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Consumers (5)
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James M. Cannon Files (Ford Administration)
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The original documents are located in Box 9, folder "Consumers (5)" of the James M.
Cannon Files at the Gerald R. Ford Presidential Library.
Copyright Notice
The copyright law of the United States (Title 17, United States Code) governs the making of
photocopies or other reproductions of copyrighted material. Gerald Ford donated to the United
States of America his copyrights in all of his unpublished writings in National Archives collections.
Works prepared by U.S. Government employees as part of their official duties are in the public
domain. The copyrights to materials written by other individuals or organizations are presumed to
remain with them. If you think any of the information displayed in the PDF is subject to a valid
copyright claim, please contact the Gerald R. Ford Presidential Library.
Digitized from Box 9 of the James M. Cannon Files at the Gerald R. Ford Presidential Library
THE WHITE HOUSE
WASHINGTON
March 28, 1975
COMMENTS PHONED TO :
JIM CANNON
FROM :
Stephen Gardner
Treasury Department
SUBJECT :
Comments on Consumer Advocate Bill
1.
The specific problems that the bill gives us
are very large. The section that permits
the agency to initiate proceedings in Federal
courts to review Federal agency actions could
extend to millions of administrative decisions
made in IRS and Customs cases. That's just a
overview and it would improse tremendous burden.
2. & 3. The specific efforts made by the many treasury
bureaus agencies and departments to better represent
the consumer need to be coded or listed in more
detail than this time frame allows. As a matter
of fact, we are thinking of developing an over-
view function in the Secretaries office to
coordinate consumer interest and representation
for all treasury sections.
4.
There are numerable regulatory reforms we
could suggest - for example, financial institutions
act is a consumer bill. A regulatory reform list
is being submitted by special messenger.
FORD is LIBRARY 076836
Department
to, gim Cannon
of the Treasury
Office of the
room,
date 3-28-74 Secretary
attached is the answer to
question 4 of your letter
asking for a Treasury response
dealing with the Consumer Protection
Out.
Please add this to the
response called in by Deputy
Secretary Gardner enswering your
first three questions- Sidney
Sidney Sone Jones
Counselor to the
Secretary of the Treasury
room 3413
ext 5901
OF
THE TREASURY THE DEPARTMENT
OFFICE OF THE SECRETARY OF THE TREASURY
WASHINGTON, D.C. 20220
1789
REGULATORY REFORMS SUGGESTED TO ASSIST THE CONSUMER
1. Surface Transportation Deregulation--
a. Truck
b. Railroad
2. CAB reforms on airplane fare.
3. Assess impact of EPA rulings (see #21)
4. Repeal McGuire Act.
5. Enactment of Financial Institutions Act.
6. Unify State foreclosure and usury laws.
7. Building code and standards revisial.
8. Vigorous enforcement of antitrust laws.
9. Avoid Cargo Preference legislation.
10. Repeal Jones Act.
11. Repeal Davis-Bacon Act.
12. Accelerate Nuclear plant licensing.
13. Assess Impact of OSHA regulations (see #22)
14. Repeal of the Anti-trust Exemption of Agricultural Cooperatives
with Annual Sales Exceeding $10 Million. In the context of
anti-trust exemptions for agricultural cooperatives, consider
amending the Capper-Volstead Act of 1922 and any subsequent
legislation incorporating its features of granting dairy
cooperatives anti-trust exemptions. The intent of the original
law was to give small farmer cooperatives equal bargaining power
with buyers, but not to give the supercooperatives of today
virtual control over domestic supplies.
Any size limit for exemption would be purely arbitrary and
could in several commodities act as a substantial deterrent
CBP
to pro competitive activities. It is our view that existing
- 2 -
laws are a sufficient deterrent to any abuses that may
accrue from large cooperatives. This is evident by the
fact that there are currently at least five anti-trust suits
pending against cooperatives in either the Department of
Justice or the Federal Trade Commission. Three of these
cases are milk, one in broilers, and one in lettuce. USDA
is also investigating charges of undue price enhancement
in potatoes.
15. Amendment of marketing order legislation so as to prohibit
restrictions on interstate movement and production quotas on
individual producers. The Agricultural Marketing Agreement
Act of 1937 provides authority for a wide range of regulatory
activities relating to the marketing of agricultural commodities.
