[Federal Register Volume 73, Number 195 (Tuesday, October 7, 2008)]
[Proposed Rules]
[Pages 58832-58858]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E8-23745]



[[Page 58831]]

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Part IV





Federal Trade Commission





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16 CFR Parts 3 and 4



Rules of Practice; Proposed Rule

Federal Register / Vol. 73, No. 195 / Tuesday, October 7, 2008 / 
Proposed Rules

[[Page 58832]]


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FEDERAL TRADE COMMISSION

16 CFR Parts 3 and 4


Rules of Practice

AGENCY: Federal Trade Commission (``Commission'' or ``FTC'').

ACTION: Proposed rule amendments; request for public comment.

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SUMMARY: The FTC is proposing to amend Parts 3 and 4 of its Rules of 
Practice, in order to further expedite its adjudicative proceedings, 
improve the quality of adjudicative decision making, and clarify the 
respective roles of the Administrative Law Judge (``ALJ'') and the 
Commission in Part 3 proceedings.

DATES: Written comments must be received on or before November 6, 2008.

ADDRESSES: Interested parties are invited to submit written comments 
electronically or in paper form. Comments should refer to ``Parts 3 and 
4 Rules of Practice Rulemaking--P072104'' to facilitate the 
organization of comments. Please note that comments will be placed on 
the public record of this proceeding--including on the publicly 
accessible FTC website, at (http://www.ftc.gov/os/publiccomments.shtm) 
-- and therefore should not include any sensitive or confidential 
information. In particular, comments should not include any sensitive 
personal information, such as an individual's Social Security number; 
date of birth; driver's license number or other state identification 
number, or foreign country equivalent; passport number; financial 
account number; or credit or debit card number. Comments also should 
not include any sensitive health information, such as medical records 
and other individually identifiable health information. In addition, 
comments should not include any ``[t]rade secret or any commercial or 
financial information which is obtained from any person and which is 
privileged or confidential. . . . ,'' as provided in Section 6(f) of 
the FTC Act, 15 U.S.C. 46(f), and Commission Rule 4.10(a)(2), 16 CFR 
4.10(a)(2). Comments containing material for which confidential 
treatment is requested must be filed in paper form, must be clearly 
labeled ``Confidential,'' and must comply with Commission Rule 
4.9(c).\1\
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    \1\ The comment must be accompanied by an explicit request for 
confidential treatment, including the factual and legal basis for 
the request, and must identify the specific portions of the comment 
to be withheld from the public record. The request will be granted 
or denied by the Commission's General Counsel, consistent with 
applicable law and the public interest. See Commission Rule 4.9(c), 
16 CFR 4.9(c).
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    Because paper mail in the Washington area, and specifically to the 
FTC, is subject to delay due to heightened security screening, please 
consider submitting your comments in electronic form. Comments filed in 
electronic form should be submitted by using the following weblink: 
(https://secure.commentworks.com/ftc-part3rules) (and following the 
instructions on the web-based form). To ensure that the Commission 
considers an electronic comment, you must file it on the web-based form 
at the weblink: (https://secure.commentworks.com/ftc-part3rules). If 
this document appears at (http://www.regulations.gov/search/index.jsp), 
you may also file an electronic comment through that website. The 
Commission will consider all comments that regulations.gov forwards to 
it. You may also visit the FTC website at www.ftc.gov to read this 
document and the news release describing it.
    A comment filed in paper form should include the ``Parts 3 and 4 
Rules of Practice Rulemaking--P072104'' reference both in the text and 
on the envelope, and should be mailed or delivered by courier to the 
following address: Federal Trade Commission, Office of the Secretary, 
Room H-135 (Annex R), 600 Pennsylvania Avenue, NW, Washington, DC 
20580.
    The Federal Trade Commission Act (``FTC Act'') and other laws the 
Commission administers permit the collection of public comments to 
consider and use in this proceeding as appropriate. The Commission will 
consider all timely and responsive public comments that it receives, 
whether filed in paper or electronic form. Comments received will be 
available to the public on the FTC website, to the extent practicable, 
at (http://www.ftc.gov/os/publiccomments.shtm). As a matter of 
discretion, the Commission makes every effort to remove home contact 
information for individuals from the public comments it receives before 
placing those comments on the FTC website. More information, including 
routine uses permitted by the Privacy Act, may be found in the FTC's 
privacy policy, at (http://www.ftc.gov/ftc/privacy.shtm)

FOR FURTHER INFORMATION CONTACT: Michael D. Bergman, Attorney, (202) 
326-3184, or Lisa M. Harrison, Attorney, (202) 326-3204, Office of the 
General Counsel, Federal Trade Commission, 600 Pennsylvania Avenue, NW, 
Washington DC 20580.

SUPPLEMENTARY INFORMATION: This discussion contains the following 
sections:

I. Introduction
II. Section-By-Section Analysis of the Proposed Rule Revisions
III. Invitation to Comment
IV. Proposed Rule Revisions

I. Introduction

A. Need for Reform of the Commission's Adjudicatory Process

    The Commission has periodically reviewed its rules and procedures 
governing the process of administrative adjudication at the Commission 
(``Part 3 Rules'') to determine if its administrative adjudication 
process can be improved, and has made changes it considered 
appropriate. In particular, the Commission's Part 3 adjudicatory 
process has long been criticized as being too protracted. See, e.g., 
FTC v. Freeman Hosp., 911 F.Supp. 1213, 1228 n.8 (W.D. Mo. 1995) (``The 
average time from the issuance of a complaint by the FTC to an initial 
decision by an administrative law judge averaged nearly three years in 
1988. Moreover, additional time will be required if that initial 
decision is appealed.''), aff'd, 69 F.3d 260 (8th Cir. 1995); see also 
National Dynamics Corp. v. FTC, 492 F.2d 1333, 1335 (2d Cir. 1974) 
(remarking upon the ``leisurely course typical of FTC proceedings''); 
J. Robert Robertson, FTC Part III Litigation: Lessons from Chicago 
Bridge and Evanston Northwestern Healthcare, 20 Antitrust 12 (Spring 
2006); Report of the American Bar Association Section of Antitrust Law 
Special Committee to Study the Role of the Federal Trade Commission, 58 
Antitrust L.J. 43, 116 n.167 (1989) (``It is disappointing that the 
Commission . . . continues to have problems of delay.'').
    Protracted Part 3 proceedings have at least three undesirable 
consequences. First, in merger cases, such protracted proceedings may 
result in parties abandoning transactions before their antitrust merits 
can be adjudicated. Second, protracted Part 3 proceedings may result in 
substantially increased litigation costs for the Commission and 
respondents whose transactions or practices are challenged. For 
example, protracted discovery schedules and pretrial proceedings can 
result in nonessential discovery and motion practice that can be very 
costly to both the Commission and respondents. Third, protracted Part 3 
proceedings do not necessarily result in decisions that are more just 
or fair. To the contrary, there is some truth to the adage that 
frequently ``justice delayed, is justice denied.''

[[Page 58833]]

    To address these concerns, the Commission has periodically engaged 
in reform efforts to minimize delay and improve the quality of the 
administrative decisionmaking process in a fair manner fully consistent 
with the Administrative Procedure Act (``APA'')\2\ without prejudicing 
the due process rights of the parties in these proceedings. For 
example, in 1994 the Commission adopted a guideline to expedite the 
preparation and issuance of final orders and opinions from an initial 
decision. See (http://www.ftc.gov/os/adjpro/adjproprepprocedures.pdf). 
In 1996, the Commission adopted the ``fast track'' procedure in Rule 
3.11A and other changes. 61 FR 50640 (Sept. 26, 1996). In 2001, the 
Commission issued another package of approximately twenty rule changes, 
66 FR 17622 (Apr. 3, 2001),\3\ and has implemented other rule changes 
throughout the past decade.
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    \2\ 5 U.S.C. 551 et seq.
    \3\ As discussed below in the section-by-section summary of the 
proposed rule revisions, the Commission is proposing certain rule 
revisions to rules it implemented previously that had lengthened the 
process. For example, it is proposing to revise Rule 3.12(a) (as 
amended in the 2001 revisions), which permits the tolling of the 
period to answer the complaint until resolution of certain motions, 
because parties have other procedural means available to them that 
would not unduly delay the proceedings. Similarly, the Commission is 
proposing a modest reduction in the period of time to schedule an 
initial pretrial conference under Rule 3.21(b) that had been 
enlarged in the 2001 revisions.
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    More recently, Commission staff engaged in a broad and systematic 
internal review to further improve its Part 3 practices and procedures 
in light of the Commission's recent adjudicatory experiences. The goal 
of this effort was for significant improvement in the Part 3 process 
through comprehensive review rather than piecemeal modifications of a 
limited number of rules, to ensure that the rules are consistent with 
one another and that they are workable in practice. Discussions 
involved input from various Bureaus within the Commission, the Office 
of the General Counsel, the Office of the Administrative Law Judges, an 
evaluation of the rules and procedures of the federal courts and other 
agencies' adjudicative procedures, as well as the legal standards 
imposed by the APA.
    The Commission believes that any adjudicative process should 
balance three factors: the public interest in a high quality 
decisionmaking process; the interests of justice in an expeditious 
resolution of litigated matters; and the very real interest of the 
parties in litigating matters economically without unnecessary expense. 
For example, in principle, high quality expeditious adjudications may 
impose costs on the parties or the agency that they may not need to 
bear if the demands of a given case permit a more leisurely 
adjudicative process. Alternatively, attempts to increase efficiency or 
decrease costs to those involved could lead to trade offs in the 
quality of the ultimate result. The Commission believes that these 
comprehensive proposed rule revisions would strike an appropriate 
balance between the need for fair process and quality decisionmaking, 
the desire for efficient and speedy resolution of matters, and the 
potential costs imposed on the Commission and the parties.

B. Respective Roles of the Commission and the Administrative Law Judge

    The Commission was established by Congress and President Woodrow 
Wilson in 1914 to be an expert, specialized agency providing guidance 
to consumers and the business community on sophisticated questions 
involving unfair methods of competition, later expanded to issues 
involving unfair or deceptive acts or practices.\4\ To accomplish this 
goal, it was provided the authority not only to prosecute cases and 
serve as a ``think tank'' making policy, but also to adjudicate its own 
cases and render decisions.\5\ Congress determined that the Commission 
could use its expertise and administrative adjudicative powers as a 
``uniquely effective vehicle for the development of antitrust law in 
complex settings in which the agency's expertise [could] make a 
measurable difference.''\6\ Certainty, consistency and accuracy in 
Commission decisions could serve as a tool not only to improve the 
resolution of individual cases, but to provide broad guidance to 
industry and the public and help set the policy agenda.\7\
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    \4\ Final Report of the Attorney General's Committee on 
Administrative Procedure 16 (1941) [hereinafter Attorney General's 
Final Report]; see also Marc Winerman, The Origins of the FTC: 
Concentration, Cooperation, Control, and Competition, 71 Antitrust 
L.J. 1 (2003) (discussing the formation and history of the FTC); D. 
Bruce Hoffman & M. Sean Royall, Administrative Litigation at the 
FTC: Past, Present, and Future, 71 Antitrust L.J. 319 (2003) 
(discussing the evolution of administrative adjudication at the 
FTC).
    \5\ Hoffman & Royall, supra note 4, at 319.
    \6\ Id. at 319-20.
    \7\ Id.
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    In the influential 1941 report by the Attorney General that became 
the basis for the subsequently enacted APA, the Attorney General 
identified numerous advantages to administrative adjudications: for 
example, the potential for uniformity of decisions, efficiency, and the 
inability of courts to handle the volume of suits heard by 
administrative agencies.\8\ One of the most critical advantages, and a 
cornerstone characteristic of administrative agencies, is expertise. 
The Congress and the Executive have long recognized that the ability of 
agencies to devote continuous time, supervision, and expertise to 
complex problems calling for specialized knowledge is a critical 
advantage and an important reason for the creation of administrative 
agencies.\9\ With its expertise and unique institutional tools, the 
Commission was created to be--and continues to function as--a forum for 
expert adjudication.
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    \8\ Attorney General's Final Report, supra note 4, at 11-18.
    \9\ Id. at 15.
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    The Attorney General's Final Report also described the role of 
hearing examiners (the predecessor to ALJs) in all agencies that use 
them. The report observed that the hearing examiner ``plays an 
essential part of the process of hearing and deciding'' given the 
difficulty for busy agency heads to fulfill these roles.\10\ 
Specifically, the Report discussed the importance of having a presiding 
officer, such as an ALJ, hear the evidence and make an initial decision 
or recommendation because agency heads may lack the time to ``read the 
voluminous records and winnow out the essence of them.''\11\ The 
Attorney General's Manual on the APA further explained that a general 
statutory purpose of the APA was to ``enhance[] the status and role of 
hearing officers'' and, because the APA vests in the ALJs the 
enumerated powers to the extent that such powers have been given to the 
agency itself, ``an agency is without power to withhold such powers 
from its hearing officers.''\12\ ALJs have wide ranging authority under 
the APA.\13\
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    \10\ Id. at 47.
    \11\ Id. at 45-46.
    \12\ Attorney General's Manual on the Administrative Procedure 
Act 74 (1947) [hereinafter Attorney General's Manual].
    \13\ See 5 U.S.C. 556(c).
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    At the same time, the APA specifies that such authority is 
``subject to the published rules of the agency,'' which ``is intended 
to make clear the authority of the agency to lay down policies and 
procedural rules which will govern the exercise of such powers by 
[ALJs].''\14\ Thus, the Supreme Court ``has for more than four decades 
emphasized that the formulation of procedures was basically to be left 
within the discretion of the agencies to which Congress had confided 
the responsibility for substantive judgments.'' Vermont

[[Page 58834]]

Yankee Nuclear Power Corp. v. Natural Resources Defense Council, Inc., 
435 U.S. 519, 524 (1978). In accordance with the APA, the Commission's 
rules contemplate an important role for its ALJs not only in ensuring a 
fair and orderly process but also in assuring the public that the 
Commission's proceedings are fair. Under Rule 0.14, the Commission 
delegates to the ALJs ``the initial performance of statutory fact-
finding functions and initial rulings on conclusions of law, to be 
exercised in conformity with Commission decisions and policy directives 
and with its Rules of Practice.''\15\ Further, Rule 3.42(c) provides 
that presiding officials ``shall have the duty to conduct fair and 
impartial hearings, to take all necessary action to avoid delay in the 
disposition of proceedings, and to maintain order,'' and that they 
shall have ``all powers necessary to that end.''\16\ The Commission 
believes that the following proposed rule revisions would ensure the 
proper balance between the Commission's expertise and the important 
function to be served by its ALJs.
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    \14\ Attorney General's Manual, supra note 12, at 74-75.
    \15\ 16 CFR 0.14.
    \16\ 16 CFR 3.42(c).
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    These proposed rule provisions can be considered an important first 
step, but not the end of the process. To expedite such reforms, the 
Commission intends to establish an internal Standing Rules Committee to 
address potential rule changes that may be needed in the future, with 
this standing committee's recommendations to be reviewed annually by 
the Commission. We recognize that, if adopted, the amended rules' use 
in actual litigation, the comments invited by this document, as well as 
future events, may reveal the need for further amendments, and that a 
standing committee could ensure that the Commission's rules remain 
current. The Commission also announces today its intention to make best 
efforts to expedite its preparation and disposition of final orders and 
opinions in its review of initial decisions in adjudicatory 
proceedings. The Commission understands that public concern about Part 
3 delay is not limited to the proceedings before the ALJ, but extends 
to the delay occasionally incurred by Commission resolution of appeals 
of initial decisions. The Commission intends to expedite all phases of 
the Part 3 process.

C. Overview of Proposed Rule Revisions

    The Commission staff's effort has culminated in comprehensive and 
systematic proposed rule changes. We believe that administrative rules 
that bring the Commission's expertise into play earlier and more often 
during the Part 3 process will likely further the Congressional purpose 
that the Commission be a proper forum for expert adjudication and 
ensure the high quality of the Commission's decisionmaking. For ease of 
reference, the proposed revisions discussed in the following section 
can be organized into certain categories, generally designed to improve 
the quality of decisionmaking or to expedite the Part 3 process by 
imposing stricter deadlines throughout the prehearing or hearing 
process, or by giving the Commission the authority to intercede earlier 
in the proceedings.
    Tighter time limits. Several of the proposed rule revisions allow 
the ALJ or the Commission to impose tighter time periods during the 
adjudicatory process. For example, Rule 3.1 would provide that the ALJ 
or the Commission may shorten any time periods set in the rules 
provided that no party will be unfairly prejudiced. Rule 3.11 would 
require that the date of the evidentiary hearing be set in the notice 
accompanying the complaint, which would be 5 months from the date of 
the complaint in merger cases and 8 months from the date of the 
complaint in non-merger cases, unless the Commission orders otherwise. 
Rule 3.12 would require the respondent to file its answer within 14 
days of service of the complaint, instead of 20. Rule 3.21 would impose 
strict deadlines on prehearing procedures, including requiring that the 
parties' initial meet and confer session and the initial scheduling 
conference take place shortly after the answer is filed. Rule 3.51 
would be amended to eliminate the authority of the ALJ to extend the 
one-year deadline for filing initial decisions, and would provide that 
any extensions be approved by the Commission only where it finds there 
are ``extraordinary circumstances.''
    Earlier Commission involvement. Other proposed rule revisions are 
intended to ensure that the Commission is appropriately involved 
earlier in the adjudicatory process. For example, Rules 3.22 and 3.24 
would provide authority to the Commission to decide in the first 
instance all dispositive prehearing motions, including motions for 
summary decision, unless it refers the motion to the ALJ, while at the 
same time ensuring that the underlying proceedings are not stayed 
pending resolution of the dispositive motion absent a Commission order. 
The proposed revisions are intended to avoid the substantial delay that 
can result from an erroneous ruling by the ALJ on legal and policy 
issues that are within the Commission's expertise. Rule 3.42 would 
expressly provide authority for the Commission or an individual 
Commissioner to preside over discovery and other prehearing proceedings 
before transferring the matter to the ALJ.
    Discovery and motion practice reforms. Other proposed rule changes 
are intended to expedite and improve the quality of the proceedings by 
making the discovery process and motion practice more efficient. For 
example, Rule 3.22 would impose word count limits on both dispositive 
and nondispositive motions. Rule 3.31 would limit the scope of the 
search for discoverable materials for complaint counsel, respondents, 
and third parties to minimize the burden and costs of searching for 
materials that are likely either duplicative or privileged, unless 
there has been a sufficient showing of need. Rule 3.31 would also 
expressly limit waivers resulting from the inadvertent disclosure of 
privileged materials. Rule 3.31 would further require the ALJ to issue 
a standard protective order that is intended to limit delay from 
negotiations and disputes arising from case-specific orders and to 
ensure that privileged information, competitively sensitive 
information, and personally sensitive information are treated 
consistently in all Part 3 cases. A new Rule 3.31A would govern expert 
discovery and would impose strict deadlines, to begin essentially at 
the end of fact discovery, to identify expert witnesses and to submit 
expert reports and rebuttal expert reports, and would limit each side 
to 5 expert witnesses unless there are ``extraordinary circumstances.'' 
Rule 3.36 would impose a heightened requirement for subpoenas issued to 
component offices of the Commission that are not involved in the 
litigation. Rule 3.37 would specify procedures governing the exchange 
of relevant ``electronically stored information,'' and Rule 3.38 would 
be amended to impose strict deadlines and word count limits to resolve 
motions to compel discovery.
    Hearings. Other proposed rule revisions are intended to expedite 
and streamline the evidentiary hearing. For example, Rule 3.41 would 
limit the length of hearings to 210 hours--the equivalent of 30 seven-
hour trial days--unless there is a showing of ``good cause,'' would 
limit each side to one half of the trial time, and would limit the 
length of opening and closing arguments. Rule 3.43 would be revised to 
expressly permit at the hearing the use of hearsay evidence--including 
prior testimony--if sufficiently reliable, as well as the admission of 
relevant statements or testimony by a party-opponent and the self-
authentication

[[Page 58835]]

and admission of third party documents. Rule 3.44 would require that 
witness testimony be video recorded digitally and made part of the 
official record so that the Commission, if appropriate, can make an 
independent assessment of witness demeanor. Rule 3.46 would impose 
strict deadlines for the simultaneous filing of proposed findings, 
conclusions, and supporting briefs.
    Initial decision and Commission review. As noted above, Rule 3.51 
would maintain the one-year deadline for the issuance of the initial 
decision (except where the Commission otherwise orders), but would 
require that the initial decision be issued within 70 days of the last 
filed proposed findings. Rule 3.52 would be revised to shorten the 
lengths of principal briefs on appeal to the Commission to 14,000 words 
and reply briefs to 7,000 words, lengths consistent with the approach 
taken in the Federal Rules of Appellate Procedure, unless otherwise 
permitted by the Commission. In this regard, the Commission notes that 
it has the benefit of all the briefs, legal memoranda, and proposed 
findings of fact that the parties have submitted to the ALJ.
    Finally, the Commission intends to make certain technical revisions 
throughout the rules including, for example, eliminating the convention 
of specifying numbers in both written and numerical form, and 
substituting gender-neutral language.
    The proposed rule revisions relate solely to agency practice and, 
thus, are not subject to the notice and comment requirements of the 
APA, 5 U.S.C. 553(a)(2). Although the proposed rule revisions are 
exempt from these requirements, the Commission invites comment on them 
before deciding whether to adopt them. The proposed revisions are also 
not subject to the requirements of the Regulatory Flexibility Act, 5 
U.S.C. 601(2) and the requirements of the Paperwork Reduction Act, 44 
U.S.C. 3518(c)(1)(B)(ii); 5 CFR 1320.4 (exempting information collected 
during the conduct of administrative proceedings or investigations).

