 16 CFR part 248. For the same reasons the Commission has determined to eliminate section 14.7, it has determined that § 248.8 of the Beauty/Barber Guides also should be eliminated. The Commission is publishing its determination concerning § 248.8 in a separate notice.

6 See e.g., Cal. Penal Code sec. 641.3 et seq. (Deering 1995); Ill. Rev. Stat., Ch. 38, para. 29A–1 (1995); N.Y. Penal Law sec. 180.00 (McKinney 1976).

7 See e.g., Tex. Penal Code sec. 32.42 (West 1995); Cal. Bus. & Prof. Code sec. 17539.1 (Deering 1995); Cal. Penal Code sec. 319 et seq. (Deering 1995). affected by the amendments described in this notice.

The Commission is not seeking public comment on these amendments to repeal §§ 14.2, 14.4, 14.7, 14.11 and 14.17, and to revise § 14.16. These interpretations, guidelines and policy statements are not regulations, only interpretative guides and general statements of policy. Therefore, the Commission does not need to seek public comment before repealing or revising them.3 Further, because the Commission’s determinations to repeal or revise these interpretations, guidelines and policy statements are based upon changes in the law and regulations, the existence of other laws, regulations or legal decisions, facts concerning current industry practices that do not appear to be in controversy, or current Commission policy, public comment is not likely to aid the Commission significantly in making these determinations. The amendments become effective upon publication in the Federal Register.

II. Sections Revised or Repealed A. Section 14.2 Section 14.2 states that it is not the Commission’s policy to consider the use of the word ‘‘tile’’ in the designation of non-ceramic products to be false and misleading, provided that either the true composition of such products or the fact that they are not ceramic products is plainly disclosed. The Commission issued this policy statement in 1950 as guidance to industry and to amend certain stipulations covering specific companies that the Commission published between 1937 and 1945. The Commission has no reason to believe that sellers of non-ceramic tile products currently fail to disclose the composition of their products or misrepresent their composition. In any event, the Commission can prosecute misrepresentations of product composition, or the failure to disclose, prior to sale, information that is material to a consumer’s purchasing decision, as unfair or deceptive acts or practices under section 5 of the FTC Act, 15 U.S.C. 45.

For these reasons, the Commission has determined that § 14.2 is unnecessary and superfluous. B. Section 14.4 Section 14.4 contains the Commission’s interpretation of the requirements of section 5 of the FTC Act concerning yarn and fabric that contain metallically weighted silk fiber. The Commission issued this interpretation in 1960 to supplement the fiber identification requirements of the Textile Fiber Products Identification Act (‘‘Textile Act’’), 15 U.S.C. 70, and the rules and regulations issued under the Textile Act.4 Specifically § 14.4 states that the fiber identification required by the Textile Act shall be immediately accompanied by a clear and non-deceptive disclosure that the silk fiber present is weighted, along with the percentage of the total weight of the silk fiber content in its finished state that the weighting represents. Section 14.4 further states that the disclosure shall appear on the same label that contains the fiber identification required by the Textile Act, and the rules and regulations issued under it, and in immediate conjunction with any representation in advertisements, sales promotional literature, or invoices that relates to fiber content.

During at least the past 15 years, the Commission has not been aware of any problems concerning the sale of ‘‘metallically weighted silk’’ yarn and fabric products. In any event, the Commission can prosecute misrepresentations concerning ‘‘metallically weighted silk’’ products, or the failure to disclose, prior to sale, information that is material to a consumer’s purchasing decision, as unfair or deceptive acts or practices under section 5 of the FTC Act. For these reasons, the Commission has determined that § 14.4 is unnecessary and superfluous. C. Section 14.7 Section 14.7 contains interpretations of legal requirements concerning the payment by industry members of socalled ‘‘push money.’’ 5 These interpretations, which the Commission issued in 1962, prohibit industry members from providing anything of value to a salesperson employed by a customer of the industry member as inducement to obtain greater effort in promoting the resale of the industry member’s products when: (i) The agreement or payment is made ‘‘without the knowledge and consent of the salesperson’s employer,’’ (ii) the benefit to the salesperson or customer is dependent on lottery; (iii) ‘‘any provision of the agreement or understanding requires or contemplates practices or a course of conduct unduly and intentionally hampering the sales of products of competitors * * *;’’ (iv) ‘‘the effect may be to substantially lessen competition or tend to create a monopoly;’’ or (v) ‘‘similar payments are not accorded to salespersons of competing customers on proportionally equal terms in compliance with sections 2 (d) and (e) of the Clayton Act,’’ 15 U.S.C. 13 (d) and (e).