16. Support Regulatory Reform Commission.
17. Review the Commodity Exchange Act.
18. Review occupational licensing requirements which may limit entry,
competition and productivity improvements. It is our under-
standing that most of the licensing restrictions are under State
law.
19. Review the necessity for commodity import restrictions currently
in effect for meat, sugar, coffee, dairy products, cotton, wheat,
and other products. (Import restrictions on coffee are no
longer in effect. Our obligations under the International Coffee
Agreement of 1968 lapsed on September 30, 1973, at which time all
quota provisions and import restrictions under the ICA ended.
Import restrictions on sugar continue as part of the U.S. Sugar
Act; however, these restrictions end with the expiration of the
Act on December 31, 1974.)
20. Deregulation of natural gas.
21. Environment - The Federal Government should reexamine its
policies toward environmental protection to determine (a) which
programs are, on balance, beneficial (in the sense of having
economic/social benefits which outweigh their economic/social
costs), (b) which of those which are not beneficial could be
made beneficial through an improved program of implementation,
and (c) which of those which are beneficial could be improved
through more efficient programs of implementation. For those
programs which can be improved a plan of action should be drawn
to implement such improvement. Those programs which are not
and cannot be made beneficial should be truncated. An interagency
task force composed of representatives from OMB, DOT, DOA, DOC,
Treasury, HEW, DOI, CEA and EPA, and the Domestic Council should
be convened to map out the work.
- 3 -
22. Safety - The Federal Government should determine whether its
safety regulations are cost-effective. Where such programs
are not beneficial and cannot be made beneficial, they should
be truncated. Specific attention should be given to: (a) passive
restraint systems in auto vehicles, (b) safety standards in the
design of interstate highways, (c) safety regulations which
impact upon the airport/airway system, and (d) regulations
governing product safety.
23. The Department of Health, Education, and Welfare should be
directed to make an intense study of Federal, State, and local
requlations which impact upon the costs (and productivity) of
medical care provisions. Among the problems to be addressed
are the following:
a. Discriminatory examinations. The AMA promulgates a more
difficult examination for "foreign" (educated) physicians,
even if such physicians are U.S. citizens. Also, State
examinations discriminate against out-of-State educated
physicians.
b. Discrimination against innovative delivery systems. State
and local codes of ethics penalize physicians who attempt
innovative delivery systems (health maintenance organizations, etc.).
C. Limits on hospital practice. Local medical associations, in
"cooperation" with hospitals, determine which physicians are
authorized to practice.
d. Ban on advertising. State and local codes of ethics ban
adverising as "unprofessional." A physician who does advertise
is driven out of the association (s) and is deprived of access
to hospitals and may even lose his license to practice. The
effects of this on competition are obvious.
e. Ban on drug advertising. State and local codes of ethics and some
State laws bar the advertising of drug prices. There is some
evidence that this has a significant adverse competitive effect.
f. Others. Other problem areas include: (1) the fee-setting
activities of Blue Shield plans, (2) the promulgation of
Relative Value Scales by State and local medical societies,
(3) maximum price fixing, market preemption, and monopolization
by foundations' usurpation of insurers' claims-review functions,
and (4) hospital monopolies, including market division
accomplished through health planning councils.
FORD CIBRANT
- 4 -
24. Remove restrictions against para-professionals.
25. Amendment of civil aviation legislation to permit discount
air fares and to bring capacity - limiting agreements under
the antitrust laws.
(Comment: While these may be proper objectives, it should be
kept in mind that the action plan devised by the Administration
Task Force to deal with international aviation problems:
a. suggests a reorganization of the fare structure which would
minimize the use of discount fares, and
b. encourages the use of capacity agreements by carriers crossing
the Atlantic.
26. DOT and CAB investigate IATA system of rate-making.
27. Rigorous enforcement of Inflation Impact Statement.
28. Prevent further increases in minimum wage or at least permit
teenage exemption.
29. Repeal the private express statutes that give Post Office a
first-class mail monopoly.