II. Section-By-Section Analysis of the Proposed Rule Revisions

    The following is a section-by-section analysis of the proposed 
revisions to Part 3 of the Commission's Rules, and the proposed 
revision to Rule 4.3, which would allow for extensions in certain 
circumstances of the time limits in the Part 3 Rules.

Subpart A--Scope of Rules; Nature of Adjudicative Proceedings

Section 3.1: Scope of the rules in this part.

    The Rule would be amended to state that the Part 3 Rules generally 
apply only to ``formal'' adjudicative proceedings. This change, if 
adopted, would clarify that the Part 3 Rules generally apply only to 
the types of adjudication governed by the adjudication provisions in 
the APA.\17\ These provisions only govern cases of ``adjudication 
required by statute to be determined on the record after opportunity 
for an agency hearing.''\18\ Rule 3.2, as amended, would specify 
further the types of adjudicative proceedings that are subject to the 
Part 3 Rules.
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    \17\ 5 U.S.C. 554, 556-57.
    \18\ 5 U.S.C. 554.
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    The Rule would be amended further to allow the ALJ or the 
Commission to shorten time periods set by the Rule, provided that the 
shortened time periods would not unfairly prejudice any party. This 
authority could be used in proceedings where expedited procedures would 
serve the public interest (e.g., unconsummated mergers) or where the 
issues do not require elaborate discovery or evidentiary hearings 
(e.g., cases where the parties agree that a copious evidentiary record 
already exists that merely needs to be supplemented).

Section 3.2: Nature of adjudicative proceedings.

    The technical revisions to this Rule would clarify that Commission 
consideration of consent orders--in addition to negotiations of consent 
orders--are not adjudicative proceedings. The proposed changes also 
omit from the list of excluded items proceedings under specific 
statutes that have rarely occurred in recent decades.

Subpart B--Pleadings

Section 3.11: Commencement of proceedings.

    The proposed Rule amendment specifies that the actual date for the 
evidentiary hearing would be 5 months from the date the complaint is 
issued in merger cases and 8 months from the date of the complaint in 
all other cases. The proposed change would also give the Commission 
discretion to determine a different date for the evidentiary hearing 
when it issues the complaint. As amended, Rule 3.21(c), discussed 
below, would provide that the hearing date can be extended by the 
Commission for good cause after the complaint is issued.
    In most cases where the issues are not exceptionally complex and 
the premerger process has been complete, the Commission believes a 5-
month complaint-to-evidentiary-hearing process should be feasible. 
Considering the ``safety valve'' built into the proposed Rule and the 
ability of respondents' counsel to engage in pre-complaint meetings 
with the Commissioners where they might advocate for longer post-
complaint discovery periods, the proposed Rule would appear to be 
flexible enough to accommodate the exceptional case. Similarly, the 
Commission believes a 8-month complaint-to-evidentiary-hearing process 
is feasible for all other cases. Here too, the amended language, if 
adopted, would be broad enough to allow the Commission either to set a 
later hearing date at the time it issues the complaint or, under 
amended Rule 3.21(c), to entertain a request for more time upon a 
showing of good cause post-complaint.
    Proposed Rule 3.11 would also delete paragraph (c), which has 
allowed the respondent to file a motion for more definite statement. If 
a respondent elects to file such a motion, or any other motion, it 
tolls the deadline for respondent to file an answer to the complaint 
that would result in substantial delay in the proceedings. The proposed 
Rule revision would still provide the respondent an opportunity to 
raise similar objections and to file a motion to dismiss, but under the 
proposed amendment to Rule 3.22(b) discussed below, the Commission's 
consideration of the motion would not stay proceedings before the ALJ 
unless the Commission so orders.
    These proposed amendments to Rule 3.11 are intended to expedite 
cases by requiring the Commission to set a fixed deadline for the start 
of the evidentiary hearing and the ALJ and the parties to adhere to the 
deadline.

Section 3.12: Answer.

    The proposed Rule amendment would shorten the current deadline in 
paragraph (a) for filing an answer from 20 to 14 days, a time period 
that should be sufficient for parties who, during the course of the 
precomplaint investigation, have become familiar with the issues. The 
proposed Rule revision would also eliminate the provision in paragraph 
(a) that allows the filing of any motion to toll the deadline for 
respondent to file an answer to the complaint, which had been added by 
the Commission in its

[[Page 58836]]

2001 Rule amendments.\19\ The Commission believes the Rule, if amended 
as proposed in this document, would result in an earlier prehearing 
conference, earlier discovery, and a more expeditious closure to the 
proceeding.
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    \19\ 66 FR 17622 (Apr. 3, 2001).
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    The proposed changes to paragraphs (b) and (c) would remove the 
ALJ's authority to render an initial decision when the allegations of 
the complaint are admitted or there is a default. Instead, the 
Commission would render its final decision on the basis of the facts 
alleged in the complaint. One rationale for the provision of ``hearing 
officers'' (the predecessor to ALJs) in the APA was to alleviate the 
burden on agency heads of hearing evidence and reviewing a voluminous 
record.\20\ When those burdens do not exist, it will likely be more 
efficient for the Commission to issue a final opinion and order without 
the intermediate step of an ALJ's initial decision.
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    \20\ See Attorney General's Final Report, supra note 4, 45-46.
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Subpart C--Prehearing Procedures; Motions; Interlocutory Appeals; 
Summary Decisions

Section 3.21: Prehearing procedures.

    As amended, Rule 3.21(a) would require that the parties' initial 
meet-and-confer session take place within 5 days of the answer and 
would require the parties to discuss electronically stored information 
(ESI) at that time, including the scope of and the time period for the 
exchange of ESI and the format for exchanging such information. This 
change is intended to help expedite the case and facilitate resolution 
of production issues in ways that minimize costs. Rule 3.21(a) would 
also be modified by deleting a phrase that suggested that the parties 
should discuss a proposed hearing date because, under proposed Rule 
3.11, such a date will already have been set by the Commission when it 
issued the complaint, and under proposed Rule 3.21(c), that date could 
be modified by the Commission upon a showing of good cause. Rule 
3.21(a), as amended, would also specify broad subjects to be discussed 
at the parties' meet and confer session(s) before the scheduling 
conference.
    Revised paragraph (b) would advance the deadline for the scheduling 
conference from 14 days after the answer is filed to 10 days after the 
answer is filed. Although the Commission extended the deadline to 14 
days in 2001,\21\ it believes the 10-day deadline is reasonable for 
most cases. In extraordinary circumstances, the scheduling conference 
can be postponed. Revised paragraph (b) would include additional items 
to be discussed at the scheduling conference, such as stages of the 
proceeding that may be expedited. The proposed revisions contemplate 
that the parties would inform the ALJ of the results of their 
meeting(s) pursuant to paragraph (a) regarding their proposed discovery 
plan, including the disclosure of ESI, and that the ALJ would 
incorporate in the scheduling order a discovery plan that he or she 
deems appropriate.
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    \21\ 66 FR 17622 (Apr. 3, 2001).
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    Revised paragraph (c)(1) would specify that the ALJ's scheduling 
order will establish a schedule of proceedings that will permit the 
evidentiary hearing to commence on the date set by the Commission. The 
Rule would also state that the Commission may, upon a showing of good 
cause, order a later date for the evidentiary hearing than the one 
specified in the complaint. The proposed deadline for the prehearing 
scheduling conference and order and the more detailed requirements for 
both are intended to help keep the prehearing proceedings on track and 
enable the parties to contribute to a high quality record on which the 
ALJ can base his or her decisions.
    Revised paragraph (c)(2) would be revised to authorize the ALJ to 
extend, upon a showing of good cause, any deadline in the scheduling 
order other than the date of the evidentiary hearing.
    Revised paragraph (f) would state that the ALJ shall hold 
additional prehearing and status conferences or enter additional orders 
as may be needed to ``ensure the just and expeditious disposition of 
the proceeding and to avoid unnecessary cost.''

Section 3.22: Motions.

    Revised Rule 3.22(a) would give the Commission the opportunity to 
rule on motions to strike, motions for summary decision, and prehearing 
motions to dismiss, but the Commission may refer such motions back to 
the ALJ. This proposal allows the Commission to decide legal questions 
and articulate applicable law when the parties raise purely legal 
issues. In addition, an early ruling on a dispositive motion may 
expedite resolution of a matter and save litigants resources where the 
legal issue is the primary dispute. The Commission followed a similar 
approach in South Carolina State Board of Dentistry when it retained 
jurisdiction to hear motions to dismiss. See In re South Carolina State 
Bd. of Dentistry, 136 F.T.C. 229 (2004). This proposal codifies that 
approach, giving the Commission more flexibility to determine the law 
and resolve matters expeditiously.The revised Rule would also provide 
that rulings on motions to dismiss based on alleged failure to 
establish a prima facie case shall be deferred until after the hearing 
record is closed. The current provision for a recommended ruling by the 
ALJ when certifying to the Commission a motion outside his or her 
authority to decide would be eliminated.
    The Commission anticipates that new paragraphs (b) and (e) would 
expedite cases by providing that proceedings before the ALJ will not be 
stayed while the Commission considers a motion, unless the Commission 
orders otherwise, and would require the ALJ to decide motions within 14 
days of briefing of the motion.
    Re-designated paragraph (c) would impose word count limits on 
motion papers. Dispositive motions would be limited to 10,000 words 
(approximately 40 double-spaced pages), and non-dispositive motions 
would be limited to 2,500 words (approximately 10 double-spaced pages).
    Re-designated paragraph (d) would be modified to provide an 
automatic right of reply in support of dispositive motions. Further, 
paragraph (d) would state that: ``Reply and surreply briefs to motions 
other than dispositive motions shall be permitted only in circumstances 
where the parties wish to draw the ALJ's or the Commission's attention 
to recent important developments or controlling authority that could 
not have been raised earlier in the party's principal brief.'' There 
would also be a 5-day filing deadline for any authorized reply to a 
motion.
    Current paragraph (e) would be eliminated, and current paragraph 
(f) would be redesignated as paragraph (g).

Section 3.23: Interlocutory appeals.

    The revised Rule would continue to permit the parties to seek 
discretionary review of certain interlocutory rulings by the ALJ. 
Paragraph (a) would leave unchanged the types of rulings that the 
parties can ask the Commission to review without a determination by the 
ALJ that interlocutory review is appropriate. Paragraph (b) would 
continue to permit interlocutory appeals of other rulings only on a 
determination that the ruling ``involves a controlling question of law 
or policy as to which there is substantial ground for difference of 
opinion and that an immediate appeal from the ruling may materially 
advance the ultimate termination of the litigation or subsequent review 
will be an inadequate remedy.''

[[Page 58837]]

    In order to reduce delay, the revised Rule would require the ALJ to 
make his or her determination whether the application for review 
involves such a controlling question within three days after the filing 
by a party of a request for such a determination. It would eliminate 
the requirement that the ALJ provide a written justification for his or 
her determination. The revised Rule would allow the party to file its 
application for review with the Commission if the ALJ does not make a 
timely ruling on its request for a determination on the appropriateness 
of review.
    Because the pendency of an application for review may leave a cloud 
over the proceeding before the ALJ, the revised Rule would also provide 
a default if the Commission fails to act quickly on the application. 
The revised Rule would provide that, unless the Commission decides to 
entertain the appeal within three days after the filing of the 
application and answer, the request for discretionary review will be 
deemed to be denied. This would not constitute an affirmance of the 
ALJ's ruling on the merits. Also, to avoid unnecessary delay, the 
revised Rule would set shorter deadlines for the filing of applications 
and answers and, to reduce burdens, impose tighter limits than the 
current Rule on the length of these filings. The Commission, however, 
would retain authority to direct additional briefing.

Section 3.24: Summary decisions.

    The revised Rule would accommodate the proposed amendment to Rule 
3.22 providing that dispositive motions will be decided initially by 
the Commission unless referred by the Commission to the ALJ. At the 
same time, it would also require that motions be filed not later than 
30 days before the evidentiary hearing, rather than 20 days as in the 
current Rule. It would extend the deadline for filing affidavits in 
opposition to a summary decision motion from 10 to 14 days. Because the 
moving party may have had months to prepare its motion and supporting 
papers, the revised Rule would allow slightly more time than the 
current Rule for the opposing party to compile, authenticate, and 
perform the other research necessary to respond. Finally, the proposed 
Rule would eliminate the 30-day deadline for ruling on the motion but 
allow the Commission to set a deadline for decision when referring a 
summary decision motion, or any other dispositive motion, to the ALJ. 
In any event, under revised Rule 3.22(b), the filing of a motion under 
this Rule would not stay the proceeding before the ALJ.

Rule 3.26: Motions following denial of preliminary injunctive relief.

    The Commission adopted the current version of Rule 3.26 in 
connection with a 1995 policy statement, which explained the process 
the Commission follows in deciding whether to pursue administrative 
litigation of a merger case following the denial of a preliminary 
injunction.\22\ The statement noted that the ``Commission was created 
in part because Congress believed that a special administrative agency 
would serve the public interest by helping to resolve complex antitrust 
questions'' and that it was expected that ``an administrative agency 
was especially suited to resolving difficult antitrust questions, and 
that the FTC should be the principal fact finder in the process.''\23\
---------------------------------------------------------------------------

    \22\ 60 FR 39741 (Aug. 3, 1995).
    \23\ Id.
---------------------------------------------------------------------------

    According to the statement, ``[i]n any given case, the evidence, 
arguments, and/or opinion from the preliminary injunction hearing may, 
or may not, suggest that further proceedings would be in the public 
interest. The Commission's guiding principle is that the determination 
whether to proceed in administrative litigation following the denial of 
a preliminary injunction and the exhaustion or expiration of all 
avenues of appeal must be made on a case-by-case basis.''\24\ The 
Commission adopted Rule 3.26 to provide a formal mechanism for making 
this determination.
---------------------------------------------------------------------------

    \24\ Id.
---------------------------------------------------------------------------

    The Commission proposes to revise provisions in the Rule that grant 
an automatic withdrawal from adjudication of the Part 3 case upon the 
filing of a motion to withdraw from adjudication or an automatic stay 
upon the filing of a motion to dismiss. An automatic withdrawal from 
adjudication or stay might well be appropriate if the denial of 
preliminary injunctive relief typically warranted terminating the Part 
3 case. But the Part 3 proceeding is the suitable forum for deciding 
the merits, see FTC v. Whole Foods Market, Inc., 533 F.3d 869, 875-76 
(D.C. Cir. 2008) (``[A] district court must not require the FTC to 
prove the merits, because, in a [5 U.S.C.] Sec.  53(b) preliminary 
injunction proceeding, a court `is not authorized to determine whether 
the antitrust laws . . . are about to be violated.' That responsibility 
lies with the FTC.'') (quoting FTC v. Food Town Stores, Inc., 539 F.2d 
1339, 1342 (4th Cir. 1976)). Thus, the Commission believes the norm 
should be that the Part 3 case can proceed even if a court denies 
preliminary relief. If that is the norm, routine withdrawals from 
adjudication or stays of proceedings before the ALJ could unnecessarily 
delay the typical Part 3 case in which ancillary relief has been 
denied. The proposed Rule would allow the Part 3 case to proceed unless 
the Commission determines, on the facts of the particular case, that a 
withdrawal or stay is appropriate.
    The revised Rule would also make explicit that a motion to dismiss 
or withdraw may be filed only after the Commission has an opportunity 
to seek reconsideration and appellate review of a denial of injunctive 
relief.\25\ The revision would also prescribe the same word count 
limits for memoranda supporting or opposing these motions as for 
motions to dismiss filed under Rule 3.22(a) and eliminate the special 
limitation for printed filings.
---------------------------------------------------------------------------

    \25\ See In re Equitable Resources, Inc., No. 9322, 2007 F.T.C. 
LEXIS 49 (May 30, 2007); 60 FR 39640, 39641 (Aug. 3, 1995).
---------------------------------------------------------------------------

Subpart D--Discovery; Compulsory Process

Section 3.31: General discovery provisions.

    Paragraph (b) of Rule 3.31 would be amended to specify that the 
documents to be disclosed as part of the parties' mandatory initial 
disclosures include declarations or affidavits, as well as transcripts 
of investigational hearings and depositions, and that initial 
disclosures also include ESI. The reference to ESI would update the 
term ``data compilations'' and would parallel the 2006 amendment to 
Fed. R. Civ. Proc. 26(a)(1)(B). The proposed limitations on disclosure 
of ESI in paragraph (c)(3) follow Fed. R. Civ. P. 26(b)(2)(B). In 
particular, the proposed provision in paragraph (c)(3) that a party 
need not provide discovery of ESI from sources that the party 
identifies as not reasonably accessible because of undue burden or cost 
is anticipated to reduce delays and costs to the parties.
    As discussed below, the Commission proposes to treat expert 
discovery in a new Rule 3.31A, and therefore the provisions in 
paragraphs (b) and (c) of Rule 3.31 governing expert discovery would be 
eliminated.
    The proposed changes to paragraph (c)(2) would limit the scope of 
discovery for complaint counsel, respondents, and third parties who 
receive a discovery request. Complaint counsel would only need to 
search for materials that were collected or reviewed in the course of 
the investigation of the matter or prosecution of the case and that are 
in the possession, custody or control of the Bureaus or Offices of the 
Commission that investigated the matter, including

[[Page 58838]]

the Bureau of Economics. The ALJ could authorize for good cause 
additional discovery of materials in the possession, custody, or 
control of those Bureaus or Offices, or authorize other discovery 
pursuant to Sec.  3.36. Neither complaint counsel, respondent, nor a 
third party receiving a discovery request under these rules would be 
required to search for materials generated and transmitted between an 
entity's counsel (including counsel's legal staff or in-house counsel) 
and not shared with anyone else, or between complaint counsel and non-
testifying Commission employees, unless the ALJ determines there is 
good cause to provide such materials. These materials are frequently 
duplicative of materials held by the parties and moreover, are almost 
always protected by the deliberative process or attorney-client 
privileges, or as work product.
    Paragraph (d) would be revised to direct the ALJ to issue a 
standard protective order (provided as an appendix to this Rule) 
governing the use of confidential materials obtained in discovery. The 
Commission believes a standard order would eliminate the delay 
resulting from negotiations and disputes over case-specific orders and 
improve quality and reduce agency costs by ensuring that discovery 
materials are handled uniformly and in a manner that is fully 
consistent with the FTC's statutory obligations with respect to 
materials it receives from private parties.
    Paragraph (h), as revised, would address the resources used to 
avoid the risk of privilege and work product waiver, which add to the 
costs and delay of discovery. The risk of waiver, and the time and 
effort needed to avoid it, are aggravated when the party is producing 
ESI. The revised Rule would limit the risk of waivers resulting from 
inadvertent disclosures as long as parties take reasonable measures to 
protect privileged materials. The Rule would not address obligations 
imposed by state bar rules on attorneys who receive materials that 
appear to be subject to a privilege claim.
    The FTC Act requires the Commission to protect ``privileged or 
confidential'' information.\26\ By providing that the Commission would 
not treat genuinely inadvertent disclosures as waivers of privilege 
claims, this proposed Rule, together with the relevant provisions of 
the FTC Act, is intended to assure respondents and third parties alike 
that if otherwise privileged materials end up in the hands of the FTC, 
they will not readily find their way into the public record. In this 
regard, the protective order would expressly include privileged 
information in the order's definition of ``confidential materials'' 
subject to the protective order.
---------------------------------------------------------------------------

    \26\ FTC Act, 6(f), 21(d)(1)(B), 15 U.S.C. 46(f), 57b-
2(d)(1)(B).
---------------------------------------------------------------------------

    Paragraph 3.31(i), as revised, would prohibit the filing of 
discovery materials with the Office of the Secretary, the ALJ, or 
otherwise providing such materials to the Commission, except when used 
to support or oppose a motion or to offer as evidence. This proposed 
change is similar to Fed. R. Civ. P. 5(d), which generally prohibits 
the filing of discovery material unless ordered by the court or used in 
the proceeding.
    The revised Rule would also make technical revisions to the current 
Rule.