To the extent that the interpretations prohibit industry members from surreptitiously compensating employees of their customers in exchange for greater effort on the part of those employees, they address commercial bribery, which may be prohibited under section 2(c) of the Clayton Act, 15 U.S.C. 13(c), and is proscribed by many state criminal statutes.6 To the extent that they prohibit bonus plans dependent on lottery, they address business conduct which may be proscribed by section 5 of the FTC Act and by state statutes relating to lotteries and similar promotions.7 To the extent the interpretations require payments to salespersons of competing customers to be on proportionally equal terms, they restate general principles of competition law that are set forth in section 2 of the Clayton Act and the Guides for Advertising Allowances and Other Merchandising Payments and Services (‘‘Fred Meyer Guides’’), 16 CFR part 240.

For these reasons, the Commission has determined that § 14.7 is unnecessary and superfluous. D. Section 14.11 Section 14.11, which the Commission issued in 1979, contains guidelines designed to prevent deception and to advise manufacturers and dealers of motor vehicles built for use upon public highways about how they can avoid violating the FTC Act. These vehicles include truck chassis and incomplete vehicles used in building motor homes. The Commission issued the guidelines because it was concerned about misleading practices some manufacturers had used to identify the model years of heavy duty trucks and other vehicles whose features changed little from year to year.

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42033 Federal Register / Vol. 60, No. 157 / Tuesday, August 15, 1995 / Rules and Regulations 8 See Mack Trucks, Inc., 94 F.T.C. 236 (1979); Chrysler Motors Corp., 94 F.T.C. 245 (1979); Ford Motor Company, 94 F.T.C. 254 (1979); Paccar. Inc., 94 F.T.C. 263 (1979); White Motor Corp., 94 F.T.C. 272 (1979); and International Harvester 94 F.T.C. 281 (1979).

9 Request for comments, 60 FR 17656 (April 7, 1995).

After it issued the guidelines, the Commission accepted consent agreements with most of the manufacturers of those heavy duty trucks and other vehicles.8 The consent agreements provide adequate guidance for manufacturers of such vehicles and others concerning how to avoid violating the FTC Act regarding a vehicle’s model year.

For these reasons, the Commission has determined that § 14.11 is unnecessary and superfluous. E. Section 14.16 Section 14.16 contains interpretations, published in 1982, concerning the compliance responsibilities under the Truth-in- Lending Simplification and Reform Act of 1980, Pub. L. 96–221, 94 Stat. 168, and the revisions of Regulation Z, 12 CFR part 226, that were published by the Federal Reserve Board in 1981, 46 FR 20848, for those creditors and advertisers subject to final cease and desist orders issued by the Commission prior to April 1, 1981 that require compliance with provisions of the original Turth-In-Lending Act (‘‘TILA’’), 15 U.S.C. 1601 et seq., and prior Regulation Z. This section, therefore, applies Congress’ simplification of TILA to pre-existing orders issued by the Commission that compel compliance with the TILA and Regulation Z. The Commission believes that the current language in § 14.16 might be interpreted to freeze orders enacted prior to April 1, 1981 to the requirements of the TILA and Regulation Z as of April 1, 1981, and not to allow or require parties subject to Commission orders to meet the requirements of subsequent amendments to the TILA and Regulation Z. It is not the Commission’s intent that section 14.16 have this effect. For this reason, the Commission has determined to revise § 14.16 to state clearly that the Commission will interpret TILA and Regulation Z provisions of all orders consistent with the current requirements of the TILA and Regulation Z, and with any subsequent amendments to the TILA and Regulation Z.

Further, §§ 1416(b)(1) and (b)(2) specify enforcement responsibilities during a transition period in 1981 and 1982. Because these sections no longer are relevant, the Commission has determined to delete these provisions, and to renumber and revise the remainder of § 14.16(b). F. Section 14.17 Section 14.17 contains an explanation of the Commission’s policy concerning questions that are relevant when the Commission decides whether to initiate an enforcement action under the trade regulation rule regarding Disclosure Requirements and Prohibitions Concerning Franchising and Business Opportunity Ventures (‘‘Franchise Rule’’), 16 CFR part 436. The Commission, however, has investigated and filed in court the vast bulk of its Franchise Rule enforcement actions since it published this Franchise Rule enforcement protocol in 1984. Thus, the protocol does not reflect, fully and accurately, the Commission’s present enforcement policy. Moreover, the Commission currently is reviewing the Franchise Rule under its ongoing regulatory review program.9 For these reasons, the Commission repeals § 14.17. The Commission will consider whether it is necessary to issue an updated version of the protocol to reflect current law, fact and policy after it completes its regulatory review of the Franchise Rule.

Authority: 15 U.S.C. 41–58. List of Subjects in 16 CFR Part 14 Advertising, motor vehicles, silk, textiles, trade practices, truth-inlending.

