IB 

Union Calendar No. 685 

114TH CONGRESS 

2D SESSION H. R. 5510 

[Report No. 114–875, Part I] 

To amend the Federal Trade Commission Act to establish new requirements 

relating to investigations, consent orders, and reporting requirements, 

and for other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

JUNE 16, 2016 

Mr. BURGESS introduced the following bill; which was referred to the Committee on Energy and Commerce, and in addition to the Committee on 

the Judiciary, for a period to be subsequently determined by the Speaker, 

in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned 

DECEMBER 13, 2016 

Reported from the Committee on Energy and Commerce with an amendment 

[Strike out all after the enacting clause and insert the part printed in italic] 

DECEMBER 13, 2016 

The Committee on the Judiciary discharged; committed to the Committee of 

the Whole House on the State of the Union and ordered to be printed 

[For text of introduced bill, see copy of bill as introduced on June 16, 2016] 

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A BILL 

To amend the Federal Trade Commission Act to establish 

new requirements relating to investigations, consent orders, and reporting requirements, and for other purposes. 

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1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE; TABLE OF CONTENTS. 

4 (a) SHORT TITLE.—This Act may be cited as the 

5 ‘‘FTC Process and Transparency Reform Act of 2016’’. 

6 (b) TABLE OF CONTENTS.—The table of contents for 

7 this Act is as follows: 

Sec. 1. Short title; table of contents. 

Sec. 2. Unlawful act or practice. 

Sec. 3. Time limitation for consent orders. 

Sec. 4. Annual reporting on the status of investigations. 

Sec. 5. Requirement of analysis and rationale for legislative and regulatory recommendations. 

Sec. 6. Effects of guidelines, general statements of policy, and similar guidance. 

Sec. 7. Termination of inactive investigations. 

Sec. 8. Nonpublic collaborative discussions. 

Sec. 9. Annual plan required. 

8 SEC. 2. UNLAWFUL ACT OR PRACTICE. 

9 Section 5(n) of the Federal Trade Commission Act (15 

10 U.S.C. 45(n)) is amended to read as follows: 

11 ‘‘(n) UNLAWFUL ACT OR PRACTICE.— 

12 ‘‘(1) SUBSTANTIAL INJURY REQUIRED.— 

13 ‘‘(A) IN GENERAL.—The Commission shall 

14 have no authority under this section or section 

15 18 to declare unlawful an act or practice on the 

16 grounds that such act or practice is unfair unless 

17 the act or practice causes or is likely to cause 

18 substantial injury to consumers which is not rea19 sonably avoidable by consumers themselves and 

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1 not outweighed by countervailing benefits to con2 sumers or to competition. 

3 ‘‘(B) SUBSTANTIAL INJURY TO CON4 SUMERS.—For purposes of this subsection, an 

5 act or practice does not cause and is not likely 

6 to cause substantial injury to consumers if the 

7 injury or harm resulting from such act or prac8 tice is trivial or merely speculative. An injury 

9 may be sufficiently substantial if the injury does 

10 a small harm to a large number of people. An 

11 act or practice may be likely to cause a substan12 tial injury if the act or practice raises a signifi13 cant risk of concrete harm. 

14 ‘‘(C) CONSIDERATIONS REQUIRED.—In de15 termining whether an act or practice causes or 

16 is likely to cause substantial injury to consumers 

17 under this subsection, the Commission shall con18 sider the following: 

19 ‘‘(i) Whether the act or practice results 

20 in monetary harm. 

21 ‘‘(ii) Whether the act or practice results 

22 in unwarranted health or safety risk. 

23 ‘‘(iii) Whether the act or practice re24 sults only in emotional or other more sub25 jective harm. 

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1 ‘‘(2) NET EFFECTS OF INJURY REQUIRED.— 

2 ‘‘(A) CONSIDERATIONS REQUIRED.—An act 

3 or practice is not unfair unless the act or prac4 tice is injurious in its net effects. In determining 

5 whether an act or practice is injurious in its net 

6 effects, the Commission shall consider the fol7 lowing: 

8 ‘‘(i) The various costs for a remedy, in9 cluding the costs to the parties directly be10 fore the Commission. 

11 ‘‘(ii) The burdens on society in general 

12 in the form of increased paperwork, in13 creased regulatory burdens on the flow of 

14 information, reduced incentives to innova15 tion and capital formation, and other simi16 lar matters. 