Section 3.31A: Expert discovery.

    New Rule 3.31A would mandate a schedule for the disclosure of 
potential expert witnesses, the production of expert reports, and the 
start and completion of expert depositions. This Rule would incorporate 
and revise certain provisions now contained in current Rule 3.31(b) and 
(c). The scheduling provisions are intended to provide for expert 
discovery in a more orderly and expeditious manner than what has 
occurred in past proceedings.
    The Rule would not permit expert discovery to begin until fact 
discovery is essentially completed. The Commission believes that 
discovery of experts, including the production of expert reports, will 
be less than thorough if facts potentially relevant to their opinions 
have yet to be discovered. The Rule would also limit the number of 
expert witnesses to 5 per side, but would allow a party to seek leave 
to call additional expert witnesses in extraordinary circumstances. It 
has been the Commission's experience that 5 expert witnesses per side 
is sufficient for each party to present its case.
    The Rule would require that each expert who will testify at the 
evidentiary hearing produce a written report, thereby eliminating the 
ALJ's authority to dispense with them. Preparation of a written expert 
report is a common requirement in federal courts and, given the 
Commission's goal of expedited proceedings, should be required here 
during the discovery period to allow the parties more effective and 
targeted discovery.
    The Rule would provide that complaint counsel submit their initial 
expert reports first, followed by respondents' expert reports. 
Respondents' reports, of course, can rebut material in complaint 
counsel's initial expert reports. The revised Rule would also 
explicitly authorize complaint counsel to call rebuttal experts and, if 
complaint counsel exercises this option, would require the experts to 
prepare rebuttal expert reports. Thus, the Rule would allow complaint 
counsel's experts an opportunity to respond to respondents' expert 
reports.
    The Rule would also exclude from expert discovery anyone who has 
been retained or specially employed by another party in anticipation of 
litigation or preparation for hearing unless he or she is expected to 
be called as a witness at the hearing, so as to prevent the discovery 
of the unpublished work product of non-testifying experts, particularly 
where such materials are proprietary and highly confidential. The 
discovery of such marginally relevant materials can be a major 
distraction from the central case and can have an adverse effect on the 
willingness of non-testifying experts to consult in the future.

Section 3.33: Depositions.

    Paragraph (b) would be added to allow the ALJ, upon a party's 
motion, to prevent the taking of a deposition if the deposition would 
not meet the scope of discovery standard under Rule 3.31(c) or if the 
value of the deposition would be outweighed by considerations of unfair 
prejudice, confusion of the issues, evidence that would be misleading, 
or by considerations of undue delay, waste of time, or needless 
presentation of cumulative evidence (as set forth under Rule 3.43(b)). 
Paragraph (b) would also clarify that the fact that a witness testifies 
in an investigative hearing does not preclude the deposition of that 
witness.
    Paragraph (c) would be revised to stop the practice of filing 
notices of deposition with the Office of the Secretary, the ALJ or 
otherwise providing such notices to the Commission, except as provided 
in proposed Rule 3.31(i). Such notices serve no purpose for the ALJ or 
the agency, and receipt of these notices causes unnecessary processing 
costs for the Commission.
    Revised Rule 3.43, as discussed below, would provide for the 
admission of hearsay evidence in the evidentiary hearing if the 
evidence is ``relevant, material, and bears satisfactory indicia of 
reliability so that its use is fair.'' If meeting this standard, 
depositions, investigational hearings, and other prior testimony may be 
admitted. Consistent with this proposed revision, current Rule 
3.33(g)(1) would be eliminated because it contains hearsay-based 
limitations for the use of depositions. Paragraphs (g)(2) and (3) would 
be renumbered accordingly.

[[Page 58839]]

Section 3.34: Subpoenas.

    Paragraphs (a) and (b), as amended, would authorize counsel for a 
party to sign and issue a subpoena on a form provided by the Secretary. 
These revisions are intended to expedite the commencement of hearings 
by speeding the issuance of discovery and hearing subpoenas. The 
definition of ``documents'' would also be revised to be parallel to 
Fed. R. Civ. P. 45(c)(1).
    Revisions to paragraph (c) would reflect revised Rule 3.36, 
discussed below, which would require a special showing of need for 
subpoenas directed to the offices of the Commissioners, the General 
Counsel, Bureaus and Offices not involved in the matter, the ALJs, or 
the Secretary.

Section 3.35: Interrogatories to parties.

    New paragraph (a)(3) would provide that interrogatories should not 
be filed with the Office of the Secretary, the ALJ or otherwise 
provided to the Commission except as provided in proposed Rule 3.31(i).
    Paragraph (b)(2), as revised, would eliminate the requirement that 
a party seek an order from the ALJ when not answering a contention 
interrogatory before the end of discovery. If a party poses a 
contention interrogatory that is capable of being answered at an 
earlier time, there is no reason it could not move to compel a more 
expeditious response.

Section 3.36: Applications for subpoenas for records of or appearances 
by certain officials or employees of the Commission or officials or 
employees of governmental agencies other than the Commission, and 
subpoenas to be served in a foreign country.

    Paragraph (a) currently requires a special showing of need for 
subpoenas to other agencies and foreign subpoenas. The revised Rule 
would require a special showing of need for subpoenas directed to the 
offices of the Commissioners, the General Counsel, Bureaus and Offices 
not involved in the matter, the ALJs, and the Secretary. None of these 
offices is likely to possess relevant, discoverable information that is 
not available from other sources. Given the lack of useful additional 
information likely to be available from these offices, the burden (and 
delay) of searches for responsive records and the creation of privilege 
logs should not be imposed without strong justification. These 
revisions would reduce the cost and time devoted to searches for 
information that is likely to be privileged or that is unlikely to lead 
to the discovery of admissible evidence.
    The revisions to paragraph (b)(3) would require a showing of 
``compelling need'' as the corresponding standard for witness 
testimony. Because the Commission is proposing to revise Rule 3.34 to 
eliminate specific showings for hearing subpoenas, the reference to 
that Rule would be eliminated from the first sentence of paragraph (b). 
The reference to Rule 3.37 would be moved to a new paragraph (b)(5).

Section 3.37: Production of documents, electronically stored 
information, and any tangible thing; access for inspection and other 
purposes.

    The existing Rule substantially follows Fed. R. Civ. P. 34. The 
revised Rule would include the current federal rule's provisions on 
electronic discovery. The revised Rule would also provide that requests 
under this section not be filed with the Office of the Secretary, the 
ALJ or otherwise provided to the Commission, except as provided in 
proposed Rule 3.31(i).

Section 3.38: Motion for order compelling disclosure or discovery; 
sanctions.

    The revised Rule would impose short deadlines for responses to and 
rulings on motions to compel. It would impose a 2,500 word limit, which 
translates into approximately 10 double-spaced pages, for motions and 
answers. This limit should be sufficient to enable parties to address 
several discovery issues in one filing.
    The revised Rule would consolidate the sanctions for failure to 
comply with discovery and disclosure requirements and add as a sanction 
the inability to call a witness who was not disclosed under Rule 
3.31(b) or an expert not disclosed under proposed Rule 3.31A.

Section 3.38A: Withholding requested material.

    The revised Rule would modify the existing requirement that a 
privilege/work-product log must always contain specific information for 
each item being withheld. The Commission intends to substitute the more 
flexible requirement in Fed. R. Civ. P. 26(b)(5)(A) that the schedule 
of withheld items ``describe the nature of the documents, 
communications, or tangible things not produced or disclosed -- and do 
so in a manner that, without revealing information itself privileged or 
protected, will enable other parties to assess the claim.'' This 
proposed requirement would permit parties to describe withheld items by 
categories, but only if the description ``will enable other parties to 
assess the claim.'' Unless such descriptions are sufficient, item-by-
item descriptions would be required.
    The revised Rule would also clarify that the log need not describe 
any material outside the scope of the duty to search set forth in 
revised Rule 3.31(c)(2) except to the extent that the ALJ has 
authorized additional discovery as provided in that Rule. These 
exclusions, if adopted, will reduce the burden and time devoted to 
preparing a detailed log without eliminating information about 
materials most likely to be relevant to the litigation.

Section 3.39: Orders requiring witnesses to testify or provide other 
information and granting immunity.

    The Commission is proposing technical revisions to the existing 
Rule.
    All in all, the proposed revisions to the discovery Rules are 
designed to encourage the parties to cooperate in the discovery 
process, ``automate'' the discovery process to the greatest extent 
possible, and provide effective sanctions against those who violate a 
discovery obligation. The Commission's expectation is that the revised 
Rules would work to improve the quality of the discovery process and 
would ultimately reduce the costs and delays that are incurred when 
parties engage in unnecessary gamesmanship. For example, the Commission 
believes that the sanction of prohibiting a party from calling a fact 
or expert witness who should have been disclosed earlier would reduce 
the need for last-minute discovery that could delay the hearing and 
thereby eliminate the extra costs associated with such discovery and 
improve the quality of the discovery process.

Subpart E--Hearings

Section 3.41: General hearing rules.

    In order to expedite proceedings, revised Rule 3.41(b) would 
require that the evidentiary hearing commence on the date set in the 
notice accompanying the complaint. It also would limit the length of 
the hearing to 210 hours, the equivalent of 30 seven-hour trial days, 
unless extended by the Commission for good cause, and establish 
reasonable time allocations for both sides.

Section 3.42: Presiding officials.

    Revised Rule 3.42(a) would make explicit provision for the 
Commission retaining jurisdiction over a matter during some or all of 
the prehearing proceedings and designating one or more Commissioners to 
preside. The Commission has followed this course in several recent 
cases. The APA, 5 U.S.C. 556(b), allows the agency itself or one or

[[Page 58840]]

more of its members to preside, and the Commission can see no reason 
why the Commission or an individual Commissioner may not preside over 
the beginning phases of the proceeding even where the Commission or the 
individual Commissioner does not preside over the hearing or issue the 
initial decision. In appropriate cases, early Commission involvement 
has the potential for improving the quality of the final product, 
expediting the proceeding, and ultimately reducing the costs of the 
litigation.

Section 3.43: Evidence.

    The Commission proposes to amend this Rule to define hearsay 
evidence and to provide expressly in paragraph (b) for the use and 
admission of hearsay evidence in Commission proceedings if the evidence 
``is relevant, material, and bears satisfactory indicia or reliability 
so that its use is fair.'' The existing Rule states that ``[r]elevant, 
material, and reliable evidence shall be admitted. Irrelevant, 
immaterial, and unreliable evidence shall be excluded.'' This 
modification does not represent a change in the current rule; rather it 
emphasizes that the stricter hearsay rules in the Federal Rules of 
Evidence do not determine admissibility of evidence in administrative 
litigation. The ALJ, in the first place, and ultimately the Commission 
must independently assess the reliability of the evidence itself.
    Administrative agencies like the FTC ``have never been restricted 
by the rigid rules of evidence,''\27\and should evaluate the 
admissibility of hearsay evidence based on whether ``it bear[s] 
satisfactory indicia of reliability . . . [is] probative and its use 
fundamentally fair.''\28\ The ALJ, and on appeal the Commission, are 
capable of assessing the reliability and weight to be given hearsay 
evidence by, for example, determining the independence or possible bias 
of an out-of-court declarant, the context in which the hearsay material 
was created, whether the statement was sworn to, and whether it is 
corroborated or contradicted by other forms of direct evidence.
---------------------------------------------------------------------------

    \27\ FTC v. Cement Inst., 333 U.S. 683, 705-06 (1948).
    \28\ Calhoun v. Bailar, 626 F.2d 145, 148 (9th Cir. 1980); see 
also Richardson v. Perales, 402 U.S. 389, 407-08 (1971); J.A.M. 
Builders, Inc. v. Herman, 233 F.3d 1350, 1354 (11th Cir. 2000) 
(hearsay admissible in administrative proceedings if ``reliable and 
credible''); 5 U.S.C. 556(d) (APA provides that ``[a]ny oral or 
documentary evidence may be received, but the agency as a matter of 
policy shall provide for the exclusion of irrelevant, immaterial or 
unduly repetitious evidence. A sanction may not be imposed or rule 
or order issued except on consideration of the whole record or those 
parts thereof cited by a party and supported by and in accordance 
with the reliable, probative, and substantial evidence.'').
---------------------------------------------------------------------------

    In that regard, proposed paragraph (b) would provide that 
depositions, investigational hearings, and prior testimony in 
Commission and other proceedings shall be admissible even if they are 
or contain hearsay, provided that the testimony is otherwise 
sufficiently reliable and probative. The revised Rule would also make 
clear that relevant statements or testimony by a party-opponent are 
admitted since such statements are not hearsay.
    The Commission believes that the revision regarding hearsay 
evidence will improve the quality of Commission decisions by enabling 
the ALJ and the Commission to decide cases with a more complete record, 
which would not exclude relevant, material, and reliable evidence, 
including prior testimony, merely because it is hearsay.
    Proposed new paragraph (c), which is analogous to Fed. R. Evid. 
902(11), is intended to facilitate the admissibility of third party 
documents by self-authentication through a written declaration of the 
third party document custodian.
    Proposed new paragraph (d)(1) would adopt the standard for the 
presentation of evidence at an oral hearing under 5 U.S.C. 556(d), 
including the right to present both sworn oral and documentary 
evidence, to offer rebuttal evidence, and to conduct reasonable cross-
examination. Of particular note, this paragraph would permit sufficient 
``cross-examination as, in the discretion of the Commission or the ALJ, 
may be required for a full and true disclosure of the facts,'' a 
standard that does not impose an absolute or unlimited right of cross-
examination.\29\
---------------------------------------------------------------------------

    \29\ See, e.g., Citizens Awareness Network, Inc. v. United 
States, 391 F.3d 338, 351 (1st Cir. 2004); Central Freight Lines, 
Inc. v. United States, 669 F.2d 1063 (5th Cir. 1982).
---------------------------------------------------------------------------

    Finally, re-designated paragraph (f) would define what constitutes 
``official notice.'' The current Rule does not define official notice 
or what constitutes such notice. Further, the revised Rule would 
provide that a party may controvert an officially noticed fact either 
by opposing the other party's request to do so or after it has been 
noticed by the ALJ or the Commission.
    Other paragraphs in the current Rule would be re-designated.

Section 3.44: Record.

    Paragraph (a) would be amended to require that witness testimony be 
preserved as a digital video recording that would be made part of the 
official record. Video recordings are permitted and frequently taken in 
depositions,\30\ but federal courts do not typically record 
proceedings. Section 5(b) of the FTC Act does not preclude video 
recording testimony, merely requiring that the ``testimony in any such 
proceeding shall be reduced to writing and filed in the office of the 
Commission.'' The purpose of the proposed Rule revision is to provide a 
record for the Commissioners who are not present at the hearing, but 
are ultimately responsible for deciding the outcome of the case, to be 
able to make an independent assessment of the demeanor of the witnesses 
when that is appropriate. Courts have recognized the ``added value of 
demeanor evidence'' from video recording.\31\ The Commission believes 
that the video recording requirement would improve the quality of 
Commission decisions whenever witness demeanor is a significant issue.
---------------------------------------------------------------------------

    \30\ See, e.g., Fed. R. Civ. P. 30(b)(3)(A).
    \31\ See FTC v. Tarriff, No. 08-MC-217, 2008 WL 2230062, at *5 
(D.D.C. June 2, 2008).
---------------------------------------------------------------------------

    Paragraph (c), as revised, would delete the word ``immediately'' at 
the beginning of the first sentence to allow the Commission or ALJ to 
provide the parties with three business days to review the record to 
determine if it is complete or needs to be supplemented.

Section 3.45: In camera orders.

    Paragraph (b), as revised, would add a paragraph making clear that 
parties have no obligation to file or provide in camera versions of 
filings with sensitive materials with anyone other than opposing 
counsel and the ALJ during the proceedings, as well as with the 
Commission or federal courts during any appeals.

Section 3.46: Proposed finding, conclusions, and order.

    Revised paragraph (a), if adopted, would expressly provide for the 
simultaneous filing of proposed findings of fact, conclusions of law, 
and supporting briefs within 21 days of the close of the hearing 
record, and the filing of optional proposed reply findings within 10 
days of the filing of the initial proposed findings. The current Rule 
does not impose any deadlines or specify the order of these filings. 
This change, if adopted, is expected to expedite the post-hearing 
phase.

Subpart F--Decision

Section 3.51: Initial decision.

    Paragraph (a) would be amended to establish the deadline for 
issuing the

[[Page 58841]]

initial decision by the filing of proposed findings and conclusions 
(and supporting exhibits) rather than by the closing of the hearing 
record. The current Rule requires that the initial decision be filed 
within 90 days after the close of the record. The revised Rule would 
require that the initial decision be filed within 70 days of the last 
filed proposed findings and conclusions (or 85 days of the closing of 
the hearing record if the parties waive filing proposed findings and 
conclusions).
    The revised Rule would maintain the over-all requirement that the 
initial decision be issued within one year after the issuance of the 
complaint. The revised Rule, however, would no longer authorize the ALJ 
to grant consecutive 60-day extensions upon a finding of 
``extraordinary circumstances.'' Instead, only the Commission could 
grant extensions if it finds there are ``extraordinary circumstances 
and if appropriate in the public interest.'' The Commission believes 
that eliminating the authority of ALJs to grant extensions of the one-
year deadline would permit the Commission to prevent protracted delays, 
while still providing ample time for the ALJ to review the evidence and 
issue the initial decision.
    New paragraph (c)(2) would require that the initial decision be 
filed in a word processing format that is accessible to the Commission 
on review.

Section 3.52: Appeal from initial decision.

    Paragraphs (b) and (c) would be amended to reduce the word limit 
for the principal appellate briefs from 18,750 words to 14,000 words 
(approximately 55 double-spaced pages) to minimize unnecessarily 
lengthy briefs. The Commission anticipates that the shortened limits 
would lead to more focused arguments. The proposed length is the same 
as that permitted in Fed. R. App. P. 32(a)(7). Paragraph (c) would also 
be revised to reduce the word limit for cross-appeal briefs to 16,500 
words, the same as in Fed. R. App. P. 28.1(e)(2).
    While lengthier appellate briefs could be justified by the 
Commission's obligation to review the record de novo, this is offset by 
the fact that the Commission has ready access to the briefs and 
proposed findings submitted by the parties to the ALJ. Further, parties 
will not be prejudiced because they may request permission to extend 
the word count limits, which may be appropriate where the case involves 
a particularly large record or complex legal issues. However, as noted 
in paragraph (k), the Commission will not lightly permit such 
extensions.
    Paragraph (d) would be amended to reduce the length of reply briefs 
to half of the principals' briefs, or 7,000 words, consistent with Fed. 
R. App. P. 32(a)(7). This paragraph would also make explicit that 
parties cannot raise new arguments or matters in reply briefs that 
could have been raised earlier, based on concerns that reply briefs 
have often gone beyond ``a rebuttal of matters'' in the appellee's 
brief.
    Paragraph (h) would be revised by striking the last two sentences 
as unnecessary.
    Paragraph (j) would be amended to impose a word count limit on 
amicus briefs to ``no more than one-half the maximum length authorized 
by these rules for a party's principal brief,'' consistent with the 
approach taken by Fed. R. App. P. 29(d).
    Finally, revised paragraph (k) would specify the contents of the 
brief that will count toward the word count limit, similar to that 
imposed by Fed. R. App. P. 32(a)(7)(B)(iii).

Rule 4.3: Time.

    Revised Rule 4.3(b), if adopted, would specify that the ALJ may 
extend a time period set by a Commission order only if the order 
expressly authorizes the ALJ to do so. It would also add time limits 
regarding motions directed to the Commission to the list of extensions 
that only the Commission may grant. The revised Rule would also clarify 
that the ALJ may not enlarge any deadline that a rule specifically 
authorizes only the Commission to extend.

III. Invitation to Comment

    The Commission invites interested members of the public to submit 
written comments addressing the issues raised above. Such comments must 
be filed by November 6, 2008, and must be filed in accordance with the 
instructions in the ADDRESSES section of this document.