Text of Amendments Accordingly, under the authority of 15 U.S.C. 41–58, the Commission amends 16 CFR part 14 as follows: PART 14—ADMINISTRATIVE INTERPRETATIONS, GENERAL POLICY STATEMENTS, AND ENFORCEMENT POLICY STATEMENTS 1. Sections 14.2, 14.4, 14.7, 14.11 and 14.17 are removed.

2. Section 14.16 is revised to read as follows:

14.16 Interpretation of Truth-in-Lending Orders consistent with amendments to the Truth-in-Lending Act and Regulation Z. Introduction The Federal Trade Commission (FTC) has determined that there is a need to clarify the compliance responsibilities under the Truth-in-Lending Act (TILA) (Title I, Consumer Credit Protection Act, 15 U.S.C. 1601 et seq.), as amended by the Truth-in-Lending Simplification and Reform Act of 1980 (Pub. L. 96–221, 94 Stat. 168), and under revised Regulation Z (12 CFR part 226, 46 FR 20848), and subsequent amendments to the TILA and Regulation Z, of those creditors and advertisers who are subject to final cease and desist orders that require compliance with provisions of the Truth-in-Lending statute or Regulation Z. Clarification is necessary because the Truth-in-Lending Simplification and Reform Act and revised Regulation Z significantly relaxed prior Truth-in- Lending requirements on which provisions of numerous outstanding orders were based. The Policy Statement provides that the Commission will interpret and enforce Truth-in-Lending provisions of all orders so as to impose no greater or different disclosure obligations on creditors and advertisers named in such orders than are required generally of creditors and advertisers under the TILA and Regulation Z, and subsequent amendments to the TILA and Regulation Z.

Policy Statement (a) All cease and desist orders issued by the FTC that require compliance with provisions of the Truth-in-Lending Act and Regulation Z (12 CFR part 226) will be interpreted and enforced consistent with the amendments to the TILA incorporated by the Truth-in-Lending Simplification and Reform Act of 1980, and the revision of Regulation Z implementing the same, promulgated on April 1, 1981 by the Board of Governors of the Federal Reserve System (46 FR 20848), and by subsequent amendments to the TILA and Regulation Z. Likewise, the Federal Reserve Board staff commentary to revised Regulation Z (46 FR 50288, October 9, 1981), and subsequent revisions to the Federal Reserve Board staff commentary to Regulation Z, will be considered in interpreting the requirements of existing orders.

(b) After an amendment to Regulation Z becomes effective, compliance with the revised credit disclosure requirements will be considered compliance with the existing order, and: (1) To the extent that revised Regulation Z deletes disclosure requirements imposed by any Commission order, compliance with these requirements will no longer be required; however, (2) To the extent that revised Regulation Z imposes additional disclosure or format requirements, a failure to comply with the added requirements will be considered a violation of the TILA.

(c) A creditor or advertiser must continue to comply with all provisions

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42034 Federal Register / Vol. 60, No. 157 / Tuesday, August 15, 1995 / Rules and Regulations 1 Administrative Interpretations, General Policy Statements, and Enforcement Policy Statements, 16 CFR part 14; Guides for the Mail Order Insurance Industry, 16 CFR part 234; Guides Against Debt Collection Deception, 16 CFR part 237; and Guide Against Deceptive Use of the Word ‘‘Free’’ in Connection With the Sale of Photographic Film and Film Processing Services, 16 CFR part 242. 2 See, e.g., Requests for Comments Concerning Guides for the Hosiery Industry, 59 FR 18004 (Apr. 15, 1994); Request for Comment Concerning Guides for the Feather and Down Products Industry, 59 FR 18006 (Apr. 15, 1994).

3 16 CFR 14.2.

4 Unfortunately, seeking public comment would not permit the Commission to count the repeal and revision of these guides and interpretive rules in its tally of completed actions in the Regulatory Reinvention Initiative Report that will be sent to the President on August 1, 1995, but perhaps that harm could be mitigated by reporting to the President that the Commission is seeking public comment concerning repeal or revision. of the order which do not relate to Truth-in-Lending Act requirements or are unaffected by Regulation Z. These provisions are not affected by this policy statement and will remain in full force and effect.

Staff Clarifications The Commission intends that this Enforcement Policy Statement obviate the need for any creditor or advertiser to file a petition to reopen and modify any affected order under section 2.51 of the Commission’s rules of practice (16 CFR 2.51). However, the Commission recognizes that the policy statement may not provide clear guidance to every creditor or advertiser under order. The staff of the Division of Enforcement, Bureau of Consumer Protection, will respond to written requests for clarification of any order affected by this policy statement.

By direction of the Commission. Donald S. Clark, Secretary.

