The Office of Management and Budget cleared the way yesterday for the Federal Trade Commission to impose controversial new rules on the funeral industry to make undertakers give customers more information about prices and types of services they offer.
After an extensive review and considerable internal debate, the OMB concluded that the regulation would have a practical effect and would not impose excessive paperwork burdens on the industry. As a result, the OMB told the FTC that it could go ahead and issue the regulation.
The OMB ruling was a victory for FTC officials who had feared that the administration, in its drive to cut federal red tape, would oppose the rule and try to block it from taking effect.
FTC officials said yesterday that the OMB decision may now make it easier for the agency to win congressional support for the rule. Under a 1980 law, Congress can veto any FTC rule it dislikes by a majority vote in both houses.
Just two weeks ago, Congress vetoed an FTC rule that would have required used-car dealers to tell their customers about major known defects in the cars they sell. After that veto, FTC officials concluded that they had little chance in winning congressional support for any other rule they issue.
At the heart of the funeral rule is a requirement that undertakers provide customers with a comprehensive, itemized price list of all their goods and services before any transaction is discussed. Funeral directors also would be required to disclose price information over the telephone if the consumer requests it.
From the day the OMB received the rule for review under the two-year-old Paperwork Reduction Act, the administration was split over whether it should reject the rule, OMB officials have acknowledged.
Several economists argued that the rule was ineffective and unnecessarily injected the government into the marketplace.
However, OMB sources say that another faction successfully argued that the rule should be issued to protect consumers at an especially vulnerable period.
The rule now has to be reconsidered by the commission and will probably come up for a vote sometime next month.