The Federal Trade Commission temporarily shut down its operations today, apparently the first federal agency ever forced to close its doors in a budget dispute. The shutdown came despite eleventh-hour congressional action to limit sharply the agency's power.
The agency yesterday ordered all operations halted, effective today, except those related to the shutdown. The order forced commission staff members to cancel travel plans hurriedly as well as a major court appearance and a series of activities connected with antitrust and consumer protection cases.
The budget dilemma evolved yesterday -- the last day of formal FTC funding -- as the House appropriations Committee considered a $55 million budget request for the agency.
But the budget aproval was postponed. Some committee members endorsed a proposal that would leave the agency in limbo until both the House and Senate approve a conference report limiting the FTC powers and President Carter signed it into law. At least one appropriations committee member yesterday said he would attempt to make the budget plan a continuing resolution that could lift the funding embargo.
Attorney General Benjamin Civiletti caught FTC officials by surprise this week, issuing a ruling that forced the shutdown. Civiletti barred agencies from continuing their operations during a period of "lapsed appropriations."
"We are in the absurd situation of having to follow the attorney general's opinion," said one FTC official. "We intend to follow it. People who come to work [today] will have the obligation of shutting down the FTC."
The 66-year-old commission, which employs more than 1,600 people countrywide including 1,100 here, has been the target of intense criticism from Congress and segments of the business community as a result of its recent aggressive monitoring of virtually every segment of economic activity.
That criticism, which encompasses FTC action involving fields as diverse as broadcasting and agricultural cooperatives, hs resulted in congressional action to limit, if not end, commission investigations and rule-making actions.
The FTC authorization bill became the target of those critics, as members of Congress and powerful business lobbying groups sought to use the bill as the legislative vehicle to limit FTC work. The authorization package, which had been tied up in a House-Senate squabble over which industries and commission procedures would be affected, was approved by the conference committee, with the only dissent coming from Sen. Robert Packwood (R-Ore.).
Most conference members said that although they were not completely satisfied with the bill, the problems raised by shutting down the FTC were forcing their hand.
"We either vote today to continue the FTC or we'll allow this important agency of our government to go out of existence," said Rep. Matthew Rinaldo (R-N.J.), a conference member.
The appropriations committee has consistently said that without congressional passage of an authorization bill it would not continue the temporary funding.
Even late yesterday, the vital conference report language was under study by conference members and their staffs. The package approved by the conference:
Ends FTC authority to petition for cancellation of a trademark on the grounds that it has become "generic."
Sets up a mechanism for state exemptions from an FTC rule governing the pricing practices of funeral home operators.
Allows the FTC to continue an antitrust probe of Sunkist, an agricultural cooperative, but calls on the FTC, and the Departments of Agriculture and Justice to set up a panel to study the commission's jurisdiction over the giant cooperatives.
Permits the FTC to investigate the insurance industry only after endorsement by either congressional oversight committee.
Forces the agency to limit its investigation of advertising directed at children to ads that are "deceptive" rather than simply misleading and limits the FTC to that standard on other similar probes.
Curtails the agency's ability to issue trade rules relating to the standards and certification process.
Adopts a two-house congressional veto of FTC rules. Congress currently has no veto provision over the FTC rules.
FTC Chairman Michael Pertschuk said he was "gratified" by the agreement, adding it would "permit the agency to continue the major ongoing proceedings which were under attack," White House officials reacted cautiously, however, uncertain about whether the final language would enable Carter to sign the bill.
Much of the controversy about the package in the last several weeks focused on the so-called "kid-vid" investigation, which Packwood said had been virtually killed by the authorization language.
"Eliminating unfairness as a standard in regulating advertising is attributable to the strong influence of the sugar, tobacco and advertising lobbies," Packwood said.
As the agency's activities were forced to a halt, FTC General Counsel Michael Sohn wrote to Civiletti explaining the commission's shutdown activities and requesting a ruling as to their compliance with the law.
Meanwhile, 11 FTC investigators reading oil company documents in Texas were told to return home, and an FTC argument before a federal appeals court in New York scheduled for today was canceled.
One FTC regional office official said he was worried about what to tell telephone callers today. "How do you explain to the public that yo can't help them," he said. "We're effectively in a closing-down mode."