17 ‘‘(B) CONSUMER DECISIONS.—The Commis18 sion may not second-guess the wisdom of par19 ticular consumer decisions, but may consider 

20 whether the act or practice unreasonably creates 

21 or takes advantage of an obstacle to the free exer22 cise of consumer decisionmaking. 

23 ‘‘(3) PUBLIC POLICY CONSIDERATIONS.—In de24 termining whether an act or practice is unfair, the 

25 Commission may consider established public policies 

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1 as evidence to be considered with all other evidence. 

2 Such public policy considerations may not serve as a 

3 primary basis for such determination.’’. 

4 SEC. 3. TIME LIMITATION FOR CONSENT ORDERS. 

5 (a) AMENDMENT.—Section 5 of the Federal Trade 

6 Commission Act (15 U.S.C. 45) is amended by adding at 

7 the end the following new subsections: 

8 ‘‘(o) TERMINATION CLAUSE REQUIRED FOR CONSENT

9 ORDERS.—Any consent order entered into by the Commis10 sion relating to alleged unfair or deceptive acts or practices 

11 by the person, partnership, or corporation, subject to the 

12 consent order shall include a termination clause that the 

13 consent order shall expire not later than 8 years after the 

14 date on which the consent order is entered into, unless the 

15 consent order relates to alleged fraud by the person, partner16 ship, or corporation subject to the consent order or requires 

17 a time limit longer than 8 years based on the factors de18 scribed in this subsection. In determining the time limit 

19 for any termination clause, the Commission shall consider 

20 each of the following factors: 

21 ‘‘(1) The impact of technological progress on the 

22 continuing relevance of the consent order. 

23 ‘‘(2) Whether there is reason to believe that the 

24 person, partnership, or corporation would continue to 

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1 engage in activities that violate this section without 

2 the consent order. 

3 ‘‘(p) CONSENT ORDER REVIEW.—Any consent order 

4 entered into by the Commission that is unrelated to alleged 

5 fraud by the person, partnership, or corporation subject to 

6 the consent order and has a termination date more than 

7 5 years after such consent order is entered into shall include 

8 a clause providing for Commission review of the consent 

9 order 5 years after the date on which the order is entered 

10 into. Such clause shall require the Commission to evaluate 

11 whether the consent order has achieved its initial purposes 

12 based on the factors described in subsection (o). The clause 

13 shall provide that if, based on such evaluation, the Commis14 sion determines that the consent order has achieved its pur15 poses, the Commission shall terminate the consent order. 

16 ‘‘(q) PETITION FOR REVIEW OF EXISTING CONSENT

17 ORDERS.—Any person, partnership, or corporation that as 

18 of the effective date of this subsection is subject to a consent 

19 order that is unrelated to alleged fraud and has been effec20 tive for a period of at least five years may petition the Com21 mission to terminate such consent order. In evaluating a 

22 petition to terminate a consent order under this subsection, 

23 the Commission shall consider whether the consent order has 

24 achieved its initial purposes based on each of the factors 

25 described in subsection (o). If, based on such evaluation, 

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1 the Commission determines that the consent order has 

2 achieved its purposes, the Commission shall terminate the 

3 consent order.’’. 

4 (b) EFFECTIVE DATE; APPLICABILITY.—The amend5 ment made by subsection (a) shall take effect on the date 

6 of enactment of this Act and with respect to subsections (o) 

7 and (p) of section 5 of the Federal Trade Commission Act 

8 (15 U.S.C. 45), as added by subsection (a), shall apply with 

9 respect to any consent order entered into after such date. 

10 SEC. 4. ANNUAL REPORTING ON THE STATUS OF INVES11 TIGATIONS. 

12 Section 5 of the Federal Trade Commission Act (15 

13 U.S.C. 45), as amended by section 3, is further amended 

14 by adding at the end the following new subsection: 

15 ‘‘(r) REPORT ON INVESTIGATIONS.— 

16 ‘‘(1) IN GENERAL.—The Commission shall, on an 

17 annual basis, submit a report to Congress on inves18 tigations with respect to unfair or deceptive acts or 

19 practices, and with respect to unfair methods of com20 petition, in or affecting commerce (within the mean21 ing of subsection (a)(1)), detailing— 

22 ‘‘(A) the number of such investigations the 

23 Commission has commenced; 

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1 ‘‘(B) the number of such investigations the 

2 Commission has closed with no official agency 

3 action; 

4 ‘‘(C) the disposition of such investigations, 

5 if such investigations have concluded and re6 sulted in official agency action; and 

7 ‘‘(D) for each such investigation that was 

8 closed with no official agency action, subject to 

9 paragraph (2), a description— 

10 ‘‘(i) sufficient to indicate the legal 

11 analysis supporting the Commission’s deci12 sion not to continue such investigation; and 

13 ‘‘(ii) of the industry sectors of the per14 sons, partnerships, or corporations who are 

15 subjects of such investigation. 