30. Required coordination of all Federal land use activities.
U.S. DEPARTMENT OF LABOR
OFFICE OF THE SECRETARY
WASHINGTON
March 28, 1975
Dear Mr. Cannon:
The attached memorandum prepared by Department of
Labor staff provides some brief responses to the four
questions you posed in your March 27 letter to Secretary
Dunlop. The Secretary has not had the opportunity to
review this document but has asked me to respond in
his behalf.
I hope this information is sufficient and useful.
Sincerely,
John C. Read
Executive Assistant
Mr. James M. Cannon
Assistant to the President
for Domestic Affairs
The White House
Washington, D.C.
Attachment
CC:
Secretary Dunlop
THE IMPACT OF S200 ON THE DEPARTMENT OF LABOR
I.
Special Problems
Labor standards enforcement (Fair Labor Standards
Act, Age Discrimination in Employment Act, Equal Pay
Act, Service Contract Act, Davis-Bacon Act, Walsh-Healy
Act, Occupational Safety and Health Act, Executive
Order E011246) almost necessarily has a cost impact
and therefore could involve an "interest of consumers."
Section 6 of S200 allows the administrator of the
Agency for Consumer Advocacy to intervene in DOL
enforcement actions, initiate judicial review of such
actions or request the iniation of proceedings under
the labor standards provisions. This would mean that
the Department would have to deal with a new party in
most of our enforcement activities.
Section 10 of S200 permits the administrator to gather
information required to protect the health and safety
of consumers, and this could duplicate our own
information gathering under the Occupational Safety and
Health Act.
The labor disputes exemption under Section 16 of
S200 is not broad enough to exclude OSHA enforcement
or civil rights proceedings.
II.
Specific efforts by the Department to better represent
the consumer include our published policies of proposing
rules and regulations even where not required to do so,
regional hearings on such regulations, economic impact
statements and the preparation of summaries of all
comments received in the rule making process.
III.
Additional efforts by the Department to better represent
the consumer in our activities include the preparation
of detailed guidelines for all the agencies within the
Department on the preparation of economic impact statements
for all new legislation and regulations which would have
a significant economic impact.
-2-
IV.
We do not have any regulatory reforms to propose. It
has been the Secretary's view that a catalog of exist-
ing programs and policies in this area is necessary
before any new legislation or reform should be under-
taken.
[ca 3/28/75]
STATE
United States Department of the Interior
OFFICE OF THE SECRETARY
March
1849
WASHINGTON, D.C. 20240
Dear Jim:
In response to your letter of yesterday, we have conducted a quick
survey of our programs with respect to consumer interests.
Most of our programs affect consumers only indirectly. The closest
we come to the consumer are our parks and recreation programs. Nominal
fees are charged in certain areas for specific services but these fees
generate only about 10% of our operating costs. The Department also
markets water and hydroelectricity. However, we act as a wholesaler
and sell bulk power and water to public utilities, municipalities and
irrigation districts. Our mineral leasing activities are even further
removed from ultimate consumers.
I do not mean to imply, however, that our programs have no impact on
consumers. More specifically, let me address your four questions.
1. Problems the Economic Advocate bill presents to Interior
In its mission of management and protection of natural resources, the
Department does take actions that affect the supply of important
commodities and services, such as energy, minerals, recreation oppor-
tunities, and the like. The central problem the Consumer Advocate Bill
might present to Interior is that such a consumer agency could set up a
powerful and biased special interest with very broad authority to
intervene in Departmental activity. This could be highly unfair, since
consumers as a group are only one of many sectors with an interest in
the conduct of natural resources policy. Other interests, such as the
taxpayer, as title holders to Federal resources, and private owners of
resources, are also entitled to fair treatment in the disposition of
Federal resources. We feel that we provide a balanced decision process
now, giving due consideration to consumer interests through normal
processes of public comment and advisory activity. This bill could
easily produce an undesirable weighting of our decisions.
2. Efforts now being made to represent the consumer
We have progressed in our efforts to provide clearer and more compre-
hensive environmental impact statements covering our proposed actions
which could affect consumers as well as other interests, For example,
CONSERVE
AMERICA'S
ENERGY
Save Energy and You Serve America!
proposed rate increases in hydro-power and water rates charged by the
Department have been subjected to environmental impact analyses. It
is through this process and related public hearings that ultimate con-
sumers can comment on whether our analysis adequately presents the
consequences of our proposed actions on their well being. More remotely,
our environmental analyses and public hearings on proposed leasing of
mineral deposits, rights-of-way grants over public lands, and subsequent
regulations provide similar opportunities for the expression and con-
sideration of consumer interests.