Statement of Commissioner Mary L. Azcuenaga Concurring in 16 CFR Part 14, Matter No. P954215; Repeal of Mail Order Insurance Guides, Matter No. P954903; Repeal of Guides Re: Debt Collection, Matter No. P954809; and Free Film Guide Review, Matter No. P959101 In a flurry of deregulation, the Commission today repeals or substantially revises several Commission guides and other interpretive rules.1 The Commission does so without seeking public comment. I have long supported the general goal of repealing or revising unnecessary, outdated, or unduly burdensome legislative and interpretive rules, and I agree that the repeal or revision of these particular guides and interpretive rules appears reasonable. Nevertheless, I cannot agree with the Commission’s decision not to seek public comment before making these changes.

Although it is not required to do so under the Administrative Procedure Act, 5 U.S.C. 553(b)(A), the Commission traditionally has sought public comment before issuing, revising, or repealing its guides and other interpretive rules. More specifically, the Commission adopted a policy in 1992 of reviewing each of its guides at least once every ten years and issuing a request for public comment as part of this review. See FTC Operating Manual ch. 8.3.8. The Commission decided to seek public comment on issues such as: (1) The economic impact of and continuing need for the guide; (2) changes that should be made in the guide to minimize any adverse economic effect; (3) any possible conflict between the guide and any federal, state, or local laws; and (4) the effect on the guide of technological, economic, or other industry changes, if any, since the guide was promulgated. Id. The Commission has sought public comment and has posed these questions concerning a number of guides since adopting its procedures for regulatory review in 1992.2 Notwithstanding its long-standing, general practice of seeking public comment and its specific policy of seeking public comment as part of its regulatory review process, the Commission has chosen not to seek public comment before repealing or revising these guides and interpretive rules. Why not? Has the Commission changed its view about the potential value of public comment? Perhaps the Commission knows all the answers, but then again, perhaps not. Although reasonable arguments can be made for repeal or revision of these guides and interpretive rules, public comment still might prove to be beneficial. In addition, the relatively short period of time that would be required for public comment should not be problematic. The Commission has not addressed any of these guides or interpretive rules in the last ten years. Indeed, it has not addressed some of them for thirty years or more. For example, the Commission apparently has not addressed the interpretive rule concerning the use of the word ‘‘tile’’ in designation of non-ceramic products since it was issued in 1950.3 The continued existence of these guides and interpretive rules during a brief public comment period surely would cause no harm because they are not binding and because, arguably, they are obsolete. I seriously question the need to act so precipitously as to preclude the opportunity for public comment.4 In 1992, the Commission announced a careful, measured approach for reviewing its guides and interpretive rules, and public comment has been an important part of that process. Incorporating public comment into the review is appropriate and sensible. Although I have voted in favor of repealing or revising these guides and interpretive rules, I strongly would have preferred that the Commission seek public comment before doing so.

[FR Doc. 95–19926 Filed 8–14–95; 8:45 am] BILLING CODE 6750–01–M DEPARTMENT OF STATE Bureau of Consular Affairs 22 CFR Part 41 [Public Notice 2238] Visas: Documentation of Nonimmigrants Under the Immigration and Nationality Act, as Amended; Business and Media Visas AGENCY: Bureau of Consular Affairs, DOS.

ACTION: Final rule.

SUMMARY: This rule implements the provisions of section 209 of the Immigration Act of 1990. This section creates a new nonimmigrant classification under INA 101(a)(15)(R). The new nonimmigrant visa classification provides for the temporary admission into the United States of ‘‘aliens in religious occupations.’’ DATES: August 15, 1995.

FOR FURTHER INFORMATION CONTACT: Stephen K. Fischel, Chief, Legislation and Regulations Division, 202–663– 1204.

SUPPLEMENTARY INFORMATION: On January 6, 1992, at 57 FR 341, the Department of State published an interim rule in the Federal Register and requested comments from interested parties by February 5, 1992. The Visa Office received six comments on the interim rule and considered each one of the comments in the preparation of the final rule.

General As explained in the preamble to the interim rule, the Immigration Act of 1990, Public Law 101–649, amended INA 101(a)(27)(C) and created INA 101(a)(15)(R). The substantive standards for the nonimmigrant and immigrant provisions are the same with the exception that the immigrant category requires that the immigrant alien must have been performing out one of the vocations and activities listed in INA 101(a)(27)(C) during the 2 years immediately preceding the petition for special immigrant status. A significant procedural difference between the nonimmigrant visa classification and the special immigrant category lies in the fact that a petition must be filed with and approved by the Immigration and Naturalization Service (INS) to accord special immigrant status. Although no petition is required to establish entitlement under the ‘‘R’’ visa classification, the applicable standards common to the two visas must be applied by the INS and the Department