16 ‘‘(2) CONSENT REQUIRED.—The Commission 

17 shall not include in a report required under para18 graph (1) the description required under subpara19 graph (D) of such paragraph unless the Commission 

20 has— 

21 ‘‘(A) provided to each person, partnership, 

22 or corporation who is a subject of the investiga23 tion a notification containing the description to 

24 be included in the report; and 

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1 ‘‘(B) obtained the consent of each such per2 son, partnership, or corporation to the inclusion 

3 of the description in the report. 

4 ‘‘(3) PRIVACY PROTECTION.—The description re5 quired under paragraph (1)(D) shall not include the 

6 identity of any person, partnership, or corporation 

7 who is a subject of the investigation or any other in8 formation that identifies the person, partnership, or 

9 corporation.’’. 

10 SEC. 5. REQUIREMENT OF ANALYSIS AND RATIONALE FOR 

11 LEGISLATIVE AND REGULATORY REC12 OMMENDATIONS. 

13 The Federal Trade Commission Act (15 U.S.C. 41 et 

14 seq.) is amended by inserting after section 6 the following 

15 new section: 

16 ‘‘SEC. 6A. ECONOMIC ANALYSIS REQUIRED. 

17 ‘‘(a) IN GENERAL.—Except as provided in subsection 

18 (b), the Commission may not publish a recommendation for 

19 legislative or regulatory action unless— 

20 ‘‘(1) the Commission publishes any economic 

21 analysis or advice prepared by the Bureau of Eco22 nomics of the Commission relating to such rec23 ommendation; or 

24 ‘‘(2) if no such economic analysis or advice was 

25 prepared, the Commission indicates, in writing as 

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1 part of such recommendation, that no such analysis 

2 or advice was given. 

3 ‘‘(b) EXCEPTION.—The requirement in subsection (a) 

4 shall not apply if— 

5 ‘‘(1) the recommendation for legislative or regu6 latory action is made as part of an appearance by a 

7 Commissioner before Congress; 

8 ‘‘(2) the recommendation is made to a State or 

9 local government entity; 

10 ‘‘(3) the recommendation is requested by and 

11 submitted to any member or committee of Congress, 

12 including the Committee on Energy and Commerce of 

13 the House of Representatives; 

14 ‘‘(4) the recommendation is submitted to another 

15 Federal agency in response to a notice of proposed 

16 rulemaking, including comments to the Federal Com17 munications Commission; or 

18 ‘‘(5) the recommendation is submitted to the 

19 United Kingdom, the European Union or members 

20 thereof, including recommendations to the European 

21 Parliament, the European Commission, or any data 

22 protection authorities of any member state with re23 gard to cross-border data flows and other privacy and 

24 data security matters.’’. 

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1 SEC. 6. EFFECTS OF GUIDELINES, GENERAL STATEMENTS 

2 OF POLICY, AND SIMILAR GUIDANCE. 

3 Section 18(a) of the Federal Trade Commission Act 

4 (15 U.S.C. 57a(a)) is amended by adding at the end the 

5 following: 

6 ‘‘(3)(A) No guidelines, general statements of policy, or 

7 similar guidance related either to unfair methods of com8 petition or to unfair or deceptive acts or practices, in or 

9 affecting commerce, issued by the Commission shall confer 

10 any rights upon any person, State, or locality, nor shall 

11 operate to bind the Commission or any person, State, or 

12 locality to the approach recommended in such guidelines, 

13 general statements of policy, or similar guidance. In any 

14 enforcement action, the Commission shall prove a violation 

15 of a provision of law enforced by the Commission. The Com16 mission may not base an enforcement action on, or execute 

17 a consent order based on, acts or practices that are alleged 

18 to be inconsistent with any such guidelines, general state19 ments of policy, or similar guidance, unless the acts or 

20 practices violate a provision of law enforced by the Commis21 sion. 