IV. Proposed Rule Revisions

List of Subjects in 16 CFR Part 3

    Administrative practice and procedure.

List of Subjects in 16 CFR Part 4

    Administrative practice and procedure.

0
For the reasons set forth in the preamble, the Federal Trade Commission 
proposes to amend Title 16, Chapter 1, Subchapter A of the Code of 
Federal Regulations, parts 3 and 4, as follows:

PART 3--RULES OF PRACTICE FOR ADJUDICATIVE PROCEEDINGS

0
1. The authority citation for part 3 continues to read as follows:

    Authority: 15 U.S.C. 46, unless otherwise noted.

0
2. Revise Sec.  3.1 to read as follows:


Sec.  3.1  Scope of the rules in this part.

    The rules in this part govern procedure in formal adjudicative 
proceedings. To the extent practicable and consistent with requirements 
of law, the Commission's policy is to conduct such proceedings 
expeditiously. In the conduct of such proceedings the Administrative 
Law Judge and counsel for all parties shall make every effort at each 
stage of a proceeding to avoid delay. Except as otherwise provided by 
law, the Commission, at any time, or the Administrative Law Judge at 
any time prior to the filing of his or her initial decision, may 
shorten any time limit prescribed by these Rules of Practice, provided 
that the shortened time limit would not unfairly prejudice the rights 
of any party.

0
3. Revise Sec.  3.2 to read as follows:


Sec.  3.2  Nature of adjudicative proceedings.

    Adjudicative proceedings are those formal proceedings conducted 
under one or more of the statutes administered by the Commission which 
are required by statute to be determined on the record after 
opportunity for an agency hearing. The term includes hearings upon 
objections to orders relating to the promulgation, amendment, or repeal 
of rules under sections 4, 5 and 6 of the Fair Packaging and Labeling 
Act, but does not include rulemaking proceedings up to the time when 
the Commission determines under Sec.  1.26(g) of this chapter that 
objections sufficient to warrant the holding of a public hearing have 
been filed. The term also includes proceedings for the assessment of 
civil penalties pursuant to Sec.  1.94 of this chapter. The term does 
not include other proceedings such as negotiations for and Commission 
consideration of the entry of consent orders; investigational hearings 
as distinguished from proceedings after the issuance of a complaint; 
requests for extensions of time to comply with final orders or other 
proceedings involving compliance with final orders; proceedings for the 
promulgation of industry guides or trade regulation rules; or the 
promulgation of substantive rules and regulations.

0
4. Revise Sec.  3.11 to read as follows:

[[Page 58842]]

Sec.  3.11  Commencement of proceedings.

    (a) Complaint. Except as provided in Sec.  3.13, an adjudicative 
proceeding is commenced when an affirmative vote is taken by the 
Commission to issue a complaint.
    (b) Form of complaint. The Commission's complaint shall contain the 
following:
    (1) Recital of the legal authority and jurisdiction for institution 
of the proceeding, with specific designation of the statutory 
provisions alleged to have been violated;
    (2) A clear and concise factual statement sufficient to inform each 
respondent with reasonable definiteness of the type of acts or 
practices alleged to be in violation of the law;
    (3) Where practical, a form of order which the Commission has 
reason to believe should issue if the facts are found to be as alleged 
in the complaint; and
    (4) Notice of the specific date, time and place for the evidentiary 
hearing.
    Unless a different date is determined by the Commission, the date 
of the evidentiary hearing shall be 5 months from the date of a 
complaint issued pursuant to sections 7 and 11(b) of the Clayton Act, 
15 U.S.C. 18 and 21(b), and 8 months from the date of issuance of a 
complaint in all other proceedings.

0
5. Revise Sec.  3.12 to read as follows:


Sec.  3.12  Answer.

    (a) Time for filing. A respondent shall file an answer within 14 
days after being served with the complaint.
    (b) Content of answer. An answer shall conform to the following:
    (1) If allegations of complaint are contested. An answer in which 
the allegations of a complaint are contested shall contain:
    (i) A concise statement of the facts constituting each ground of 
defense;
    (ii) Specific admission, denial, or explanation of each fact 
alleged in the complaint or, if the respondent is without knowledge 
thereof, a statement to that effect. Allegations of a complaint not 
thus answered shall be deemed to have been admitted.
    (2) If allegations of complaint are admitted. If the respondent 
elects not to contest the allegations of fact set forth in the 
complaint, the answer shall consist of a statement that he or she 
admits all of the material allegations to be true. Such an answer shall 
constitute a waiver of hearings as to the facts alleged in the 
complaint, and together with the complaint will provide a record basis 
on which the Commission shall issue a final decision containing 
appropriate findings and conclusions and a final order disposing of the 
proceeding. In such an answer, the respondent may, however, reserve the 
right to submit proposed findings of fact and conclusions of law under 
Sec.  3.46.
    (c) Default. Failure of the respondent to file an answer within the 
time provided shall be deemed to constitute a waiver of the 
respondent's right to appear and contest the allegations of the 
complaint and to authorize the Commission, without further notice to 
the respondent, to find the facts to be as alleged in the complaint and 
to enter a final decision containing appropriate findings and 
conclusions and a final order disposing of the proceeding.

0
6. Revise Sec.  3.21 to read as follows:


Sec.  3.21  Prehearing procedures.

    (a) Meeting of the parties before scheduling conference. As early 
as practicable before the prehearing scheduling conference described in 
paragraph (b) of this section, but in any event no later than 5 days 
after the answer is filed by the last answering respondent, counsel for 
the parties shall meet to discuss the nature and basis of their claims 
and defenses and the possibilities for a prompt settlement or 
resolution of the case. The parties shall also agree, if possible, on 
(1) a proposed discovery plan specifically addressing a schedule for 
depositions of fact witnesses, the production of documents and 
electronically stored information, and the timing of expert discovery 
pursuant to Sec.  3.31A. The parties' agreement regarding 
electronically stored information should include the scope of and a 
specified time period for the exchange of such information that is 
subject to Sec.  Sec.  3.31(b)(2), 3.31(c), and 3.37(a), and the format 
for the disclosure of such information, consistent with Sec.  
3.31(c)(3) and Sec.  3.37(c); (2) a preliminary estimate of the time 
required for the evidentiary hearing; and (3) any other matters to be 
determined at the scheduling conference.
    (b) Scheduling conference. Not later than 10 days after the answer 
is filed by the last answering respondent, the Administrative Law Judge 
shall hold a scheduling conference. At the scheduling conference, 
counsel for the parties shall be prepared to address: (1) their factual 
and legal theories; (2) the current status of any pending motions; (3) 
a schedule of proceedings that is consistent with the date of the 
evidentiary hearing set by the Commission; (4) steps taken to preserve 
evidence relevant to the issues raised by the claims and defenses; (5) 
the scope of anticipated discovery, any limitations on discovery, and a 
proposed discovery plan, including the disclosure of electronically 
stored information; (6) issues that can be narrowed by agreement or by 
motion, suggestions to expedite the presentation of evidence at trial, 
and any request to bifurcate issues, claims or defenses; and (7) other 
possible agreements or steps that may aid in the just and expeditious 
disposition of the proceeding and to avoid unnecessary cost.
    (c) Prehearing scheduling order. (1) Not later than 2 days after 
the scheduling conference, the Administrative Law Judge shall enter an 
order that sets forth the results of the conference and establishes a 
schedule of proceedings that will permit the evidentiary hearing to 
commence on the date set by the Commission, including a plan of 
discovery that addresses the deposition of fact witnesses, timing of 
expert discovery, and the production of documents and electronically 
stored information, dates for the submission and hearing of motions, 
the specific method by which exhibits shall be numbered or otherwise 
identified and marked for the record, and the time and place of a final 
prehearing conference. The Commission may, upon a showing of good 
cause, order a later date for the evidentiary hearing than the one 
specified in the complaint.
    (2) The Administrative Law Judge may, upon a showing of good cause, 
grant a motion to extend any deadline or time specified in this 
scheduling order other than the date of the evidentiary hearing. Such 
motion shall set forth the total period of extensions, if any, 
previously obtained by the moving party. In determining whether to 
grant the motion, the Administrative Law Judge shall consider any 
extensions already granted, the length of the proceedings to date, the 
complexity of the issues, and the need to conclude the evidentiary 
hearing and render an initial decision in a timely manner. The 
Administrative Law Judge shall not rule on ex parte motions to extend 
the deadlines specified in the scheduling order, or modify such 
deadlines solely upon stipulation or agreement of counsel.
    (d) Meeting prior to final prehearing conference. Counsel for the 
parties shall meet before the final prehearing conference described in 
paragraph (e) of this section to discuss the matters set forth therein 
in preparation for the conference.
    (e) Final prehearing conference. As close to the commencement of 
the evidentiary hearing as practicable, the Administrative Law Judge 
shall hold a final prehearing conference, which counsel shall attend in 
person, to submit any proposed stipulations as to law, fact, or 
admissibility of evidence,

[[Page 58843]]

exchange exhibit and witness lists, and designate testimony to be 
presented by deposition. At this conference, the Administrative Law 
Judge shall also resolve any outstanding evidentiary matters or pending 
motions (except motions for summary decision) and establish a final 
schedule for the evidentiary hearing.
    (f) Additional prehearing conferences and orders. The 
Administrative Law Judge shall hold additional prehearing and status 
conferences or enter additional orders as may be needed to ensure the 
just and expeditious disposition of the proceeding and to avoid 
unnecessary cost. Such conferences shall be held in person to the 
extent practicable.
    (g) Public access and reporting. Prehearing conferences shall be 
public unless the Administrative Law Judge determines in his or her 
discretion that the conference (or any part thereof) shall be closed to 
the public. The Administrative Law Judge shall have discretion to 
determine whether a prehearing conference shall be stenographically 
reported.

0
7. Revise Sec.  3.22 to read as follows:


Sec.  3.22  Motions.

    (a) Presentation and disposition. Motions filed under Sec.  3.26 or 
Sec.  4.17 shall be directly referred to and ruled on by the 
Commission. Motions to dismiss filed before the evidentiary hearing, 
motions to strike, and motions for summary decision shall be directly 
referred to the Commission and shall be ruled on by the Commission, 
unless the Commission in its discretion refers the motion to the 
Administrative Law Judge. If the Commission refers the motion to the 
Administrative Law Judge, it may set a deadline for the ruling by the 
Administrative Law Judge, and a party may seek review of the ruling of 
the Administrative Law Judge in accordance with Sec.  3.23. During the 
time a proceeding is before an Administrative Law Judge, all other 
motions shall be addressed to and ruled upon, if within his or her 
authority, by the Administrative Law Judge. The Administrative Law 
Judge shall certify to the Commission a motion to disqualify filed 
under Sec.  3.42(g) if the Administrative Law Judge does not disqualify 
himself or herself within 10 days. The Administrative Law Judge shall 
certify to the Commission forthwith any other motion upon which he or 
she has no authority to rule. Rulings containing information granted in 
camera status pursuant to Sec.  3.45 shall be filed in accordance with 
Sec.  3.45(f). When a motion to dismiss is made at the close of the 
evidence offered in support of the complaint based upon an alleged 
failure to establish a prima facie case, the Administrative Law Judge 
shall defer ruling thereon until immediately after all evidence has 
been received and the hearing record is closed. All written motions 
shall be filed with the Secretary of the Commission, and all motions 
addressed to the Commission shall be in writing. The moving party shall 
also provide a copy of its motion to the Administrative Law Judge at 
the time the motion is filed with the Secretary.
    (b) Pendency of proceedings. A motion under consideration by the 
Commission shall not stay proceedings before the Administrative Law 
Judge unless the Commission so orders.
    (c) Content. All written motions shall state the particular order, 
ruling, or action desired and the grounds therefor. Memoranda in 
support of, or in opposition to, any dispositive motion shall not 
exceed 10,000 words. Memoranda in support of, or in opposition to, any 
other motion shall not exceed 2,500 words. Any reply in support of a 
dispositive motion shall not exceed 5,000 words and any reply in 
support of any other motion authorized by the Administrative Law Judge 
or the Commission shall not exceed 1,250 words. These word count 
limitations include headings, footnotes and quotations, but do not 
include the cover, table of contents, table of citations or 
authorities, glossaries, statements with respect to oral argument, any 
addendums containing statutes, rules or regulations, any certificates 
of counsel, proposed form of order, and any attachment required by 
Sec.  3.45(e). Documents that fail to comply with these provisions 
shall not be filed with the Secretary. Motions must also include the 
name, address, telephone number, fax number, and e-mail address (if 
any) of counsel and attach a draft order containing the proposed 
relief. If a party includes in a motion information that has been 
granted in camera status pursuant to Sec.  3.45(b) or is subject to 
confidentiality protections pursuant to a protective order, the party 
shall file 2 versions of the motion in accordance with the procedures 
set forth in Sec.  3.45(e). The party shall mark its confidential 
filings with brackets or similar conspicuous markings to indicate the 
material for which it is claiming confidential treatment. The time 
period specified by Sec.  3.22(d) within which an opposing party may 
file an answer will begin to run upon service on that opposing party of 
the confidential version of the motion.
    (d) Responses. Within 10 days after service of any written motion, 
or within such longer or shorter time as may be designated by the 
Administrative Law Judge or the Commission, the opposing party shall 
answer or shall be deemed to have consented to the granting of the 
relief asked for in the motion. If an opposing party includes in an 
answer information that has been grantedin camera status pursuant to 
Sec.  3.45(b) or is subject to confidentiality protections pursuant to 
a protective order, the opposing party shall file 2 versions of the 
answer in accordance with the procedures set forth in Sec.  3.45(e). 
The moving party shall have no right to reply, except for dispositive 
motions or as otherwise permitted by the Administrative Law Judge or 
the Commission. Reply and surreply briefs to motions other than 
dispositive motions shall be permitted only in circumstances where the 
parties wish to draw the Administrative Law Judge's or the Commission's 
attention to recent important developments or controlling authority 
that could not have been raised earlier in the party's principal brief. 
The reply may be conditionally filed with the motion seeking leave to 
reply. Any reply to a dispositive motion, or any permitted reply to any 
other motion, shall be filed within 5 days after service of the last 
answer to that motion.
    (e) Rulings on motions. Unless otherwise provided by a relevant 
rule, the Administrative Law Judge shall rule on motions within 14 days 
after the filing of all motion papers authorized by this section. The 
Commission, for good cause, may extend the time allowed for a ruling.
    (f) Motions for extensions. The Administrative Law Judge or the 
Commission may waive the requirements of this section as to motions for 
extensions of time; however, the Administrative Law Judge shall have no 
authority to rule on ex parte motions for extensions of time.
    (g) Statement. Each motion to quash filed pursuant to Sec.  
3.34(c), each motion to compel or determine sufficiency pursuant to 
Sec.  3.38(a), each motion for sanctions pursuant to Sec.  3.38(b), and 
each motion for enforcement pursuant to Sec.  3.38(c) shall be 
accompanied by a signed statement representing that counsel for the 
moving party has conferred with opposing counsel in an effort in good 
faith to resolve by agreement the issues raised by the motion and has 
been unable to reach such an agreement. If some of the matters in 
controversy have been resolved by agreement, the statement shall 
specify the matters so resolved and the matters remaining unresolved. 
The statement shall recite the date, time, and place of each such 
conference between counsel, and the names of all parties

[[Page 58844]]

participating in each such conference. Unless otherwise ordered by the 
Administrative Law Judge, the statement required by this rule must be 
filed only with the first motion concerning compliance with the 
discovery demand at issue.

0
8. Revise Sec.  3.23 to read as follows:


Sec.  3.23  Interlocutory appeals.

    (a) Appeals without a determination by the Administrative Law 
Judge. The Commission may, in its discretion, entertain interlocutory 
appeals where a ruling of the Administrative Law Judge:
    (1) Requires the disclosure of records of the Commission or another 
governmental agency or the appearance of an official or employee of the 
Commission or another governmental agency pursuant to Sec.  3.36, if 
such appeal is based solely on a claim of privilege: Provided, that the 
Administrative Law Judge shall stay until further order of the 
Commission the effectiveness of any ruling, whether or not appeal is 
sought, that requires the disclosure of nonpublic Commission minutes, 
Commissioner circulations, or similar documents prepared by the 
Commission, individual Commissioner, or the Office of the General 
Counsel;
    (2) Suspends an attorney from participation in a particular 
proceeding pursuant to Sec.  3.42(d); or
    (3) Grants or denies an application for intervention pursuant to 
the provisions of Sec.  3.14. Appeal from such rulings may be sought by 
filing with the Commission an application for review within 3 days 
after notice of the Administrative Law Judge's ruling. An answer may be 
filed within 3 days after the application for review is filed. The 
Commission upon its own motion may enter an order staying compliance 
with a discovery demand authorized by the Administrative Law Judge 
pursuant to Sec.  3.36 or placing the matter on the Commission's docket 
for review. Any order placing the matter on the Commission's docket for 
review will set forth the scope of the review and the issues which will 
be considered and will make provision for the filing of memoranda of 
law if deemed appropriate by the Commission.
    (b) Other interlocutory appeals. A party may request the 
Administrative Law Judge to determine that a ruling involves a 
controlling question of law or policy as to which there is substantial 
ground for difference of opinion and that an immediate appeal from the 
ruling may materially advance the ultimate termination of the 
litigation or subsequent review will be an inadequate remedy. An answer 
may be filed within 3 days after the application for review is filed. 
The Administrative Law Judge shall issue a ruling on the request for 
determination within 3 days. The party may file an application for 
review with the Commission within 1 day after notice that the 
Administrative Law Judge has issued the requested determination or 1 
day after the deadline has passed for the Administrative Law Judge to 
issue a ruling on the request for determination and the Administrative 
Law Judge has not issued his or her ruling.
    (c) The application for review shall attach the ruling from which 
appeal is being taken and any other portions of the record on which the 
moving party relies. Neither the application for review nor the answer 
shall exceed 2,500 words. This word count limitation includes headings, 
footnotes and quotations, but does not include the cover, table of 
contents, table of citations or authorities, glossaries, statements 
with respect to oral argument, any addendums containing statutes, rules 
or regulations, any certificates of counsel, proposed form of order, 
and any attachment required by Sec.  3.45(e). The Commission may order 
additional briefing on the application.
    (d) Unless the Commission, within 3 days after the filing of an 
application for review, decides to entertain the appeal, the 
application shall be deemed to be denied.
    (e) Proceedings not stayed. Application for review and appeal 
hereunder shall not stay proceedings before the Administrative Law 
Judge unless the Judge or the Commission shall so order.

0
9. Revise Sec.  3.24 to read as follows:


Sec.  3.24  Summary decisions.