In general, we are attempting to factually provide consumer interests
the implications of our actions through environmental impact analyses.
More specifically, in the marketing of power and water, we are providing
these products at a rate equivalent to the costs the Federal Government
incurs, except for irrigation water which we normally provide at sub-
stantial subsidies. With respect to the leasing of Federally owned
mineral resources, both onshore and on the outer continental shelf, we
are attempting to increase the competition for the development of these
resources which will be immediately beneficial to the taxpayer and will
also benefit consumers in the longer run. Finally, our programs to
provide Federal parks and to assist States in their park programs in-
crease the opportunities and reduce the costs for outdoor recreation
interests.
3. Additional efforts to represent consumer interests
Our highest priority objective in the Department is to increase the
domestic supply of energy. Success in this effort will reduce consumers'
energy costs. We are proposing an accelerated oil and gas leasing pro-
gram on the outer continental shelf which could lessen our reliance of
foreign supplies and reduce world prices. We are also about to propose
a new coal leasing policy designed to increase the supply of clean
energy on a least-cost basis.
4. Regulatory reforms
We are about to promulgate new regulations which would ban joint bidding
by the major oil companies on oil and gas lease sales on the outer
continental shelf. Such action should increase competition and ultimately
be beneficial to consumers. In addition, as part of our proposed new
coal leasing policy, we will apply strict diligence regulations which
will force present and future leasees to either produce coal in sub-
stantial quantities or relinquish their rights. Such a regulation will
increase scarce energy supplies and reduce their costs in the near future.
-3-
I sympathize with you in your efforts to find a better alternative for
representing consumer interests than S.200. However, in this attempt, I
hope we can avoid alternatives which on the surface seem reasonable,
but actually create greater red tape and impede an orderly and objective
decisionmaking process. The inflationary impact statement drill is a
case in point. The intent was good, but the consequences could be
disastrous in terms of delay and bureaucratic costs. I trust that
whatever alternatives for representing consumer interests are proposed,
their full implications and costs will be considered.
Please call if you need further assistance.
Sincerely,
Under Secretary
Honorable James M. Cannon
Assistant to the President
for Domestic Affairs
The White House
Washington, D.C. 20500
DEPARTMENT
OF
HOUSING
*
*
DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
AND
WASHINGTON, D. C. 20410
URBAN
OFFICE OF THE SECRETARY
IN REPLY REFER TO:
March 28, 1975
MEMORANDUM
TO
:
Carla A. Hills, Secretary
FROM
:
Bernard J. Carl, Special Assistant
SUBJECT: Consumer Protection Act of 1975
1. The proposed legislation is not expected to have any substan-
tial impact on the activities of this agency as differentiated
from its impact on the Executive Branch generally.
First, we have few formal regulatory proceedings in which it is
likely the proposed Administrator would intervene. One such
proceeding would be hearings pursuant to the Interstate Land
Sales Act, when the Secretary refuses to accept a lot developer's
disclosure statement or where the Secretary suspends such a
statement. We would not consider the Administrator's partici-
pation in such a proceeding particularly onerous.
Most of our other proceedings involve less formal policy deter-
minations, for example, the formulation of proposed regulations
concerning mobile home standards, settlement procedures or
minimum property standards. We would welcome wider participation
of consumer groups and their representatives including the
Administrator in such proceedings, which usually involve only
publication for comment in the Federal Register and, occasionally,
a public hearing. We are, however, somewhat concerned that the
broad definition of "agency activity" contained in S.200 would
allow the Administrator to become involved in our informal
communications with constituent industry groups, making such
communication exceedingly difficult.
2
There are certain other elements of the Act which we might
find somewhat onerous. We are particularly troubled by the
proposed agency's broad authority to secure information from
other federal departments, since that authority could deter
members of our client industries from providing us with full
and candid disclosures of financial and other information
which we find very useful in the conduct of our activities.
2. We have several programs with a consumer protection orientation.
For your information, I am attaching hereto a list of some of
those programs.