22 ‘‘(B) Compliance with any guidelines, general state23 ment of policy, or similar guidance issued by the Commis24 sion may be used as evidence of compliance with the provi25 sion of law under which the guidelines, general statement 

26 of policy, or guidance was issued. 

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1 ‘‘(C) Nothing in this paragraph shall be construed to 

2 confer any authority upon or negate any authority of the 

3 Commission to issue guidelines, general statements of pol4 icy, or similar guidance.’’. 

5 SEC. 7. TERMINATION OF INACTIVE INVESTIGATIONS. 

6 Section 20 of the Federal Trade Commission Act (15 

7 U.S.C. 57b–1) is amended— 

8 (1) by redesignating subsection (j) as subsection 

9 (k); and 

10 (2) by inserting after subsection (i) the following 

11 new subsection: 

12 ‘‘(j) TERMINATION OF INACTIVE INVESTIGATION.— 

13 ‘‘(1) IN GENERAL.—Except as provided in para14 graph (2), a covered investigation shall terminate at 

15 the expiration of the six-month period beginning on 

16 the date on which a covered verifiable written commu17 nication is sent by the Commission. 

18 ‘‘(2) EXCEPTION.—Paragraph (1) does not apply 

19 if— 

20 ‘‘(A) an additional covered verifiable writ21 ten communication is sent by the Commission 

22 during the period described in paragraph (1); 

23 ‘‘(B) the Commission votes to extend the 

24 covered investigation before the expiration of 

25 such period; or 

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1 ‘‘(C) the Commission determines in a vote, 

2 within 30 days after the expiration of such pe3 riod, that the Commission did not send a covered 

4 verifiable written communication during such 

5 period because of excusable neglect or a cir6 cumstance beyond the control of the Commission 

7 that rendered notification during such period 

8 impossible. 

9 ‘‘(3) DEFINITIONS.—In this subsection: 

10 ‘‘(A) COVERED INVESTIGATION.—The term 

11 ‘covered investigation’ means an investigation 

12 conducted pursuant to this section in which the 

13 Commission has notified the person, partnership, 

14 or corporation that is the subject of the investiga15 tion by verifiable written communication. 

16 ‘‘(B) COVERED VERIFIABLE WRITTEN COM17 MUNICATION.—The term ‘covered verifiable writ18 ten communication’ means a verifiable written 

19 communication relating to an investigation con20 ducted pursuant to this section that is sent to the 

21 person, partnership, or corporation that is the 

22 subject of the investigation.’’. 

23 SEC. 8. NONPUBLIC COLLABORATIVE DISCUSSIONS. 

24 The Federal Trade Commission Act (15 U.S.C. 41 et 

25 seq.) is amended by inserting after section 26 the following: 

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1 ‘‘SEC. 27. NONPUBLIC COLLABORATIVE DISCUSSIONS. 

2 ‘‘(a) IN GENERAL.—Notwithstanding section 552b of 

3 title 5, United States Code, a bipartisan majority of Com4 missioners may hold a meeting that is closed to the public 

5 to discuss official business if— 

6 ‘‘(1) a vote or any other agency action is not 

7 taken at such meeting; 

8 ‘‘(2) each person present at such meeting is a 

9 Commissioner or an employee of the Commission; and 

10 ‘‘(3) an attorney from the Office of General 

11 Counsel of the Commission is present at such meeting. 

12 ‘‘(b) DISCLOSURE OF NONPUBLIC COLLABORATIVE

13 DISCUSSIONS.—Not later than 2 business days after the 

14 conclusion of a meeting held under subsection (a), the Com15 mission shall publish on its Internet website a disclosure 

16 of such meeting, including— 

17 ‘‘(1) a list of the persons who attended such 

18 meeting; and 

19 ‘‘(2) a summary of the matters discussed at such 

20 meeting, except for such matters as the Commission 

21 determines may be withheld under section 552b(c) of 

22 title 5, United States Code. 

23 ‘‘(c) PRESERVATION OF OPEN MEETINGS REQUIRE24 MENTS FOR AGENCY ACTION.—Nothing in this section shall 

25 alter or supersede section 552b of title 5, United States 

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1 Code, with respect to any meeting of Commissioners other 

2 than a meeting held under subsection (a). 