    (a) Procedure. (1) Any party may move, with or without supporting 
affidavits, for a summary decision in the party's favor upon all or any 
part of the issues being adjudicated. The motion shall be accompanied 
by a separate and concise statement of the material facts as to which 
the moving party contends there is no genuine issue for trial. Counsel 
in support of the complaint may so move at any time after 20 days 
following issuance of the complaint and any respondent may so move at 
any time after issuance of the complaint. Any such motion by any party, 
however, shall be filed in accordance with the scheduling order issued 
pursuant to Sec.  3.21, but in any case at least 30 days before the 
date fixed for the hearing.
    (2) Any other party may, within 14 days after service of the 
motion, file opposing affidavits. The opposing party shall include a 
separate and concise statement of those material facts as to which the 
opposing party contends there exists a genuine issue for trial, as 
provided in Sec.  3.24(a)(3). The parties may file memoranda of law in 
support of, or in opposition to, the motion consistent with Sec.  
3.22(c). If a party includes in any such brief or memorandum 
information that has been granted in camera status pursuant to Sec.  
3.45(b) or is subject to confidentiality protections pursuant to a 
protective order, the party shall file 2 versions of the document in 
accordance with the procedures set forth in Sec.  3.45(e). If the 
Commission (or, when appropriate, the Administrative Law Judge) 
determines that there is no genuine issue as to any material fact 
regarding liability or relief, it shall issue a final decision and 
order. In the event that the motion has been referred to the 
Administrative Law Judge, such determination by the Administrative Law 
Judge shall constitute his or her initial decision and shall conform to 
the procedures set forth in Sec.  3.51(c). A summary decision, 
interlocutory in character and in compliance with the procedures set 
forth in Sec.  3.51(c), may be rendered on the issue of liability alone 
although there is a genuine issue as to relief.
    (3) Affidavits shall set forth such facts as would be admissible in 
evidence and shall show affirmatively that the affiant is competent to 
testify to the matters stated therein. The Commission (or, when 
appropriate, the Administrative Law Judge) may permit affidavits to be 
supplemented or opposed by depositions, answers to interrogatories, or 
further affidavits. When a motion for summary decision is made and 
supported as provided in this rule, a party opposing the motion may not 
rest upon the mere allegations or denials of his or her pleading; the 
response, by affidavits or as otherwise provided in this rule, must set 
forth specific facts showing that there is a genuine issue of material 
fact for trial. If no such response is filed, summary decision, if 
appropriate, shall be rendered.
    (4) Should it appear from the affidavits of a party opposing the 
motion that it cannot, for reasons stated, present by affidavit facts 
essential to justify its opposition, the Commission (or, when 
appropriate, the Administrative Law Judge) may deny the motion for 
summary decision or may order a continuance to permit affidavits to be 
obtained or depositions to be taken or discovery to be had or make such 
other order as is appropriate and a determination to that effect shall 
be made a matter of record.
    (5) If on motion under this rule a summary decision is not rendered 
upon

[[Page 58845]]

the whole case or for all the relief asked and a trial is necessary, 
the Commission (or, when appropriate, the Administrative Law Judge) 
shall issue an order specifying the facts that appear without 
substantial controversy and directing further proceedings in the 
action. The facts so specified shall be deemed established.
    (b) Affidavits filed in bad faith. (1) Should it appear to the 
satisfaction of the Commission (or, when appropriate, the 
Administrative Law Judge) at any time that any of the affidavits 
presented pursuant to this rule are presented in bad faith, or solely 
for the purpose of delay, or are patently frivolous, the Commission 
(or, when appropriate, the Administrative Law Judge) shall enter a 
determination to that effect upon the record.
    (2) If upon consideration of all relevant facts attending the 
submission of any affidavit covered by paragraph (b)(1) of this 
section, the Commission (or, when appropriate, the Administrative Law 
Judge) concludes that action to suspend or remove an attorney from the 
case is warranted, it shall take action as specified in Sec.  3.42(d). 
If the Administrative Law Judge to whom the Commission has referred a 
motion for summary decision concludes, upon consideration of all the 
relevant facts attending the submission of any affidavit covered by 
paragraph (b)(1) of this section, that the matter should be certified 
to the Commission for consideration of disciplinary action against an 
attorney, including reprimand, suspension or disbarment, the 
Administrative Law Judge shall certify the matter, with his or her 
findings and recommendations, to the Commission for its consideration 
of disciplinary action in the manner provided by the Commission's 
rules.If the Commission has addressed the motion directly, it may 
consider such disciplinary action without a certification by the 
Administrative Law Judge.

0
10. Revise Sec.  3.26 to read as follows:


Sec.  3.26  Motions following denial of preliminary injunctive relief.

    (a) This section sets forth two procedures by which respondents may 
obtain consideration of whether continuation of an adjudicative 
proceeding is in the public interest after a court has denied 
preliminary injunctive relief in a separate proceeding brought under 
section 13(b) of the Federal Trade Commission Act, 15 U.S.C. 53(b), in 
aid of the adjudication.
    (b) A motion under this section shall be addressed to the 
Commission and filed with the Secretary of the Commission. Such a 
motion must be filed within 14 days after and may not be filed sooner 
than:
    (1) A district court has denied preliminary injunctive relief, all 
opportunity has passed for the Commission to seek reconsideration of 
the denial or to appeal it, and the Commission has neither sought 
reconsideration of the denial nor appealed it; or
    (2) A court of appeals has denied injunctive relief pending appeal.
    (c) Withdrawal from adjudication. If a court has denied preliminary 
injunctive relief to the Commission in a section 13(b) proceeding 
brought in aid of an adjudicative proceeding, respondents may move that 
the proceeding be withdrawn from adjudication in order to consider 
whether or not the public interest warrants further litigation. Such a 
motion shall be filed jointly or separately by each of the respondents 
in the adjudicative proceeding. Complaint counsel may file a response 
within 14 days after such motion is filed. The matter will not be 
withdrawn from adjudication unless the Commission so orders.
    (d) Consideration on the record. Instead of a motion to withdraw 
the matter from adjudication, any respondent or respondents may file a 
motion under this paragraph to dismiss the administrative complaint on 
the basis that the public interest does not warrant further litigation 
after a court has denied preliminary injunctive relief to the 
Commission. Complaint counsel may file a response within 14 days after 
such motion is filed. The filing of a motion to dismiss shall not stay 
the proceeding unless the Commission so orders.
    (e) Form. Memoranda in support of or in opposition to such motions 
shall not exceed 10,000 words. This word count limitation includes 
headings, footnotes and quotations, but does not include the cover, 
table of contents, table of citations or authorities, glossaries, 
statements with respect to oral argument, any addendums containing 
statutes, rules or regulations, any certificates of counsel, proposed 
form of order, and any attachment required by Sec.  3.45(e).
    (f) In camera materials. If any filing includes materials that are 
subject to confidentiality protections pursuant to an order entered in 
either the proceeding under section 13(b) or in the proceeding under 
this part, such materials shall be treated as in camera materials for 
purposes of this paragraph and the party shall file 2 versions of the 
document in accordance with the procedures set forth in Sec.  3.45(e). 
The time within which complaint counsel may file an answer under this 
paragraph will begin to run upon service of the in camera version of 
the motion (including any supporting briefs and memoranda).

0
11. Revise Sec.  3.31, to read as follows:


Sec.  3.31  General discovery provisions.

    (a) Discovery methods. Parties may obtain discovery by one or more 
of the following methods: Depositions upon oral examination or written 
questions; written interrogatories; production of documents or things 
for inspection and other purposes; and requests for admission. Except 
as provided in the rules, or unless the Administrative Law Judge orders 
otherwise, the frequency or sequence of these methods is not limited. 
The parties shall, to the greatest extent practicable, conduct 
discovery simultaneously; the fact that a party is conducting discovery 
shall not operate to delay any other party's discovery.
    (b) Mandatory initial disclosures. Complaint counsel and 
respondent's counsel shall, within 5 days of receipt of a respondent's 
answer to the complaint and without awaiting a discovery request, 
provide to each other:
    (1) The name, and, if known, the address and telephone number of 
each individual likely to have discoverable information relevant to the 
allegations of the Commission's complaint, to the proposed relief, or 
to the defenses of the respondent, as set forth in Sec.  3.31(c)(1); 
and
    (2) A copy of, or a description by category and location of, all 
documents and electronically stored information including declarations, 
transcripts of investigational hearings and depositions, and tangible 
things in the possession, custody, or control of the Commission or 
respondent(s) that are relevant to the allegations of the Commission's 
complaint, to the proposed relief, or to the defenses of the 
respondent, as set forth in Sec.  3.31(c)(1); unless such information 
or materials are subject to the limitations in Sec.  3.31(c)(2), 
privileged as defined in Sec.  3.31(c)(4), pertain to hearing 
preparation as defined in Sec.  3.31(c)(5), pertain to experts as 
defined in Sec.  3.31A, or are obtainable from some other source that 
is more convenient, less burdensome, or less expensive. A party shall 
make its disclosures based on the information then reasonably available 
to it and is not excused from making its disclosures because it has not 
fully completed its investigation.
    (c) Scope of discovery. Unless otherwise limited by order of the 
Administrative Law Judge or the Commission in accordance with these

[[Page 58846]]

rules, the scope of discovery is as follows:
    (1) In general. Parties may obtain discovery to the extent that it 
may be reasonably expected to yield information relevant to the 
allegations of the complaint, to the proposed relief, or to the 
defenses of any respondent. Such information may include the existence, 
description, nature, custody, condition and location of any books, 
documents, other tangible things, electronically stored information, 
and the identity and location of persons having any knowledge of any 
discoverable matter. Information may not be withheld from discovery on 
grounds that the information will be inadmissible at the hearing if the 
information sought appears reasonably calculated to lead to the 
discovery of admissible evidence.
    (2) Limitations. Complaint counsel need only search for materials 
that were collected or reviewed in the course of the investigation of 
the matter or prosecution of the case and that are in the possession, 
custody or control of the Bureaus or Offices of the Commission that 
investigated the matter, including the Bureau of Economics. The 
Administrative Law Judge may authorize for good cause additional 
discovery of materials in the possession, custody, or control of those 
Bureaus or Offices, or authorize other discovery pursuant to Sec.  
3.36. Neither complaint counsel, respondent, nor a third party 
receiving a discovery request under these rules is required to search 
for materials generated and transmitted between an entity's counsel 
(including counsel's legal staff or in-house counsel) and not shared 
with anyone else, or between complaint counsel and non-testifying 
Commission employees, unless the Administrative Law Judge determines 
there is good cause to provide such materials. The frequency or extent 
of use of the discovery methods otherwise permitted under these rules 
shall be limited by the Administrative Law Judge if he or she 
determines that:
    (i) The discovery sought is unreasonably cumulative or duplicative, 
or is obtainable from some other source that is more convenient, less 
burdensome, or less expensive;
    (ii) The party seeking discovery has had ample opportunity by 
discovery in the action to obtain the information sought; or
    (iii) The burden and expense of the proposed discovery outweigh its 
likely benefit.
    (3) Electronically stored information. A party need not provide 
discovery of electronically stored information from sources that the 
party identifies as not reasonably accessible because of undue burden 
or cost. On a motion to compel discovery, the party from whom discovery 
is sought must show that the information is not reasonably accessible 
because of undue burden or cost. If that showing is made, the 
Administrative Law Judge may nonetheless order discovery if the 
requesting party shows good cause, considering the limitations of 
paragraph (c)(2). The Administrative Law Judge may specify conditions 
for the discovery.
    (4) Privilege. Discovery shall be denied or limited in order to 
preserve the privilege of a witness, person, or governmental agency as 
governed by the Constitution, any applicable act of Congress, or the 
principles of the common law as they may be interpreted by the 
Commission in the light of reason and experience.
    (5) Hearing preparations: Materials. Subject to the provisions of 
Sec.  3.31A, a party may obtain discovery of documents and tangible 
things otherwise discoverable under paragraph (c)(1) of this section 
and prepared in anticipation of litigation or for hearing by or for 
another party or by or for that other party's representative (including 
the party's attorney, consultant, or agent) only upon a showing that 
the party seeking discovery has substantial need of the materials in 
the preparation of its case and that the party is unable without undue 
hardship to obtain the substantial equivalent of the materials by other 
means. In ordering discovery of such materials when the required 
showing has been made, the Administrative Law Judge shall protect 
against disclosure of the mental impressions, conclusions, opinions, or 
legal theories of an attorney or other representative of a party.
    (d) Protective orders; order to preserve evidence. In order to 
protect the parties and third parties against improper use and 
disclosure of confidential information, the Administrative Law Judge 
shall issue a protective order as set forth in the appendix to this 
section. The Administrative Law Judge may also deny discovery or make 
any other order which justice requires to protect a party or other 
person from annoyance, embarrassment, oppression, or undue burden or 
expense, or to prevent undue delay in the proceeding. Such an order may 
also be issued to preserve evidence upon a showing that there is 
substantial reason to believe that such evidence would not otherwise be 
available for presentation at the hearing.
    (e) Supplementation of disclosures and responses. A party who has 
made a mandatory initial disclosure under Sec.  3.31(b) or responded to 
a request for discovery with a disclosure or response is under a duty 
to supplement or correct the disclosure or response to include 
information thereafter acquired if ordered by the Administrative Law 
Judge or in the following circumstances:
    (1) A party is under a duty to supplement at appropriate intervals 
its mandatory initial disclosures under Sec.  3.31(b) if the party 
learns that in some material respect the information disclosed is 
incomplete or incorrect and if the additional or corrective information 
has not otherwise been made known to the other parties during the 
discovery process or in writing.
    (2) A party is under a duty to amend in a timely manner a prior 
response to an interrogatory, request for production, or request for 
admission if the party learns that the response is in some material 
respect incomplete or incorrect.
    (f) Stipulations. When approved by the Administrative Law Judge, 
the parties may by written stipulation (1) provide that depositions may 
be taken before any person, at any time or place, upon any notice, and 
in any manner and when so taken may be used like other depositions, and 
(2) modify the procedures provided by these rules for other methods of 
discovery.
    (g) Ex parte rulings on applications for compulsory process. 
Applications for the issuance of subpoenas to compel testimony at an 
adjudicative hearing pursuant to Sec.  3.34 may be madeex parte, and, 
if so made, such applications and rulings thereon shall remain ex parte 
unless otherwise ordered by the Administrative Law Judge or the 
Commission.
    (h) Inadvertent production. The inadvertent production of 
information produced by a party or third party in discovery that is 
subject to a claim of privilege or immunity for hearing preparation 
material shall not waive such claims as to that or other information 
regarding the same subject matter if the Administrative Law Judge 
determines that the holder of the claim made efforts reasonably 
designed to protect the privilege or the hearing preparation material, 
provided, however, this provision shall not apply if the party, or an 
entity related to that party, who inadvertently produced the privileged 
information relies upon such information to support a claim or defense.
    (i) Restriction on filings. Unless otherwise ordered by the 
Administrative Law Judge in his or her discretion, mandatory initial 
and supplemental disclosures, interrogatories, depositions, requests 
for documents, requests for admissions, and answers and responses

[[Page 58847]]

thereto shall be served upon other parties but shall not be filed with 
the Office of the Secretary, the Administrative Law Judge, or otherwise 
provided to the Commission, except to support or oppose a motion or to 
offer as evidence.

Appendix A to Sec.  3.31: Standard Protective Order

    For the purpose of protecting the interests of the parties and 
third parties in the above-captioned matter against improper use and 
disclosure of confidential information submitted or produced in 
connection with this matter:
    It is hereby ordered that this Protective Order Governing 
Confidential Material (``Protective Order'') shall govern the handling 
of all Discovery Material, as hereafter defined.
    1. As used in this Order, ``confidential material'' shall refer to 
any document or portion thereof that contains privileged, competitively 
sensitive information, or sensitive personal information. ``Sensitive 
personal information'' shall refer to, but shall not be limited to, an 
individual's Social Security number, taxpayer identification number, 
financial account number, credit card or debit card number, driver's 
license number, state-issued identification number, passport number, 
date of birth (other than year), and any sensitive health information 
identified by individual, such as an individual's medical records. 
``Document'' shall refer to any discoverable writing, recording, 
transcript of oral testimony, or electronically stored information in 
the possession of a party or a third party. ``Commission'' shall refer 
to the Federal Trade Commission (``FTC''), or any of its employees, 
agents, attorneys, and all other persons acting on its behalf, 
excluding persons retained as consultants or experts for purposes of 
this proceeding.
    2. Any document or portion thereof submitted by a respondent or a 
third party during a Federal Trade Commission investigation or during 
the course of this proceeding that is entitled to confidentiality under 
the Federal Trade Commission Act, or any regulation, interpretation, or 
precedent concerning documents in the possession of the Commission, as 
well as any information taken from any portion of such document, shall 
be treated as confidential material for purposes of this Order. The 
identity of a third party submitting such confidential material shall 
also be treated as confidential material for the purposes of this Order 
where the submitter has requested such confidential treatment.
    3. The parties and any third parties, in complying with informal 
discovery requests, disclosure requirements, or discovery demands in 
this proceeding may designate any responsive document or portion 
thereof as confidential material, including documents obtained by them 
from third parties pursuant to discovery or as otherwise obtained.
    4. The parties, in conducting discovery from third parties, shall 
provide to each third party a copy of this Order so as to inform each 
such third party of his, her, or its rights herein.
    5. A designation of confidentiality shall constitute a 
representation in good faith and after careful determination that the 
material is not reasonably believed to be already in the public domain 
and that counsel believes the material so designated constitutes 
confidential material as defined in Paragraph of this Order.
    6. Material may be designated as confidential by placing on or 
affixing to the document containing such material (in such manner as 
will not interfere with the legibility thereof), or if an entire folder 
or box of documents is confidential by placing or affixing to that 
folder or box, the designation ``CONFIDENTIAL--FTC Docket No. XXXX'' or 
any other appropriate notice that identifies this proceeding, together 
with an indication of the portion or portions of the document 
considered to be confidential material. Confidential information 
contained in electronic documents may also be designated as 
confidential by placing the designation ``CONFIDENTIAL--FTC Docket No. 
XXXX'' or any other appropriate notice that identifies this proceeding, 
on the face of the CD or DVD or other medium on which the document is 
produced. Masked or otherwise redacted copies of documents may be 
produced where the portions deleted contain privileged matter, provided 
that the copy produced shall indicate at the appropriate point that 
portions have been deleted and the reasons therefor.
    7. Confidential material shall be disclosed only to: (a) the 
Administrative Law Judge presiding over this proceeding, personnel 
assisting the Administrative Law Judge, the Commission and its 
employees, and personnel retained by the Commission as experts or 
consultants for this proceeding; (b) judges and other court personnel 
of any court having jurisdiction over any appellate proceedings 
involving this matter; (c) outside counsel of record for any 
respondent, their associated attorneys and other employees of their law 
firm(s), provided they are not employees of a respondent; (d) anyone 
retained to assist outside counsel in the preparation or hearing of 
this proceeding including consultants, provided they are not affiliated 
in any way with a respondent and have signed an agreement to abide by 
the terms of the protective order; and (e) any witness or deponent who 
may have authored or received the information in question.
    8. Disclosure of confidential material to any person described in 
Paragraph 7 of this Order shall be only for the purposes of the 
preparation and hearing of this proceeding, or any appeal therefrom, 
and for no other purpose whatsoever, provided, however, that the 
Commission may, subject to taking appropriate steps to preserve the 
confidentiality of such material, use or disclose confidential material 
as provided by its Rules of Practice; sections 6(f) and 21 of the 
Federal Trade Commission Act; or any other legal obligation imposed 
upon the Commission.
    9. In the event that any confidential material is contained in any 
pleading, motion, exhibit or other paper filed or to be filed with the 
Secretary of the Commission, the Secretary shall be so informed by the 
Party filing such papers, and such papers shall be filed in camera. To 
the extent that such material was originally submitted by a third 
party, the party including the materials in its papers shall 
immediately notify the submitter of such inclusion. Confidential 
material contained in the papers shall continue to have in camera 
treatment until further order of the Administrative Law Judge, 
provided, however, that such papers may be furnished to persons or 
entities who may receive confidential material pursuant to Paragraphs 7 
or 8. Upon or after filing any paper containing confidential material, 
the filing party shall file on the public record a duplicate copy of 
the paper that does not reveal confidential material. Further, if the 
protection for any such material expires, a party may file on the 
public record a duplicate copy which also contains the formerly 
protected material.
    10. If counsel plans to introduce into evidence at the hearing any 
document or transcript containing confidential material produced by 
another party or by a third party, they shall provide advance notice to 
the other party or third party for purposes of allowing that party to 
seek an order that the document or transcript be granted in camera 
treatment. If that party wishes in camera treatment for the document or 
transcript, the party shall file an appropriate motion with the

[[Page 58848]]

Administrative Law Judge within 5 days after it receives such notice. 
Except where such an order is granted, all documents and transcripts 
shall be part of the public record. Where in camera treatment is 
granted, a duplicate copy of such document or transcript with the 
confidential material deleted therefrom may be placed on the public 
record.
    11. If any party receives a discovery request in another proceeding 
that may require the disclosure of confidential material submitted by 
another party or third party, the recipient of the discovery request 
shall promptly notify the submitter of receipt of such request. Unless 
a shorter time is mandated by an order of a court, such notification 
shall be in writing and be received by the submitter at least 10 
business days before production, and shall include a copy of this 
Protective Order and a cover letter that will apprise the submitter of 
its rights hereunder. Nothing herein shall be construed as requiring 
the recipient of the discovery request or anyone else covered by this 
Order to challenge or appeal any order requiring production of 
confidential material, to subject itself to any penalties for non-
compliance with any such order, or to seek any relief from the 
Administrative Law Judge or the Commission. The recipient shall not 
oppose the submitter's efforts to challenge the disclosure of 
confidential material. In addition, nothing herein shall limit the 
applicability of Rule 4.11(e) of the Commission's Rules of Practice, 16 
CFR 4.11(e), to discovery requests in another proceeding that are 
directed to the Commission.
    12. At the time that any consultant or other person retained to 
assist counsel in the preparation of this action concludes 
participation in the action, such person shall return to counsel all 
copies of documents or portions thereof designated confidential that 
are in the possession of such person, together with all notes, 
memoranda or other papers containing confidential information. At the 
conclusion of this proceeding, including the exhaustion of judicial 
review, the parties shall return documents obtained in this action to 
their submitters, provided, however, that the Commission's obligation 
to return documents shall be governed by the provisions of Rule 4.12 of 
the Rules of Practice, 16 CFR 4.12.
    13. The provisions of this Protective Order, insofar as they 
restrict the communication and use of confidential discovery material, 
shall, without written permission of the submitter or further order of 
the Commission, continue to be binding after the conclusion of this 
proceeding.

