Exercising its first congressional veto over the Federal Trade Commission, Congress yesterday killed the agency's controversial used-car rule that would have required car dealers to disclose more information about the cars they sell to their customers.
By a 286-133 vote, the House vetoed the rule primarily on the grounds that the regulation, designed to protect consumers from unscrupulous dealers, was so costly and burdensome that it would aggravate further the already ailing automobile industry.
The Senate vetoed the rule last week by a 69-27 vote, so the FTC now is barred permanently from implementing its rule, which would have required dealers to post a one-page sticker on all used cars to alert consumers about any known major defects. The sticker also would have told consumers what warranty rights the dealer is offering.
The legislative veto was a major victory for car dealers, who have been lobbying vigorously against the rule ever since a more stringent version first was discussed six years ago. Over the past 3 1/2 years, the National Automobile Dealers Association made $825,000 in campaign contributions to members of Congress.
Several congressmen who opposed the veto charged yesterday that the large sum of contributions was a critical factor in the lopsided vote.
Consumer groups that had fought for the rule indicated they will challenge the veto. Mark Silbergeld, director of Consumers Union's Washington office, said his organization will file suit within a few days challenging the constitutionality of the veto. Some congressmen who opposed the veto, including Rep. Toby Moffett (D-Conn.), said they may join the suit or file their own.
Meanwhile, the new FTC chairman, James C. Miller III--who did not participate in the formulation of the used-car rule and did not play any role in the veto debate--held a press conference immediately after the vote to announce that he would urge the commission to adopt a modified version of the vetoed rule.
Under Miller's proposal, the rule would not require dealers to list any known major defects but still would force them to post a sticker describing the warranty rights that come with each car.
Commission officials said they would study Miller's proposal, but some indicated that they may not support it because they believe that deleting the defects requirement may water down the rule so much that it will be ineffective in protecting consumers.
Commission officials and key congressional leaders who support the activities of the FTC acknowledged yesterday that the veto does not bode well for the agency, which has been under attack by business groups for the past four years.
The veto "casts doubt on our efforts to mitigate unfair and deceptive trade practices in the marketplace," said FTC Commissioner Patricia P. Bailey, who had led the commission's fight against the veto.
The commission has a number of other consumer-protection rules that are nearly ready to go to Congress for approval. Among these is a rule that would force funeral directors to disclose greater price information on funeral services to bereaved families.
However, Rep. James Florio (D-N.J.), the chairman of the subcommittee that oversees the FTC, said after the vote that if the used-car rule couldn't get through Congress, then the FTC never will be able to get Congress to approve its funeral rule.
What's more, he said, "Special-interest groups, smelling blood as a result of this action, are now going to mount a full-scale attack on the FTC in the authorization process." With the FTC due to expire this fall, Congress is considering a new authorization for the agency. PHOTO(By James K.W. Atherton for the W.P.):Reps. Toby Moffett, left, and James Florio, chairman of the subcommittee that oversees the Federal Trade Commission, discuss yessterday's House vote that killed the agency's rule on what data dealers would have to disclose about used cars.