The Federal Trade Commission faces a possible shutdown tonight after a Justice Department ruling suggesting the agency cannot continue to operate without prompt funding from Congress.
Attorney General Benjamin Civiletti, in an April 25 letter to President Carter, said that during periods of lapsed funding "no funds may be expended except as necessary to bring about the orderly termination of an agency's functions."
The Civiletti letter, which took FTC officials by surprise, come as House and Senate conferees are attempting to break a deadlock on the FTC's authorization bill.
Without a conference report on the FTC's authorization bill, the House Appropriations Committee has consistently said it won't take up a resolution that would continue the agency's funding. The FTC's current funding runs out tonight.
As the agency's predicament worsened yesterday, lobbyists for the broadcast and sugar industries feverishly attempted to use the Justice Department ruling as a means to encourage conference committee members and their staffs privately to adopt potentially tough restrictions on the FTC's probe of television advertising directed at children.
The House-Senate conference committee is scheduled to meet today to take up the authorization bill, the target of the substantial lobbying effort. Already, the bill restricts a number of controversial FTC investigations, including the so-called "kid-vid" case.
The fate of the FTC is further complicated by the fact that President Carter, in meetings last week with FTC and congressional leaders, has insisted that he would veto any bill that guts FTC cases or places damaging restrictions on the agency's work.
"It just isn't clear that we're going to get a bill," one high-ranking administration official said. "Even if the conferees resolve the issues tomorrow, there will still be at least a small hiatus in the agency's work. There now is the potential to have the commission go out of business for some time."
The "hiatus" or shutdown of the FTC loomed yesterday in light of the Civiletti opinion.
Under the Antideficiency Act, a little-noticed federal law, agencies are barred from spending money above their level of appropriations. Civiletti, in his letter to Carter, said the Justice Department opinion apparently is the first time the department has been asked, as a matter of law, to address the funding question.
The Civiletti letter -- which doesn't mention the FTC specifically -- was prompted by an inquiry by Rep. Gladys Spellman (D-Md.), who heads a House Civil Service subcommittee and has been concerned about the effect of the appropriations problem on the federal work force.
Civiletti said the Office of Management and Budget and the General Accounting Office have adopted "legally insupportable" positions on allowing agencies without necessary funding to continue basic operations. Those two oversight agencies had suggested that "congressional intent" behind the funding issue had been that agencies could continue these essential functions.
Agencies, without a formal appropriation, "may incur no obligations unless such obligations are otherwise authorized by law," Civiletti wrote.
"There are no exceptions to this rule under current law, even where obligations incurred earlier would avoid greater costs to the agencies should appropriations later be enacted," Civiletti wrote.
Civiletti also stressed that the Justice Department "will take actions to enforce the criminal provisions" of the Antideficiency Act if future violations of it are alleged.
Michael Sohn, the FTC's general counsel, said the Civiletti opinion "points out technical problems raised by the language" of the law. He said the FTC is "studying (Civiletti's) opinion and if there is no appropriation we will work with the attorney general's office to take the steps necessary to comply with the law."