0
12. Add Sec.  3.31A to read as follows:


Sec.  3.31A  Expert discovery.

    (a) The parties shall serve each other with a list of experts they 
intend to call as witnesses at the hearing not later than 1 day after 
the close of fact discovery, meaning the close of discovery except for 
depositions and other discovery permitted under Sec.  3.24(a)(4), and 
discovery for purposes of authenticity and admissibility of exhibits. 
Complaint counsel shall serve the other parties with a report prepared 
by each of its expert witnesses not later than 14 days after the close 
of fact discovery. Each respondent shall serve each other party with a 
report prepared by each of its expert witnesses not later than 28 days 
after the close of fact discovery. Complaint counsel shall serve 
respondents with a list of any rebuttal expert witnesses and a rebuttal 
report prepared by each such witness not later than 38 days after the 
close of fact discovery. Each side will be limited to calling at the 
evidentiary hearing 5 expert witnesses, including any rebuttal expert 
witnesses. A party may file a motion seeking leave to call additional 
expert witnesses due to extraordinary circumstances. Each report shall 
be signed by the expert and contain a complete statement of all 
opinions to be expressed and the basis and reasons therefor; the data, 
materials, or other information considered by the witness in forming 
the opinions; any exhibits to be used as a summary of or support for 
the opinions; the qualifications of the witness, including a list of 
all publications authored by the witness within the preceding 10 years; 
the compensation to be paid for the study and testimony; and a listing 
of any other cases in which the witness has testified as an expert at 
trial or by deposition within the preceding 4 years. A rebuttal report 
need not include any information already included in the initial report 
of the witness. Aside from any required information, a rebuttal report 
shall be limited to rebuttal of matters set forth in respondents' 
expert reports. If material outside the scope of fair rebuttal is 
presented, respondents may seek appropriate relief, including striking 
of all or part of the report or leave to submit a surrebuttal report. 
No party may call an expert witness at the hearing unless he or she has 
been listed and has provided reports as required by this section.
    (b) A party may depose any person who has been identified as an 
expert whose opinions may be presented at trial. Unless otherwise 
ordered by the Administrative Law Judge, a deposition of any expert 
witness shall be conducted after the disclosure of a report prepared by 
the witness in accordance with paragraph (a). Depositions of expert 
witnesses shall be completed not later than 65 days after the close of 
fact discovery. Upon motion, the Administrative Law Judge may order 
further discovery by other means, subject to such restrictions as to 
scope as the Administrative Law Judge may deem appropriate. A party, 
however, may not discover facts known or opinions held by an expert who 
has been retained or specially employed by another party in 
anticipation of litigation or preparation for hearing and who is not 
listed as a witness at hearing.

0
13. Revise Sec.  3.33 to read as follows:


Sec.  3.33  Depositions.

    (a) In general. Any party may take a deposition of any named person 
or of a person or persons described with reasonable particularity, 
provided that such deposition is reasonably expected to yield 
information within the scope of discovery under Sec.  3.31(c)(1). Such 
party may, by motion, obtain from the Administrative Law Judge an order 
to preserve relevant evidence upon a showing that there is substantial 
reason to believe that such evidence would not otherwise be available 
for presentation at the hearing. Depositions may be taken before any 
person having power to administer oaths, either under the law of the 
United States or of the state or other place in which the deposition is 
taken, who may be designated by the party seeking the deposition, 
provided that such person shall have no interest in the outcome of the 
proceeding. The party seeking the deposition shall serve upon each 
person whose deposition is sought and upon each party to the proceeding 
reasonable notice in writing of the time and place at which it will be 
taken, and the name and address of each person or persons to be 
examined, if known, and if the name is not known, a description 
sufficient to identify them. The parties may stipulate in writing or 
the Administrative Law Judge may upon motion order that a deposition be 
taken by telephone or other remote electronic means. A deposition taken 
by such means is deemed taken at the place where the deponent is to 
answer questions.
    (b) The Administrative Law Judge may rule on motion by a party that 
a deposition shall not be taken upon a determination that such 
deposition would not be reasonably expected to meet the scope of 
discovery set forth under Sec.  3.31(c), or that the value of the 
deposition would be outweighed by the considerations set forth under 
Sec.  3.43(b). The fact that a witness testifies at an

[[Page 58849]]

investigative hearing does not preclude the deposition of that witness.
    (c) Notice.
    (1) Notice to corporation or other organization. A party may name 
as the deponent a public or private corporation, partnership, 
association, governmental agency other than the Federal Trade 
Commission, or any bureau or regional office to the Federal Trade 
Commission, and describe with reasonable particularity the matters on 
which examination is requested. The organization so named shall 
designate one or more officers, directors, or managing agents, or other 
persons who consent to testify on its behalf, and may set forth, for 
each person designated, the matters on which he or she will testify. A 
subpoena shall advise a non-party organization of its duty to make such 
a designation. The persons so designated shall testify as to matters 
known or reasonably available to the organization. This subsection does 
not preclude taking a deposition by any other procedure authorized in 
these rules.
    (2) Notice to Commission. Except as provided in Sec.  3.31(i), 
notices of depositions shall not be filed with the Office of the 
Secretary, the Administrative Law Judge, or otherwise provided to the 
Commission.
    (d) Taking of deposition. Each deponent shall be duly sworn, and 
any party shall have the right to question him or her. Objections to 
questions or to evidence presented shall be in short form, stating the 
grounds of objections relied upon. The questions propounded and the 
answers thereto, together with all objections made, shall be recorded 
and certified by the officer. Thereafter, upon payment of the charges 
therefor, the officer shall furnish a copy of the deposition to the 
deponent and to any party.
    (e) Depositions upon written questions. A party desiring to take a 
deposition upon written questions shall serve them upon every other 
party with a notice stating:
    (1) The name and address of the person who is to answer them, and
    (2) The name or descriptive title and address of the officer before 
whom the deposition is to be taken.
    A deposition upon written questions may be taken of a public or 
private corporation, partnership, association, governmental agency 
other than the Federal Trade Commission, or any bureau or regional 
office of the Federal Trade Commission in accordance with the 
provisions of Sec.  3.33(c). Within 30 days after the notice and 
written questions are served, any other party may serve cross questions 
upon all other parties. Within 10 days after being served with cross 
questions, the party taking the deposition may serve redirect questions 
upon all other parties. Within 10 days after being served with redirect 
questions, any other party may serve recross questions upon all other 
parties. The content of any question shall not be disclosed to the 
deponent prior to the taking of the deposition. A copy of the notice 
and copies of all questions served shall be delivered by the party 
taking the deposition to the officer designated in the notice, who 
shall proceed promptly to take the testimony of the deponent in 
response to the questions and to prepare, certify, and file or mail the 
deposition, attaching thereto the copy of the notice and the questions 
received by him or her. When the deposition is filed the party taking 
it shall promptly give notice thereof to all other parties.
    (f) Correction of deposition. A deposition may be corrected, as to 
form or substance, in the manner provided by Sec.  3.44(b). Any such 
deposition shall, in addition to the other required procedures, be read 
to or by the deponent and signed by him or her, unless the parties by 
stipulation waive the signing or the deponent is unavailable or cannot 
be found or refuses to sign. If the deposition is not signed by the 
deponent within 30 days of its submission or attempted submission, the 
officer shall sign it and certify that the signing has been waived or 
that the deponent is unavailable or that the deponent has refused to 
sign, as the case may be, together with the reason for the refusal to 
sign, if any has been given. The deposition may then be used as though 
signed unless, on a motion to suppress under Sec.  3.33(g)(3)(iv), the 
Administrative Law Judge determines that the reasons given for the 
refusal to sign require rejection of the deposition in whole or in 
part. In addition to and not in lieu of the procedure for formal 
correction of the deposition, the deponent may enter in the record at 
the time of signing a list of objections to the transcription of his or 
her remarks, stating with specificity the alleged errors in the 
transcript.
    (g) Objections; errors and irregularities.
    (1) Objections to admissibility. Subject to the provisions of 
paragraph (g)(3) of this section, objection may be made at the hearing 
to receiving in evidence any deposition or part thereof for any reason 
which would require the exclusion of the evidence if the witness were 
then present and testifying.
    (2) Effect of errors and irregularities in depositions--(i)As to 
notice. All errors and irregularities in the notice for taking a 
deposition are waived unless written objection is promptly served upon 
the party giving the notice.
    (ii) As to disqualification of officer. Objection to taking a 
deposition because of disqualification of the officer before whom it is 
to be taken is waived unless made before the taking of the deposition 
begins or as soon thereafter as the disqualification becomes known or 
could be discovered with reasonable diligence.
    (iii) As to taking of deposition. (A) Objections to the competency 
of a witness or to the competency, relevancy, or materiality of 
testimony are not waived by failure to make them before or during the 
taking of the deposition, unless the ground of the objection is one 
which might have been obviated or removed if presented at that time.
    (B) Errors and irregularities occurring at the oral examination in 
the manner of taking the deposition, in the form of the questions or 
answers, in the oath or affirmation, or in the conduct of parties, and 
errors of any kind which might be obviated, removed, or cured if 
promptly presented, are waived unless seasonable objection thereto is 
made at the taking of the deposition.
    (C) Objections to the form of written questions are waived unless 
served in writing upon all parties within the time allowed for serving 
the succeeding cross or other questions and within 5 days after service 
of the last questions authorized.
    (iv) As to completion and return of deposition. Errors and 
irregularities in the manner in which the testimony is transcribed or 
the deposition is prepared, signed, certified, endorsed, or otherwise 
dealt with by the officer are waived unless a motion to suppress the 
deposition or some part thereof is made with reasonable promptness 
after such defect is or with due diligence might have been ascertained.

0
14. Revise Sec.  3.34 to read as follows:


Sec.  3.34  Subpoenas.

    (a) Subpoenas ad testificandum. Counsel for a party may sign and 
issue a subpoena, on a form provided by the Secretary, requiring a 
person to appear and give testimony at the taking of a deposition to a 
party requesting such subpoena or to attend and give testimony at an 
adjudicative hearing.
    (b) Subpoenas duces tecum; subpoenas to permit inspection of 
premises. Counsel for a party may sign and issue a subpoena, on a form 
provided by the Secretary, commanding a person to produce and permit 
inspection and copying of designated books, documents, or tangible 
things, or commanding a person to permit

[[Page 58850]]

inspection of premises, at a time and place therein specified. The 
subpoena shall specify with reasonable particularity the material to be 
produced. The person commanded by the subpoena need not appear in 
person at the place of production or inspection unless commanded to 
appear for a deposition or hearing pursuant to paragraph (a) of this 
section. As used herein, the term ``documents'' includes written 
materials, electronically stored information, and tangible things. A 
subpoena duces tecum may be used by any party for purposes of 
discovery, for obtaining documents for use in evidence, or for both 
purposes, and shall specify with reasonable particularity the materials 
to be produced.
    (c) Motions to quash; limitation on subpoenas subject to Sec.  
3.36. Any motion by the subject of a subpoena to limit or quash the 
subpoena shall be filed within the earlier of 10 days after service 
thereof or the time for compliance therewith. Such motions shall set 
forth all assertions of privilege or other factual and legal objections 
to the subpoena, including all appropriate arguments, affidavits and 
other supporting documentation, and shall include the statement 
required by Sec.  3.22(g). Nothing in paragraphs (a) and (b) of this 
section authorizes the issuance of subpoenas requiring the appearance 
of, or the production of documents in the possession, custody, or 
control of, an official or employee of a governmental agency other than 
the Commission, the Commissioners, the General Counsel, the Bureaus and 
Offices not involved in the matter, the office of Administrative Law 
Judges, or the Secretary in his or her capacity as custodian or 
recorder of any such information, or their respective staffs, or 
subpoenas to be served in a foreign country, which may be authorized 
only in accordance with Sec.  3.36.

0
15. Revise Sec.  3.35 to read as follows:


Sec.  3.35  Interrogatories to parties.

    (a) Availability; procedures for use. (1) Any party may serve upon 
any other party written interrogatories, not exceeding 25 in number, 
including all discrete subparts, to be answered by the party served or, 
if the party served is a public or private corporation, partnership, 
association or governmental agency, by any officer or agent, who shall 
furnish such information as is available to the party. For this 
purpose, information shall not be deemed to be available insofar as it 
is in the possession of the Commissioners, the General Counsel, the 
office of Administrative Law Judges, or the Secretary in his or her 
capacity as custodian or recorder of any such information, or their 
respective staffs.
    (2) Each interrogatory shall be answered separately and fully in 
writing under oath, unless it is objected to on grounds not raised and 
ruled on in connection with the authorization, in which event the 
reasons for objection shall be stated in lieu of an answer. The answers 
are to be signed by the person making them, and the objections signed 
by the attorney making them. The party upon whom the interrogatories 
have been served shall serve a copy of the answers, and objections, if 
any, within 30 days after the service of the interrogatories. The 
Administrative Law Judge may allow a shorter or longer time.
    (3) Except as provided in Sec.  3.31(i), interrogatories shall not 
be filed with the Office of the Secretary, the Administrative Law 
Judge, or otherwise provided to the Commission.
    (b) Scope; use at hearing. (1) Interrogatories may relate to any 
matters that can be inquired into under Sec.  3.31(c)(1), and the 
answers may be used to the extent permitted by the rules of evidence.
    (2) An interrogatory otherwise proper is not necessarily 
objectionable merely because an answer to the interrogatory involves an 
opinion or contention that relates to fact or the application of law to 
fact, but such an interrogatory need not be answered until after
    designated discovery has been completed or until a pre-trial 
conference or other later time.
    (c) Option to produce records. Where the answer to an interrogatory 
may be derived or ascertained from the records of the party upon whom 
the interrogatory has been served or from an examination, audit or 
inspection of such records, or from a compilation, abstract or summary 
based thereon, and the burden of deriving or ascertaining the answer is 
substantially the same for the party serving the interrogatory as for 
the party served, it is a sufficient answer to such interrogatory to 
specify the records from which the answer may be derived or ascertained 
and to afford to the party serving the interrogatory reasonable 
opportunity to examine, audit or inspect such records and to make 
copies, compilations, abstracts or summaries. The specification shall 
include sufficient detail to permit the interrogating party to identify 
readily the individual documents from which the answer may be 
ascertained.

0
16. Revise Sec.  3.36, to read as follows:


Sec.  3.36  Applications for subpoenas for records of or appearances by 
certain officials or employees of the Commission or officials or 
employees of governmental agencies other than the Commission, and 
subpoenas to be served in a foreign country.

    (a) Form. An application for issuance of a subpoena for the 
production of documents, as defined in Sec.  3.34(b), or for the 
issuance of a request requiring the production of or access to 
documents, other tangible things, or electronically stored information 
for the purposes described in Sec.  3.37(a), in the possession, 
custody, or control of the Commissioners, the General Counsel, any 
Bureau or Office not involved in the matter, the office of 
Administrative Law Judges, or the Secretary in his or her capacity as 
custodian or recorder of any such information, or their respective 
staffs, or of a governmental agency other than the Commission or the 
officials or employees of such other agency, or for the issuance of a 
subpoena requiring the appearance of a Commissioner, the General 
Counsel, an official of any Bureau or Office not involved in the 
matter, an Administrative Law Judge, or the Secretary in his or her 
capacity as custodian or recorder of any such information, or their 
respective staffs, or of an official or employee of another 
governmental agency, or for the issuance of a subpoena to be served in 
a foreign country, shall be made in the form of a written motion filed 
in accordance with the provisions of Sec.  3.22(a). No application for 
records pursuant to Sec.  4.11 of this chapter or the Freedom of 
Information Act may be filed with the Administrative Law Judge.
    (b) Content. The motion shall make a showing that:
    (1) The material sought is reasonable in scope;
    (2) If for purposes of discovery, the material falls within the 
limits of discovery under Sec.  3.31(c)(1), or, if for an adjudicative 
hearing, the material is reasonably relevant;
    (3) If for purposes of discovery, the information or material 
sought cannot reasonably be obtained by other means or, if for purposes 
of compelling a witness to appear at the evidentiary hearing, the 
movant has a compelling need for the testimony;
    (4) With respect to subpoenas to be served in a foreign country, 
that the party seeking discovery or testimony has a good faith belief 
that the discovery requested would be permitted by treaty, law, custom 
or practice in the country from which the discovery or testimony is 
sought and that any additional procedural requirements have been or

[[Page 58851]]

will be met before the subpoena is served; and
    (5) If the subpoena requires access to documents or other tangible 
things, it meets the requirements of Sec.  3.37.
    (c) Execution. If an Administrative Law Judge issues an Order 
authorizing a subpoena pursuant to this section, the moving party may 
forward to the Secretary a request for the authorized subpoena, with a 
copy of the authorizing Order attached. Each such subpoena shall be 
signed by the Secretary; shall have attached to it a copy of the 
authorizing Order; and shall be served by the moving party only in 
conjunction with a copy of the authorizing Order.

0
17. Revise Sec.  3.37, to read as follows:


Sec.  3.37  Production of documents, electronically stored information, 
and any tangible things; access for inspection and other purposes.

    (a) Availability; procedures for use. Any party may serve on 
another party a request: to produce and permit the party making the 
request, or someone acting on the party's behalf, to inspect and copy 
any designated documents or electronically stored information, as 
defined in Sec.  3.34(b), or to inspect and copy, test, or sample any 
tangible things which are within the scope of Sec.  3.31(c)(1) and in 
the possession, custody or control of the party upon whom the request 
is served; or to permit entry upon designated land or other property in 
the possession or control of the party upon whom the order would be 
served for the purpose of inspection and measuring, surveying, 
photographing, testing, or sampling the property or any designated 
object or operation thereon, within the scope of Sec.  3.31(c)(1). Each 
such request shall specify with reasonable particularity the documents 
or things to be produced or inspected, or the property to be entered. 
Each such request shall also specify a reasonable time, place, and 
manner of making the production or inspection and performing the 
related acts. Each request may specify the form in which electronically 
stored information is to be produced, but the requested form of 
electronically stored information must not be overly burdensome or 
unnecessarily costly to the producing party. A party shall make 
documents available as they are kept in the usual course of business or 
shall organize and label them to correspond with the categories in the 
request. A person not a party to the action may be compelled to produce 
documents and things or to submit to an inspection as provided in Sec.  
3.34. Except as provided in Sec.  3.31(i), requests under this section 
shall not be filed with the Office of the Secretary, the Administrative 
Law Judge, or otherwise provided to the Commission.
    (b) Response; objections. No more than 30 days after receiving the 
request, the response of the party upon whom the request is served 
shall state, with respect to each item or category, that inspection and 
related activities will be permitted as requested, unless the request 
is objected to, in which event the reasons for the objection shall be 
stated. If objection is made to part of an item or category, the part 
shall be specified and inspection permitted of the remaining parts. The 
response may state an objection to a requested form for producing 
electronically stored information. If the responding party objects to a 
requested form -- or if no form was specified in the request -- the 
party must state the form it intends to use. The party submitting the 
request may move for an order under Sec.  3.38(a) with respect to any 
objection to or other failure to respond to the request or any part 
thereof, or any failure to permit inspection as requested.
    (c) Production of documents or electronically stored information. 
Unless otherwise stipulated or ordered by the Administrative Law Judge, 
these procedures apply to producing documents or electronically stored 
information:
    (i) A party must produce documents as they are kept in the usual 
course of business or must organize and label them to correspond to the 
categories in the request;
    (ii) If a request does not specify a form for producing 
electronically stored information, a party must produce it in a form in 
which it is ordinarily maintained or in a reasonably usable form; and
    (iii) A party need not produce the same electronically stored 
information in more than one form.

0
18. Revise Sec.  3.38 to read as follows:


Sec.  3.38  Motion for order compelling disclosure or discovery; 
sanctions.