3 ‘‘(d) DEFINITIONS.—In this section: 

4 ‘‘(1) AGENCY ACTION.—The term ‘agency action’ 

5 has the meaning given such term in section 551 of 

6 title 5, United States Code. 

7 ‘‘(2) BIPARTISAN MAJORITY.—The term ‘bipar8 tisan majority’ means, when used with respect to a 

9 group of Commissioners, that such group— 

10 ‘‘(A) is a group of two or more Commis11 sioners; and 

12 ‘‘(B) includes, for each political party of 

13 which any Commissioner is a member, at least 

14 1 Commissioner who is a member of such polit15 ical party, and, if any Commissioner has no po16 litical party affiliation, at least 1 unaffiliated 

17 Commissioner.’’. 

18 SEC. 9. ANNUAL PLAN REQUIRED. 

19 (a) AMENDMENTS.—The Federal Trade Commission 

20 Act (15 U.S.C. 41 et seq.), as amended by section 8, is fur21 ther amended— 

22 (1) by redesignating section 28 as section 30; 

23 and 

24 (2) by inserting after section 27 the following 

25 new sections: 

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1 ‘‘SEC. 28. ANNUAL PLAN REQUIRED. 

2 ‘‘Not later than December 1 of each year, the Commis3 sion shall publish and submit to the Committees on the Ju4 diciary and Commerce, Science, and Transportation of the 

5 Senate and the Committees on the Judiciary and Energy 

6 and Commerce of the House of Representatives a plan for 

7 the next calendar year describing the projected activities of 

8 the Commission, including each of the following: 

9 ‘‘(1) The policy priorities of the Commission. 

10 ‘‘(2) Any rulemakings projected to be com11 menced. 

12 ‘‘(3) Any plans to develop guidelines or other 

13 non-regulatory guidance documents. 

14 ‘‘(4) Any plans to restructure the Commission or 

15 establish or alter working groups. 

16 ‘‘(5) Any planned projects or initiatives of the 

17 Commission, including workshops, conferences, and 

18 reports. 

19 ‘‘(6) With respect to any activities of the Com20 mission, including workshops, conferences, reports, 

21 working groups, guidance documents, or rulemakings, 

22 that relate specifically to combating unfair or decep23 tive acts or practices that target or significantly affect 

24 individuals who are 65 years of age or older, a de25 scription of how such activities will address such acts 

26 or practices. 

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1 ‘‘(7) Projected dates and timelines associated 

2 with any of the required disclosures in this section. 

3 ‘‘SEC. 29. REPORT ON ELDER FRAUD REQUIRED. 

4 ‘‘Not later than January 31 of each year, the Commis5 sion shall publish and submit to the Committee on Com6 merce, Science, and Transportation of the Senate and the 

7 Committee on Energy and Commerce of the House of Rep8 resentatives a report on the Commission’s enforcement ac9 tions to address unfair or deceptive acts or practices that 

10 may have targeted or significantly affected individuals who 

11 are 65 years of age or older during the previous calendar 

12 year, including each of the following: 

13 ‘‘(1) A brief description of each such enforcement 

14 action. 

15 ‘‘(2) The disposition of such enforcement actions, 

16 broken down by category. 

17 ‘‘(3) The proportion of such enforcement actions 

18 as a percentage of all enforcement actions relating to 

19 unfair or deceptive acts or practices in or affecting 

20 commerce brought by the Commission.’’. 

21 (b) RULE OF CONSTRUCTION.—Nothing in the amend22 ments made by subsection (a) shall be construed to limit 

23 or restrict the Federal Trade Commission’s activities or dis24 closure of information to the public, consistent with appli25 cable law. 

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1 (c) EFFECTIVE DATE; APPLICABILITY.—The amend2 ments made by subsection (a) shall take effect on the date 

3 of enactment of this Act and shall apply with respect to 

4 the first December 1 and January 31, as applicable, occur5 ring after such effective date. 

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Union Calendar No. 685 

114TH CONGRESS 

2D SESSION H. R. 5510 

[Report No. 114–875, Part I] 

A BILL 

To amend the Federal Trade Commission Act to 

ments, and for other purposes. tions, consent orders, and reporting requireestablish new requirements relating to investigaDECEMBER 13, 2016 

Reported from the Committee on Energy and Commerce 

D

with an amendment 

ECEMBER 13, 2016 

The Committee on the Judiciary discharged; committed 

the Union and ordered to be printed to the Committee of the Whole House on the State of 

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