3. An effort could be made to accord better representation to
consumers in this Department's decisions and activities, and
implementation of such reforms could easily be undertaken.
First, we have increasingly made public hearings or comment
periods a prelude to any significant agency action which could
affect consumers. For example, we recently held extensive
public hearings in Washington and Florida on the question of
condominium regulation, to afford consumers an opportunity to
express their views to upen up new channels of communication
with consumer groups.
Presently under study are mechanisms for improving consumer
complaint handling. A proposal for a centralized facility
within the Department to coordinate the handling of consumer
complaints is being considered, as is a suggestion to make
consumer complaint handling by local offices more directly
subject to Central Office supervision.
As this agency increasingly becomes involved in regulating
its client industries in consumer protection matters (See
attached statement.), serious consideration will have to be
given to what internal structure can best accommodate that
new role. It is premature, at this time, to speculate on the
results of that consideration.
FORD LIBRARY
3
4.
There is one alternative to the 1975 Consumer Protection
Act which might be saleable to the Congress and also
be a reasonable accommodation of our concerns about
the proposed legislation. That alternative would be
as follows:
(1) The Bureau of Consumer Protection (BCP) of the
Federal Trade Commission could be empowered to:
(a) Represent consumer interests in any agency
proceeding (but not informal agency
activity, as defined by S.200) which may
substantially affect consumers' interests
whenever it determines that such inter-
vention is necessary to adequately represent
the interest of consumers.
(b) The BCP could be empowered to participate
in any informal rule-making where public
comment is invited by presenting written
or oral submissions to the extent the
public was invited to do so, and the
agency involved could be obligated to
consider some admissions.
(c) The Bureau of Consumer Protection could
also be permitted to initiate or participate
in any Federal court proceeding involving
review of a Federal agency action which
substantially affects consumer interests,
not only if the BCP were previously a
party to the agency proceedings. In that
context, the BCP would seek review as a
representative of consumers who are
aggrieved parties for purposes of the
judicial review.
(d) The BCP would be given authority to
receive and review consumer complaints,
to notify the party against whom the
complaint had been lodged, transmit
such complaints to the proper authority,
and to co-ordinate responsive action on
such complaints.
4
(e) The BCP could also be empowered to maintain
logs of consumer complaints and responses.
(f) The BCP would also have the obligation of
assisting and coordinating Executive Branch
programs to disseminate consumer information
materials.
(2) This proposal has several advantages over S.200:
(a) The Federal Trade Commission's Bureau of
Consumer Protection already has substantial
consumer protection functions. The stated
purposes of the proposed Agency for Consumer
Advocacy includes the protection of consumer
choice in a competitive market and the prevention
of unfair or deceptive trade practices.
These are identical to the statutory responsi-
bilities of the Federal Trade Commission in
consumer affairs matters. It seems
unconscionably wasteful and inefficient to
fractionalize within the Executive Branch
the responsibility for protecting consumers
against such practices.
5
b. The Federal Trade Commission's power to promulgate
trade regulation rules, combined with its authority
to sue to enforce those regulations, makes that
agency a natural focus for consumer protection
activities in the Executive Branch. It is already
an agency whose perceived constituency is con-
sumer groups. It is, thus, well suited to the
role envisioned for the Agency for Consumer Advocacy.
C. The consumer complaint function envisioned by the
Act would be a useful informational source for the
FTC in implementing its power to proscribe trade
regulation rules concerning unfair trade practices.
d. Recent legislation has already given the Federal
Trade Commission limited dependent litigative
authority to protect consumer interests. It is
not a major step to supplement that authority to
include participation in administrative and judicial
review proceedings involving consumer interests,
even beyond those involving unfair trade practices
as defined by the Federal Trade Act.
e. Giving the Federal Trade Commission the power to
intervene in other agency proceedings avoids the
problem of dual prosecution in FTC matters that
would result from having a separate agency inter-
vening in FTC proceedings.
f. Giving the FTC this responsibility avoids the
creation of an entirely new bureaucracy and the
attendant start-up costs, delays and duplication
of effort that would involve.
g. The FTC already has significant expertise and tech-
nical staff skilled in consumer matters so that they
could undertake their statutory charge almost
immediately.
h. Although an incremental increase in the FTC Bureau
of Consumer Protection staff would be required,
that increase would be less than would be required
by the creation of a new agency.
i. The FTC is an agency with considerable stability
and is a part of the Executive Branch in terms of
its budget operation, hence, would be far less dis-
ruptive than the proposed agency.
