The Supreme Court's sweeping decision yesterday against legislative vetoes represents a blow to the business community, which has used the device as one of its weapons against the Federal Trade Commission in recent years.
"We supported legislative veto unequivocably; without that check we may be faced with additional problems like we encountered in the 1970s," complained Howard Vine, director of government regulation and competition at the National Association of Manufacturers.
In the 1970s, the FTC proposed a series of sweeping and controversial rules--such as a ban on television advertising aimed at children and tough restrictions on the used car and funeral industries--that drew the ire of many businessmen. These controversial proposals drew so much criticism that Congress finally enacted legislation in 1980 giving itself the power to overturn FTC rules if a majority of both the House and Senate voted against the rule.
Ever since then, business groups have believed that the veto has served as a powerful deterrent in many of the commission's decisions, forcing the commission to weaken or kill several of the controversial rules.
In the used-car case, for example, the commission weakened its original rule--which would have required used-car dealers to inspect and certify the fitness of the cars they sold--after it became clear that Congress would oppose such a sweeping rule. However, last May, Congress overwhelmingly vetoed a modified rule, which would have required used-car dealers to disclose any known defects. No inspections were required, however.
Congress refused to veto a rule that requires funeral directors to reveal more information about their services and prices to customers. The FTC says the loss of the veto will not affect the commission's decision-making. "The removal of the legislative threat I don't think will change the behavior of the commission," FTC Chairman James C. Miller III said yesterday.
Commissioner Michael Pertschuk added: "Congress remains looking over our shoulder. There are still 27 different methods of torture Congress can use if the agency doesn't meet Congress' desire. They have oversight hearings to put pressure on us; they can put specific limitations on our authorization bills and they can put riders on our appropriations to bar us from issuing certain rules."
But business groups do not agree with this assessment. With the level of rule-making activity near a record low, they do not appear particularly concerned about the absence of the legislative veto in the near future.
However, Vine and others fear that unless some specific limitations are put into law, the FTC could once again become the run-away agency they had succeeded in curbing through the veto.
"We're going to have a problem," said Jim Carty, NAM's vice president for government regulation and competition. "There may be some movement to redefine the FTC's authority, to cut back on its rulemaking authority" and its power to attack deceptive and unfair advertisements and commercial practices.
In the meantime, yesterday's ruling has cast confusion over the fate of the used-car rule. Consumer groups have challenged Congress' veto of the rule and that challenge is still before the Supreme Court.
Automobile dealers who backed the congressional veto said yesterday they hoped that meant the Supreme Court would uphold that particular veto. However, other business groups and commission officials said they expect the court to overturn that veto early next week and hand the case back to the U.S. District Court, which in turn is expected to order the implementation of the rule.
Yet it was unclear if the commission would once again have to vote on an effective date before the rule could take effect. If so, commission sources predicted that it was possible that Miller, who has opposed the rule, would try to weaken it.
Miller said yesterday he "wouldn't anticipate trying to shelve the used-car rule."