The Federal Trade Commission's controversial used-car rule, which received a second life when the Supreme Court struck down Congress' legislative veto powers several weeks ago, still faces a long haul before it goes into effect, in any form, due to the commission's 3-to-2 vote Monday to reopen the record on the rule.
The key to the rule's survival lies not with consumer groups who strongly favor it or car dealers who strenuously object to it, but with the commission itself. And the FTC today is quite a different body from the one that unanimously promulgated the rule two years ago.
The FTC, led by Chairman James C. Miller III, has been in transition from a liberal majority to a more conservative one that favors deregulation. Two of President Reagan's FTC appointees, Miller and Commissioner George Douglas, will be joined by a third, as yet unnamed, after Commissioner David Clanton's departure in late September.
Clanton, a Republican and currently the swing vote on the FTC, voted for the rule two years ago. This week, his vote was the difference in the decision to reconsider it.
Clanton, who voted with Miller and Douglas, said that, based on Congress' "strong signal . . . of unhappiness and disagreement" with the commission's decision on the rule, it is "entirely appropriate to take another look" at it.
The used-car rule essentially is a warranty disclosure measure. It requires used-car dealers to afix a one-page sticker to their cars, listing the buyer's warranty rights and indicating with an "okay," "not okay," or "don't know" the conditions of key parts of the vehicle, such as brakes, suspension, and transmission..
An earlier version of the rule proposed that dealers inspect the cars, but that was eliminated and the current rule only requires disclosure of certain major defects "if known to the dealer," said Commissioner Patricia Bailey, who originally introduced the rule. Miller indicated it might be best to eliminate this "known defects" provision.
Following an automotive lobbying blitz, Congress resoundingly vetoed the measure in May 1982, killing it until the Supreme Court's action.
Commissioner Michael Pertschuk, who also voted for the rule two years ago, strongly objected to reopening the record, saying in his dissent that it was the "product of tortuous rulemaking" and "the very minimum rule which could satisfy the requirement that the Federal Trade Commission's rulemaking be in the public interest."
He criticized Miller and Douglas, saying "the two Reagan-appointees have shifted the majority in order to prevent putting the rule into effect. There should be no doubt that this outcome is the result of the prevailing ideology of this administration and is in no way dictated by evidence of changed circumstances in the used-car industry."
Bailey also opposed reconsideration of the rule.
Reactions from the Consumers Union and the National Automotive Dealers Association differed sharply.
"It's a sad day for consumers. And it's a happy day only for the car dealers who want to deceive people," said Consumers Union spokeswoman Ellen Broadman.
"We think certain members of the commission want to destroy the rule," she said. "There's no reason, no change in circumstance for the FTC to gut the rule."
NADA issued a statement applauding the move and reiterating its opposition to the rule as it now stands. The group also reintroduced its suit in the U.S. Court of Appeals challenging "the original rule on its merit and also question(ing) the manner in which the commission promulgated the rule."