    (a) Motion for order to compel. A party may apply by motion to the 
Administrative Law Judge for an order compelling disclosure or 
discovery, including a determination of the sufficiency of the answers 
or objections with respect to the mandatory initial disclosures 
required by Sec.  3.31(b), a request for admission under Sec.  3.32, a 
deposition under Sec.  3.33, an interrogatory under Sec.  3.35, or a 
production of documents or things or access for inspection or other 
purposes under Sec.  3.37. Any memorandum in support of such motion 
shall be no longer than 2,500 words. Any response to the motion by the 
opposing party must be filed within 5 days of receipt of service of the 
motion and shall be no longer than 2,500 words. These word count 
limitations include headings, footnotes and quotations, but do not 
include the cover, table of contents, table of citations or 
authorities, glossaries, statements with respect to oral argument, any 
addendums containing statutes, rules or regulations, any certificates 
of counsel, proposed form of order, and any attachment required by 
Sec.  3.45(e). The Administrative Law Judge shall rule on a motion to 
compel within 3 business days of the date in which the response is due. 
Unless the Administrative Law Judge determines that the objection is 
justified, the Administrative Law Judge shall order that an initial 
disclosure or an answer to any requests for admissions, documents, 
depositions, or interrogatories be served or disclosure otherwise be 
made.
    (b) If a party or an officer or agent of a party fails to comply 
with any discovery obligation imposed by these rules, upon motion by 
the aggrieved party, the Administrative Law Judge or the Commission, or 
both, may take such action in regard thereto as is just, including but 
not limited to the following:
    (1) Order that any answer be amended to comply with the request, 
subpoena, or order;
    (2) Order that the matter be admitted or that the admission, 
testimony, documents or other evidence would have been adverse to the 
party;
    (3) Rule that for the purposes of the proceeding the matter or 
matters concerning which the order or subpoena was issued be taken as 
established adversely to the party;
    (4) Rule that the party may not introduce into evidence or 
otherwise rely, in support of any claim or defense, upon testimony by 
such party, officer, agent, expert or fact witness,
    or the documents or other evidence, or upon any other improperly 
withheld or undisclosed materials, information, witnesses or other 
discovery;
    (5) Rule that the party may not be heard to object to introduction 
and use of secondary evidence to show what the withheld admission, 
testimony, documents, or other evidence would have shown;
    (6) Rule that a pleading, or part of a pleading, or a motion or 
other submission by the party, concerning which the order or subpoena 
was issued, be stricken, or that a decision of the proceeding be 
rendered against the party, or both.

[[Page 58852]]

    (c) Any such action may be taken by written or oral order issued in 
the course of the proceeding or by inclusion in an initial decision of 
the Administrative Law Judge or an order or opinion of the Commission. 
It shall be the duty of parties to seek and Administrative Law Judges 
to grant such of the foregoing means of relief or other appropriate 
relief as may be sufficient to compensate for withheld testimony, 
documents, or other evidence. If in the Administrative Law Judge's 
opinion such relief would not be sufficient, or in instances where a 
nonparty fails to comply with a subpoena or order, he or she shall 
certify to the Commission a request that court enforcement of the 
subpoena or order be sought.

0
19. Revise Sec.  3.38A to read as follows:


Sec.  3.38A  Withholding requested material.

    (a) Any person withholding material responsive to a subpoena issued 
pursuant to Sec.  3.34 or Sec.  3.36, written interrogatories requested 
pursuant to Sec.  3.35, a request for production or access pursuant to 
Sec.  3.37, or any other request for the production of materials under 
this part, shall assert a claim of privilege or any similar claim not 
later than the date set for production of the material. Such person 
shall, if so directed in the subpoena or other request for production, 
submit, together with such claim, a schedule which describes the nature 
of the documents, communications, or tangible things not produced or 
disclosed -- and does so in a manner that, without revealing 
information itself privileged or protected, will enable other parties 
to assess the claim. The schedule need not describe any material 
outside the scope of the duty to search set forth in Sec.  3.31(c)(2) 
except to the extent that the Administrative Law Judge has authorized 
additional discovery as provided in that paragraph.
    (b) A person withholding material for reasons described in Sec.  
3.38A(a) shall comply with the requirements of that subsection in lieu 
of filing a motion to limit or quash compulsory process.
    (Sec. 5, 38 Stat. 719 as amended (15 U.S.C. 45))

0
20. Revise Sec.  3.39 to read as follows:


Sec.  3.39  Orders requiring witnesses to testify or provide other 
information and granting immunity.

    (a) Where Commission complaint counsel desire the issuance of an 
order requiring a witness or deponent to testify or provide other 
information and granting immunity under title 18, section 6002, United 
States Code, Directors and Assistant Directors of Bureaus and Regional 
Directors and Assistant Regional Directors of Commission Regional 
Offices who supervise complaint counsel responsible for presenting 
evidence in support of the complaint are authorized to determine:
    (1) That the testimony or other information sought from a witness 
or deponent, or prospective witness or deponent, may be necessary to 
the public interest, and
    (2) That such individual has refused or is likely to refuse to 
testify or provide such information on the basis of his or her 
privilege against self-incrimination; and to request, through the 
Commission's liaison officer, approval by the Attorney General for the 
issuance of such order. Upon receipt of approval by the Attorney 
General (or his or her designee), the Administrative Law Judge is 
authorized to issue an order requiring the witness or deponent to 
testify or provide other information and granting immunity when the 
witness or deponent has invoked his or her privilege against self-
incrimination and it cannot be determined that such privilege was 
improperly invoked.
    (b) Requests by counsel other than Commission complaint counsel for 
an order requiring a witness to testify or provide other information 
and granting immunity under title 18, section 6002, United States Code, 
may be made to the Administrative Law Judge and may be madeex parte. 
When such requests are made, the Administrative Law Judge is authorized 
to determine:
    (1) That the testimony or other information sought from a witness 
or deponent, or prospective witness or deponent, may be necessary to 
the public interest, and
    (2) That such individual has refused or is likely to refuse to 
testify or provide such information on the basis of his or her 
privilege against self-incrimination; and, upon making such 
determinations, to request, through the Commission's liaison officer, 
approval by the Attorney General for the issuance of an order requiring 
a witness to testify or provide other information and granting 
immunity; and, after the Attorney General (or his or her designee) has 
granted such approval, to issue such order when the witness or deponent 
has invoked his or her privilege against self-incrimination and it 
cannot be determined that such privilege was improperly invoked.
    (18 U.S.C. 6002, 6004)

0
21. Revise Sec.  3.41, including the heading, to read as follows:


Sec.  3.41  General hearing rules.

    (a) Public hearings. All hearings in adjudicative proceedings shall 
be public unless an in camera order is entered by the Administrative 
Law Judge pursuant to Sec.  3.45(b) of this chapter or unless otherwise 
ordered by the Commission.
    (b) Expedition. Hearings shall proceed with all reasonable 
expedition, and, insofar as practicable, shall be held at one place and 
shall continue, except for brief intervals of the sort normally 
involved in judicial proceedings, without suspension until concluded. 
The hearing will take place on the date specified in the notice 
accompanying the complaint, pursuant to Sec.  3.11(b)(4), and should be 
limited to no more than 210 hours. The Commission, upon a showing of 
good cause, may order a later date for the evidentiary hearing to 
commence or extend the number of hours for the hearing. Consistent with 
the requirements of expedition:
    (1) The Administrative Law Judge may order hearings at more than 
one place and may grant a reasonable recess at the end of a case-in-
chief for the purpose of discovery deferred during the pre-hearing 
procedure if the Administrative Law Judge determines that such recess 
will materially expedite the ultimate disposition of the proceeding.
    (2) When actions involving a common question of law or fact are 
pending before the Administrative Law Judge, the Commission or the 
Administrative Law Judge may order a joint hearing of any or all the 
matters in issue in the actions; the Commission or the Administrative 
Law Judge may order all the actions consolidated; and the Commission or 
the Administrative Law Judge may make such orders concerning 
proceedings therein as may tend to avoid unnecessary costs or delay.
    (3) When separate hearings will be conducive to expedition and 
economy, the Commission or the Administrative Law Judge may order a 
separate hearing of any claim, or of any separate issue, or of any 
number of claims or issues.
    (4) Each side shall be allotted no more than half of the trial time 
within which to present its opening statements, in limine motions, all 
arguments excluding the closing argument, direct or cross examinations, 
or other evidence.
    (5) Each side shall be permitted to make an opening statement that 
is no more than 2 hours in duration.
    (6) Each side shall be permitted to make a closing argument no 
later than 5 days after the last filed proposed findings. The closing 
argument shall last no longer than 2 hours.
    (c) Rights of parties. Every party, except intervenors, whose 
rights are determined under Sec.  3.14, shall have the right of due 
notice, cross-examination, presentation of evidence, objection,

[[Page 58853]]

motion, argument, and all other rights essential to a fair hearing.
    (d) Adverse witnesses. An adverse party, or an officer, agent, or 
employee thereof, and any witness who appears to be hostile, unwilling, 
or evasive, may be interrogated by leading questions and may also be 
contradicted and impeached by the party calling him or her.
    (e) Requests for an order requiring a witness to testify or provide 
other information and granting immunity under title 18, section 6002, 
of the United States Code, shall be disposed of in accordance with 
Sec.  3.39.
    (f) Collateral federal court actions.The pendency of a collateral 
federal court proceeding that relates to the administrative 
adjudication shall not stay the proceeding unless the Commission (or a 
court of competent jurisdiction) so orders for good cause. A stay shall 
toll any deadlines set by the rules.
    (18 U.S.C. 6002, 6004)

0
22. Revise Sec.  3.42 to read as follows:


Sec.  3.42  Presiding officials.

    (a) Who presides. Hearings in adjudicative proceedings shall be 
presided over by a duly qualified Administrative Law Judge or by the 
Commission or one or more members of the Commission sitting as 
Administrative Law Judges; and the term Administrative Law Judge as 
used in this part means and applies to the Commission or any of its 
members when so sitting. The Commission or one or more members of the 
Commission may preside over discovery and other prehearing proceedings 
and then transfer the matter to an Administrative Law Judge to preside 
over any remaining prehearing proceedings and the evidentiary hearing 
and to issue an initial decision.
    (b) How assigned. The presiding Administrative Law Judge shall be 
designated by the Chief Administrative Law Judge or, when the 
Commission or one or more of its members preside, by the Commission, 
who shall notify the parties of the Administrative Law Judge 
designated.
    (c) Powers and duties. Administrative Law Judges shall have the 
duty to conduct fair and impartial hearings, to take all necessary 
action to avoid delay in the disposition of proceedings, and to 
maintain order. They shall have all powers necessary to that end, 
including the following:
    (1) To administer oaths and affirmations;
    (2) To issue subpoenas and orders requiring answers to questions;
    (3) To take depositions or to cause depositions to be taken;
    (4) To compel admissions, upon request of a party or on their own 
initiative;
    (5) To rule upon offers of proof and receive evidence;
    (6) To regulate the course of the hearings and the conduct of the 
parties and their counsel therein;
    (7) To hold conferences for settlement, simplification of the 
issues, or any other proper purpose;
    (8) To consider and rule upon, as justice may require, all 
procedural and other motions appropriate in an adjudicative proceeding, 
including motions to open defaults;
    (9) To make and file initial decisions;
    (10) To certify questions to the Commission for its determination;
    (11) To reject written submissions that fail to comply with rule 
requirements, or deny in camera status without prejudice until a party 
complies with all relevant rules; and
    (12) To take any action authorized by the rules in this part or in 
conformance with the provisions of the Administrative Procedure Act as 
restated and incorporated in title 5, United States Code.
    (d) Suspension of attorneys by Administrative Law Judge. The 
Administrative Law Judge shall have the authority, for good cause 
stated on the record, to suspend or bar from participation in a 
particular proceeding any attorney who shall refuse to comply with his 
or her directions, or who shall be guilty of disorderly, dilatory, 
obstructionist, or contumacious conduct, or contemptuous language in 
the course of such proceeding. Any attorney so suspended or barred may 
appeal to the Commission in accordance with the provisions of Sec.  
3.23(a). The appeal shall not operate to suspend the hearing unless 
otherwise ordered by the Administrative Law Judge or the Commission; in 
the event the hearing is not suspended, the attorney may continue to 
participate therein pending disposition of the appeal.
    (e) Substitution of Administrative Law Judge. In the event of the 
substitution of a new Administrative Law Judge for the one originally 
designated, any motion predicated upon such substitution shall be made 
within 5 days thereafter.
    (f) Interference. In the performance of their adjudicative 
functions, Administrative Law Judges shall not be responsible to or 
subject to the supervision or direction of any officer, employee, or 
agent engaged in the performance of investigative or prosecuting 
functions for the Commission, and all direction by the Commission to 
Administrative Law Judges concerning any adjudicative proceedings shall 
appear in and be made a part of the record.
    (g) Disqualification of Administrative Law Judges. (1) When an 
Administrative Law Judge deems himself or herself disqualified to 
preside in a particular proceeding, he or she shall withdraw therefrom 
by notice on the record and shall notify the Director of Administrative 
Law Judges of such withdrawal.
    (2) Whenever any party shall deem the Administrative Law Judge for 
any reason to be disqualified to preside, or to continue to preside, in 
a particular proceeding, such party may file with the Secretary a 
motion addressed to the Administrative Law Judge to disqualify and 
remove him or her, such motion to be supported by affidavits setting 
forth the alleged grounds for disqualification. If the Administrative 
Law Judge does not disqualify himself or herself within 10 days, he or 
she shall certify the motion to the Commission, together with any 
statement he or she may wish to have considered by the Commission. The 
Commission shall promptly determine the validity of the grounds 
alleged, either directly or on the report of another Administrative Law 
Judge appointed to conduct a hearing for that purpose.
    (3) Such motion shall be filed at the earliest practicable time 
after the participant learns, or could reasonably have learned, of the 
alleged grounds for disqualification.
    (h)Failure to comply with Administrative Law Judge's directions. 
Any party who refuses or fails to comply with a lawfully issued order 
or direction of an Administrative Law Judge may be considered to be in 
contempt of the Commission. The circumstances of any such neglect, 
refusal, or failure, together with a recommendation for appropriate 
action, shall be promptly certified by the Administrative Law Judge to 
the Commission. The Commission may make such orders in regard thereto 
as the circumstances may warrant.

0
23. Revise Sec.  3.43 to read as follows:


Sec.  3.43  Evidence.

    (a) Burden of proof. Counsel representing the Commission, or any 
person who has filed objections sufficient to warrant the holding of an 
adjudicative hearing pursuant to Sec.  3.13, shall have the burden of 
proof, but the proponent of any factual proposition shall be required 
to sustain the burden of proof with respect thereto.
    (b) Admissibility. Relevant, material, and reliable evidence shall 
be admitted.

[[Page 58854]]

Irrelevant, immaterial, and unreliable evidence shall be excluded. 
Evidence, even if relevant, may be excluded if its probative value is 
substantially outweighed by the danger of unfair prejudice, confusion 
of the issues, or if the evidence would be misleading, or by 
considerations of undue delay, waste of time, or needless presentation 
of cumulative evidence. Evidence that constitutes hearsay may be 
admitted if it is relevant, material, and bears satisfactory indicia of 
reliability so that its use is fair. Hearsay is a statement, other than 
one made by the declarant while testifying at the hearing, offered in 
evidence to prove the truth of the matter asserted. If otherwise 
meeting the standards for admissibility described in this paragraph, 
depositions, investigational hearings, prior testimony in Commission or 
other proceedings, and any other form of hearsay, shall be admissible 
and shall not be excluded solely on the ground that they are or contain 
hearsay. Statements or testimony by a party-opponent, if relevant, 
shall be admitted.
    (c)Admissibility of third party documents. Extrinsic evidence of 
authenticity as a condition precedent to admissibility of documents 
received from third parties is not required with respect to the 
original or a duplicate of a domestic record of regularly conducted 
activity by that third party that otherwise meets the standards of 
admissibility described in paragraph (b) if accompanied by a written 
declaration of its custodian or other qualified person, in a manner 
complying with any Act of Congress or rule prescribed by the Supreme 
Court pursuant to statutory authority, certifying that the record: (1) 
was made at or near the time of the occurrence of the matters set forth 
by, or from information transmitted by, a person with knowledge of 
those matters; (2) was kept in the course of the regularly conducted 
activity; and (3) was made by the regularly conducted activity as a 
regular practice.
    (d) Presentation of evidence.
    (1) A party is entitled to present its case or defense by sworn 
oral testimony and documentary evidence, to submit rebuttal evidence, 
and to conduct such cross-examination as, in the discretion of the 
Commission or the Administrative Law Judge, may be required for a full 
and true disclosure of the facts.
    (2) The Administrative Law Judge shall exercise reasonable control 
over the mode and order of interrogating witnesses and presenting 
evidence so as to--
    (i) Make the interrogation and presentation effective for the 
ascertainment of the truth;
    (ii) Avoid needless consumption of time; and
    (iii) Protect witnesses from harassment or undue embarrassment.
    (3) As respondents are in the best position to determine the nature 
of documents generated by such respondents and which come from their 
own files, the burden of proof is on the respondent to introduce 
evidence to rebut a presumption that such documents are authentic and 
kept in the regular course of business.
    (e) Information obtained in investigations. Any documents, papers, 
books, physical exhibits, or other materials or information obtained by 
the Commission under any of its powers may be disclosed by counsel 
representing the Commission when necessary in connection with 
adjudicative proceedings and may be offered in evidence by counsel 
representing the Commission in any such proceeding.
    (f) Official notice. ``Official notice'' may be taken of any 
material fact that is not subject to reasonable dispute in that it is 
either (1) generally known within the Commission's expertise, or (2) 
capable of accurate and ready determination by resort to sources whose 
accuracy cannot reasonably be questioned. If official notice is 
requested or is taken of a material fact not appearing in the evidence 
in the record, the parties, upon timely request, shall be afforded an 
opportunity to disprove such noticed fact.
    (g) Objections. Objections to evidence shall timely and briefly 
state the grounds relied upon, but the transcript shall not include 
argument or debate thereon except as ordered by the Administrative Law 
Judge. Rulings on all objections shall appear in the record.
    (h) Exceptions. Formal exception to an adverse ruling is not 
required.
    (i) Excluded evidence. When an objection to a question propounded 
to a witness is sustained, the questioner may make a specific offer of 
what he or she expects to prove by the answer of the witness, or the 
Administrative Law Judge may, in his or her discretion, receive and 
report the evidence in full. Rejected exhibits, adequately marked for 
identification, shall be retained in the record so as to be available 
for consideration by any reviewing authority.

0
24. Revise Sec.  3.44 to read as follows:


Sec.  3.44  Record.

    (a) Reporting and transcription. Hearings shall be stenographically 
reported and transcribed by the official reporter of the Commission 
under the supervision of the Administrative Law Judge, and the original 
transcript shall be a part of the record and the sole official 
transcript. The live oral testimony of each witness shall be video 
recorded digitally, and the video recording and the written transcript 
of the testimony shall be made part of the record. Copies of 
transcripts are available from the reporter at rates not to exceed the 
maximum rates fixed by contract between the Commission and the 
reporter.
    (b) Corrections. Corrections of the official transcript may be made 
only when they involve errors affecting substance and then only in the 
manner herein provided. Corrections ordered by the Administrative Law 
Judge or agreed to in a written stipulation signed by all counsel and 
parties not represented by counsel, and approved by the Administrative 
Law Judge, shall be included in the record, and such stipulations, 
except to the extent they are capricious or without substance, shall be 
approved by the Administrative Law Judge. Corrections shall not be 
ordered by the Administrative Law Judge except upon notice and 
opportunity for the hearing of objections. Such corrections shall be 
made by the official reporter by furnishing substitute type pages, 
under the usual certificate of the reporter, for insertion in the 
official record. The original uncorrected pages shall be retained in 
the files of the Commission.
    (c) Closing of the hearing record. Upon completion of the 
evidentiary hearing, the Administrative Law Judge shall issue an order 
closing the hearing record after giving the parties 3 business days to 
determine if the record is complete or needs to be supplemented. The 
Administrative Law Judge shall retain the discretion to permit or order 
correction of the record as provided in Sec.  3.44(b).

0
25. Revise Sec.  3.45 to read as follows:


Sec.  3.45  In camera orders.

    (a) Definition. Except as hereinafter provided, material made 
subject to an in cameraorder will be kept confidential and not placed 
on the public record of the proceeding in which it was submitted. Only 
respondents, their counsel, authorized Commission personnel, and court 
personnel concerned with judicial review may have access thereto, 
provided that the Administrative Law Judge, the Commission and 
reviewing courts may disclose such in camera material to the extent 
necessary for the proper disposition of the proceeding.

[[Page 58855]]

    (b) In camera treatment of material. A party or third party may 
obtain in cameratreatment for material, or portions thereof, offered 
into evidence only by motion to the Administrative Law Judge. Parties 
who seek to use material obtained from a third party subject to 
confidentiality restrictions must demonstrate that the third party has 
been given at least 10 days notice of the proposed use of such 
material. Each such motion must include an attachment containing a copy 
of each page of the document in question on which in camera or 
otherwise confidential excerpts appear. The Administrative Law Judge 
may order that such material, whether admitted or rejected, be placed 
in cameraonly after finding that its public disclosure will likely 
result in a clearly defined, serious injury to the person, partnership 
or corporation requesting in camera treatment. This finding shall be 
based on the standard articulated in H.P. Hood & Sons, Inc., 58 F.T.C. 
1184, 1188 (1961); see also Bristol-Myers Co., 90 F.T.C. 455, 456 
(1977), which established a three-part test that was modified by 
General Foods Corp., 95 F.T.C. 352, 355 (1980). The party submitting 
material for which in camera treatment is sought must provide, for each 
piece of such evidence and affixed to such evidence, the name and 
address of any person who should be notified in the event that the 
Commission intends to disclose in camera information in a final 
decision. No material, or portion thereof, offered into evidence, 
whether admitted or rejected, may be withheld from the public record 
unless it falls within the scope of an order issued in accordance with 
this section, stating the date on whichin camera treatment will expire, 
and including:
    (1) A description of the material;
    (2) A statement of the reasons for granting in camera treatment; 
and
    (3) A statement of the reasons for the date on which in camera 
treatment will expire. Such expiration date may not be omitted except 
in unusual circumstances, in which event the order shall state with 
specificity the reasons why the need for confidentiality of the 
material, or portion thereof at issue is not likely to decrease over 
time, and any other reasons why such material is entitled to in camera 
treatment for an indeterminate period. If an in camera order is silent 
as to duration, without explanation, then it will expire 3 years after 
its date of issuance. Material subject to an in camera order shall be 
segregated from the public record and filed in a sealed envelope, or 
other appropriate container, bearing the title, the docket number of 
the proceeding, the notation ``In Camera Record under Sec.  3.45,'' and 
the date on which in camera treatment expires. If the Administrative 
Law Judge has determined thatin camera treatment should be granted for 
an indeterminate period, the notation should state that fact.
    Parties are not required to provide documents subject to in camera 
treatment, including documents obtained from third parties, to any 
individual or entity other than the Administrative Law Judge, counsel 
for other parties, and, during an appeal, the Commission or a federal 
court.
    (c) Release of in camera material. In camera material constitutes 
part of the confidential records of the Commission and is subject to 
the provisions of Sec.  4.11 of this chapter.
    (d) Briefs and other submissions referring to in camera or 
confidential information. Parties shall not disclose information that 
has been granted in camera status pursuant to Sec.  3.45(b) or is 
subject to confidentiality protections pursuant to a protective order 
in the public version of proposed findings, briefs, or other documents. 
This provision does not preclude references in such proposed findings, 
briefs, or other documents to in camera or other confidential 
information or general statements based on the content of such 
information.
    (e) When in camera or confidential information is included in 
briefs and other submissions. If a party includes specific information 
that has been granted in camerastatus pursuant to Sec.  3.45(b) or is 
subject to confidentiality protections pursuant to a protective order 
in any document filed in a proceeding under this part, the party shall 
file 2 versions of the document. A complete version shall be marked 
``In Camera'' or ``Subject to Protective Order,'' as appropriate, on 
the first page and shall be filed with the Secretary and served by the 
party on the other parties in accordance with the rules in this part. 
Submitters of in camera or other confidential material should mark any 
such material in the complete versions of their submissions in a 
conspicuous matter, such as with highlighting or bracketing. References 
to in camera or confidential material must be supported by record 
citations to relevant evidentiary materials and associated 
Administrative Law Judge in camera or other confidentiality rulings to 
confirm that in camera or other confidential treatment is warranted for 
such material. In addition, the document must include an attachment 
containing a copy of each page of the document in question on which in 
camera or otherwise confidential excerpts appear, and providing the 
name and address of any person who should be notified of the 
Commission's intent to disclose in a final decision any of the in 
camera or otherwise confidential information in the document. Any time 
period within which these rules allow a party to respond to a document 
shall run from the date the party is served with the complete version 
of the document. An expurgated version of the document, marked ``Public 
Record'' on the first page and omitting the in camera and confidential 
information and attachment that appear in the complete version, shall 
be filed with the Secretary within 5 days after the filing of the 
complete version, unless the Administrative Law Judge or the Commission 
directs otherwise, and shall be served by the party on the other 
parties in accordance with the rules in this part. The expurgated 
version shall indicate any omissions with brackets or ellipses, and its 
pagination and depiction of text on each page shall be identical to 
that of the in camera version.
    (f) When in camera or confidential information is included in 
rulings or recommendations of the Administrative Law Judge. If the 
Administrative Law Judge includes in any ruling or recommendation 
information that has been granted in camerastatus pursuant to Sec.  
3.45(b) or is subject to confidentiality protections pursuant to a 
protective order, the Administrative Law Judge shall file 2 versions of 
the ruling or recommendation. A complete version shall be marked ``In 
Camera'' or ``Subject to Protective Order,'' as appropriate, on the 
first page and shall be served upon the parties. The complete version 
will be placed in the in camera record of the proceeding. An expurgated 
version, to be filed within 5 days after the filing of the complete 
version, shall omit thein camera and confidential information that 
appears in the complete version, shall be marked ``Public Record'' on 
the first page, shall be served upon the parties, and shall be included 
in the public record of the proceeding.
    (g) Provisional in camera rulings. The Administrative Law Judge may 
make a provisional grant ofin camera status to materials if the showing 
required in Sec.  3.45(b) cannot be made at the time the material is 
offered into evidence but the Administrative Law Judge determines that 
the interests of justice would be served by such a ruling. Within 20 
days of such a provisional grant of in camera status, the party 
offering the evidence or an interested third party must present a 
motion to the Administrative Law Judge for a final ruling on whether in 
camera

[[Page 58856]]

treatment of the material is appropriate pursuant to Sec.  3.45(b). If 
no such motion is filed, the Administrative Law Judge may either 
exclude the evidence, deny in camera status, or take such other action 
as is appropriate.

0
26. Revise Sec.  3.46 to read as follows:


Sec.  3.46  Proposed findings, conclusions, and order.

    (a) General. Within 21 days of the closing of the hearing record, 
each party may file with the Secretary for consideration of the 
Administrative Law Judge proposed findings of fact, conclusions of law, 
and rule or order, together with reasons therefor and briefs in support 
thereof. Such proposals shall be in writing, shall be served upon all 
parties, and shall contain adequate references to the record and 
authorities relied on. If a party includes in the proposals information 
that has been granted in camera status pursuant to Sec.  3.45(b), the 
party shall file 2 versions of the proposals in accordance with the 
procedures set forth in Sec.  3.45(e). Reply findings of fact, 
conclusions of law, and briefs may be filed by each party within 10 
days of service of the initial proposed findings.
    (b) Exhibit Index. The first statement of proposed findings of fact 
and conclusions of law filed by a party shall include an index listing 
for each exhibit offered by the party and received in evidence:
    (1) The exhibit number, followed by
    (2) The exhibit's title or a brief description if the exhibit is 
untitled;
    (3) The transcript page at which the Administrative Law Judge ruled 
on the exhibit's admissibility or a citation to any written order in 
which such ruling was made;
    (4) The transcript pages at which the exhibit is discussed;
    (5) An identification of any other exhibit which summarizes the 
contents of the listed exhibit, or of any other exhibit of which the 
listed exhibit is a summary;
    (6) A cross-reference, by exhibit number, to any other portions of 
that document admitted as a separate exhibit on motion by any other 
party; and
    (7) A statement whether the exhibit has been accorded in camera 
treatment, and a citation to the in camera ruling.
    (c) Witness index. The first statement of proposed findings of fact 
and conclusions of law filed by a party shall also include an index to 
the witnesses called by that party, to include for each witness:
    (1) The name of the witness;
    (2) A brief identification of the witness;
    (3) The transcript pages at which any testimony of the witness 
appears; and
    (4) A statement whether the exhibit has been accordedin camera 
treatment, and a citation to the in camera ruling.
    (d) Stipulated indices. As an alternative to the filing of separate 
indices, the parties are encouraged to stipulate to joint exhibit and 
witness indices at the time the first statement of proposed findings of 
fact and conclusions of law is due to be filed.
    (e) Rulings. The record shall show the Administrative Law Judge's 
ruling on each proposed finding and conclusion, except when the order 
disposing of the proceeding otherwise informs the parties of the action 
taken.

0
27. Revise Sec.  3.51 to read as follows:


Sec.  3.51  Initial decision.

    (a) When filed and when effective. The Administrative Law Judge 
shall file an initial decision within 70 days after the filing of the 
last filed initial or reply proposed findings of fact, conclusions of 
law and order pursuant to Sec.  3.46, or within 85 days of the closing 
the hearing record pursuant to Sec.  3.44(c) where the parties have 
waived the filing of proposed findings. The Administrative Law Judge, 
for good cause, may extend these time periods by 30 days. The 
Administrative Law Judge shall file an initial decision within 14 days 
after a default or the granting of a motion for summary decision. The 
Commission may extend any of these time limits. In no event shall the 
Administrative Law Judge file an initial decision later than 1 year 
after the issuance of the administrative complaint. Extensions of the 
1-year deadline may be granted by the Commission upon a finding of 
extraordinary circumstances and if appropriate in the public interest. 
Once issued, the initial decision shall become the decision of the 
Commission 30 days after service thereof upon the parties or 30 days 
after the filing of a timely notice of appeal, whichever shall be 
later, unless a party filing such a notice shall have perfected an 
appeal by the timely filing of an appeal brief or the Commission shall 
have issued an order placing the case on its own docket for review or 
staying the effective date of the decision.
    (b) Exhaustion of administrative remedies. An initial decision 
shall not be considered final agency action subject to judicial review 
under 5 U.S.C. 704. Any objection to a ruling by the Administrative Law 
Judge, or to a finding, conclusion or a provision of the order in the 
initial decision, which is not made a part of an appeal to the 
Commission shall be deemed to have been waived.
    (c) Content, format for filing. (1) An initial decision shall be 
based on a consideration of the whole record relevant to the issues 
decided, and shall be supported by reliable and probative evidence. The 
initial decision shall include a statement of findings of fact (with 
specific page references to principal supporting items of evidence in 
the record) and conclusions of law, as well as the reasons or basis 
therefor, upon all the material issues of fact, law, or discretion 
presented on the record (or those designated under paragraph (c)(2) of 
this section) and an appropriate rule or order. Rulings containing 
information granted in camera status pursuant to Sec.  3.45 shall be 
filed in accordance with Sec.  3.45(f).
    (2) The initial decision shall be prepared in a common word 
processing format, such as WordPerfect or Word, and shall be filed by 
the Administrative Law Judge with the Office of the Secretary in both 
electronic and paper versions.
    (3) When more than one claim for relief is presented in an action, 
or when multiple parties are involved, the Administrative Law Judge may 
direct the entry of an initial decision as to one or more but fewer 
than all of the claims or parties only upon an express determination 
that there is no just reason for delay and upon an express direction 
for the entry of initial decision.
    (d) By whom made. The initial decision shall be made and filed by 
the Administrative Law Judge who presided over the hearings, except 
when he or she shall have become unavailable to the Commission.
    (e) Reopening of proceeding by Administrative Law Judge; 
termination of jurisdiction. (1) At any time from the close of the 
hearing record pursuant to Sec.  3.44(c) until the filing of his or her 
initial decision, an Administrative Law Judge may reopen the proceeding 
for the reception of further evidence for good cause shown.
    (2) Except for the correction of clerical errors or pursuant to an 
order of remand from the Commission, the jurisdiction of the 
Administrative Law Judge is terminated upon the filing of his or her 
initial decision with respect to those issues decided pursuant to 
paragraph (c)(1) of this section.

0
28. Revise Sec.  3.52 to read as follows:


Sec.  3.52  Appeal from initial decision.

    (a) Who may file; notice of intention. Any party to a proceeding 
may appeal an initial decision to the Commission by filing a notice of 
appeal with the

[[Page 58857]]

Secretary within 10 days after service of the initial decision. The 
notice shall specify the party or parties against whom the appeal is 
taken and shall designate the initial decision and order or part 
thereof appealed from. If a timely notice of appeal is filed by a 
party, any other party may thereafter file a notice of appeal within 5 
days after service of the first notice, or within 10 days after service 
of the initial decision, whichever period expires last.
    (b) Appeal brief. (1) The appeal shall be in the form of a brief, 
filed within 30 days after service of the initial decision, and shall 
contain, in the order indicated, the following:
    (i) A subject index of the matter in the brief, with page 
references, and a table of cases (alphabetically arranged), textbooks, 
statutes, and other material cited, with page references thereto;
    (ii) A concise statement of the case, which includes a statement of 
facts relevant to the issues submitted for review, and a summary of the 
argument, which must contain a succinct, clear, and accurate statement 
of the arguments made in the body of the brief, and which must not 
merely repeat the argument headings;
    (iii) A specification of the questions intended to be urged;
    (iv) The argument presenting clearly the points of fact and law 
relied upon in support of the position taken on each question, with 
specific page references to the record and the legal or other material 
relied upon; and
    (v) A proposed form of order for the Commission's consideration 
instead of the order contained in the initial decision.
    (2) The brief shall not, without leave of the Commission, exceed 
14,000 words.
    (c) Answering brief. Within 30 days after service of the appeal 
brief, the appellee may file an answering brief, which shall contain a 
subject index, with page references, and a table of cases 
(alphabetically arranged), textbooks, statutes, and other material 
cited, with page references thereto, as well as arguments in response 
to the appellant's appeal brief. However, if the appellee is also 
cross-appealing, its answering brief shall also contain its arguments 
as to any issues the party is raising on cross-appeal, including the 
points of fact and law relied upon in support of its position on each 
question, with specific page references to the record and legal or 
other material on which the party relies in support of its cross-
appeal, and a proposed form of order for the Commission's consideration 
instead of the order contained in the initial decision. If the appellee 
does not cross-appeal, its answering brief shall not, without leave of 
the Commission, exceed 14,000 words. If the appellee cross-appeals, its 
brief in answer and on cross-appeal shall not, without leave of the 
Commission, exceed 16,500 words.
    (d) Reply brief. Within 7 days after service of the appellee's 
answering brief, the appellant may file a reply brief, which shall be 
limited to rebuttal of matters in the answering brief and shall not, 
without leave of the Commission, exceed 7,000 words. If the appellee 
has cross-appealed, any party who is the subject of the cross-appeal 
may, within 30 days after service of such appellee's brief, file a 
reply brief, which shall be limited to rebuttal of matters in the 
appellee's brief and shall not, without leave of the Commission, exceed 
7,000 words. The appellee who has cross-appealed may, within 7 days 
after service of a reply to its cross-appeal, file an additional brief, 
which shall be limited to rebuttal of matters in the reply to its 
cross-appeal and shall not, without leave of the Commission, exceed 
7,000 words. The Commission will not consider new arguments or matters 
raised in reply briefs that could have been raised earlier in the 
principal briefs.
    (e) In camera information. If a party includes in any brief to be 
filed under this section information that has been granted in camera 
status pursuant to Sec.  3.45(b) or is subject to confidentiality 
provisions pursuant to a protective order, the party shall file 2 
versions of the brief in accordance with the procedures set forth in 
Sec.  3.45(e). The time period specified by this section within which a 
party may file an answering or reply brief will begin to run upon 
service on the party of the in camera or confidential version of a 
brief.
    (f) Signature. (1) The original of each brief filed shall have a 
hand-signed signature by an attorney of record for the party, or in the 
case of parties not represented by counsel, by the party itself, or by 
a partner if a partnership, or by an officer of the party if it is a 
corporation or an unincorporated association.
    (2) Signing a brief constitutes a representation by the signer that 
he or she has read it; that to the best of his or her knowledge, 
information, and belief, the statements made in it are true; that it is 
not interposed for delay; that it complies all the applicable word 
count limitation; and that to the best of his or her knowledge, 
information, and belief, it complies with all the other rules in this 
part. If a brief is not signed or is signed with intent to defeat the 
purpose of this section, it may be stricken as sham and false and the 
proceeding may go forward as though the brief has not been filed.
    (g) Designation of appellant and appellee in cases involving cross-
appeals. In a case involving an appeal by complaint counsel and one or 
more respondents, any respondent who has filed a timely notice of 
appeal and as to whom the Administrative Law Judge has issued an order 
to cease and desist shall be deemed an appellant for purposes of 
paragraphs (b), (c), and (d) of this section. In a case in which the 
Administrative Law Judge has dismissed the complaint as to all 
respondents, complaint counsel shall be deemed the appellant for 
purposes of paragraphs (b), (c), and (d) of this section.
    (h) Oral argument. All oral arguments shall be public unless 
otherwise ordered by the Commission. Oral arguments will be held in all 
cases on appeal to the Commission unless the Commission otherwise 
orders upon its own initiative or upon request of any party made at the 
time of filing his or her brief. Oral arguments before the Commission 
shall be reported stenographically, unless otherwise ordered, and a 
member of the Commission absent from an oral argument may participate 
in the consideration and decision of the appeal in any case in which 
the oral argument is stenographically reported.
    (i) Corrections in transcript of oral argument. The Commission will 
entertain only joint motions of the parties requesting corrections in 
the transcript of oral argument, except that the Commission will 
receive a unilateral motion which recites that the parties have made a 
good faith effort to stipulate to the desired corrections but have been 
unable to do so. If the parties agree in part and disagree in part, 
they should file a joint motion incorporating the extent of their 
agreement, and, if desired, separate motions requesting those 
corrections to which they have been unable to agree. The Secretary, 
pursuant to delegation of authority by the Commission, is authorized to 
prepare and issue in the name of the Commission a brief ``Order 
Correcting Transcript'' whenever a joint motion to correct transcript 
is received.
    (j) Briefs of amicus curiae. A brief of an amicus curiae may be 
filed by leave of the Commission granted on motion with notice to the 
parties or at the request of the Commission, except that such leave 
shall not be required when the brief is presented by an agency or 
officer of the United States; or by a State, territory, commonwealth, 
or the District of Columbia, or by an agency or

[[Page 58858]]

officer of any of them. The brief may be conditionally filed with the 
motion for leave. A motion for leave shall identify the interest of the 
applicant and state how a Commission decision in the matter would 
affect the applicant or persons it represents. The motion shall also 
state the reasons why a brief of an amicus curiae is desirable. Except 
as otherwise permitted by the Commission, an amicus curiae shall file 
its brief within the time allowed the parties whose position as to 
affirmance or reversal the amicus brief will support. The Commission 
shall grant leave for a later filing only for cause shown, in which 
event it shall specify within what period such brief must be filed. A 
motion for an amicus curiae to participate in oral argument will be 
granted only for extraordinary reasons. An amicus brief may be no more 
than one-half the maximum length authorized by these rules for a 
party's principal brief.
    (k) Word count limitation. The word count limitations in this 
section include headings, footnotes and quotations, but do not include 
the cover, table of contents, table of citations or authorities, 
glossaries, statements with respect to oral argument, any addendums 
containing statutes, rules or regulations, any certificates of counsel, 
proposed form of order, and any attachment required by Sec.  3.45(e). 
Extensions of word count limitations are disfavored, and will only be 
granted where a party can make a strong showing that undue prejudice 
would result from complying with the existing limit.

PART 4--MISCELLANEOUS RULES

0
1. The authority citation for part 4 continues to read as follows:

    Authority: 15 U.S.C. 46, unless otherwise noted.

0
2. Amend Sec.  4.3 by revising paragraph (b) as follows:


Sec.  4.3  Time.

* * * * *
    (b) Extensions. For good cause shown, the Administrative Law Judge 
may, in any proceeding before him or her: (1) extend any time limit 
prescribed or allowed by order of the Administrative Law Judge or the 
Commission (if the Commission order expressly authorizes the 
Administrative Law Judge to extend time periods); or (2) extend any 
time limit prescribed by the rules in this chapter, except those 
governing motions directed to the Commission, interlocutory appeals and 
initial decisions and deadlines that the rules expressly authorize only 
the Commission to extend. Except as otherwise provided by law, the 
Commission, for good cause shown, may extend any time limit prescribed 
by the rules in this chapter or by order of the Commission or an 
Administrative Law Judge, provided, however, that in a proceeding 
pending before an Administrative Law Judge, any motion on which he or 
she may properly rule shall be made to the Administrative Law Judge. 
Notwithstanding the above, where a motion to extend is made after the 
expiration of the specified period, the motion may be considered where 
the untimely filing was the result of excusable neglect.
* * * * *
    By direction of the Commission, Commissioner Rosch not 
participating.

Donald S. Clark
Secretary
[FR Doc. E8-23745 Filed 10-6-08: 8:45 am]
BILLING CODE 6750-01-S