6
j. The FTC already has significant but carefully cire
cumscribed investigative powers, pursuant to its
regulatory role, which could be relied on as an
alternative to the expansive and troublesome infor-
mation gathering tools afforded to the proposed
Agency for Consumer Advocacy under S,200.
k. The FTC has already developed techniques for the
informal resolution of issues relating to consumer
protection which could also be applied in meeting
the statutory mandate envisioned here,
1. The FTC should be a sufficiently independent body
to mollify Congress' fears about insulating the
Administrator of a consumer protection agency from
political pressures.
Attachment
APPENDIX
Among the significant current or impending consumer oriented
activities of the Department are the following:
1.
Interstate Land Sales -- The Office of Interstate Land
Sales Registration (OILSR) is responsible for implemen-
tation of the Land Sales Full Disclosure Act requiring
developers and promoters selling or leasing 50 or more
unimproved lots in interstate commerce, pursuant to a
common promotional plan, to file a registration statement
with HUD. The statement must disclose all material
information pertaining to the land and the developer
must prepare a digest of the registration statement for
distribution to prospective purchasers. OILSR reviews
the registration statements and is authorized to sue to
cure deficiencies or to enjoin violations of the Act.
One important issue concerning the activities of this
agency is its interpretation of its regulatory authority
to include an uncompleted condominium unit as the
equivalent of a lot under the Act. There is much industry
opposition to this interpretation and a test case is in
the offing.
2. FHA Minimum Property Standards -- FHA has always had some
quasi-consumer protection functions pursuant to its
responsibility to establish "minimum property standards"
and to conduct compliance inspections of insured homes
pursuant to the National Housing Act of 1937. Such
minimum property standards set out minimum levels for
elements of design and construction as well as for
materials used in that construction. There are, for
example, standards for insulation materials, safety glass,
acoustical treatment, and sealing of wood products.
3. HUD Carpeting Standards. -- On March 1, 1975, new HUD carpet
standards and a HUD certification program for carpeting was
initiated. The new standards were implemented despite a
concerted effort on the part of the industry to postpone
the effective date of the new standards. The carpet standards
constitute a marked departure from previous HUD property
standards for two reasons. Previously, standards were deter-
mined largely by the affected industry and a self-certification
process was used to police compliance. The new carpeting
standards are substantially more stringent than those proposed
by the industry and a third party enforcement mechanism was
established. Accordingly, the new carpeting standards mark a
significant advance in HUD consumer related regulatory
activities.
2
4.
Other FHA Consumer Related Responsibilities -- FHA has
several other consumer related responsibilities, including
FHA appraisals, its subdivision analysis work, FHA limita-
tions on short-swing profits that can be made by persons
who sell homes without occupying them, and restrictions
on "kick-backs" from a mortgagee in an insured
transaction.
5. Mobile Home Standards -- Title VI of the Housing and
Community Development Act of 1974 authorizes the HUD
Secretary -- in consultation with a 24-member advisory
council on which consumers will have one-third representa-
tion -- to establish a national mobile home construction
and safety standard and to work with the States to implement
an effective enforcement program. The initial standards
will be issued by August 22, 1975, and will be revised as
additional data and information are gained from research
efforts. The standards, when effective, will preempt
local standards covering construction of the mobile home.
An effective enforcement system -- including a provision
for recall of defective units -- will provide assurance
that the units built will be in compliance with the
improved standards.
6. Real Estate Settlements -- The Real Estate Settlement
Procedures Act requires the Secretary (HPMC) to promulgate
a form to be used as the standard real estate settlement
form in all transactions involving Federally related
loans, and to establish ceilings on settlement costs. The
required form is scheduled to be published on May 1, 1975.
The Act also requires advance itemized disclosure of
settlement costs in affected transactions at least 12 days
prior to settlement and prescribes certain activities such
as "fee-splitting." Criminal provisions and a private
right of action are provided. HUD's role in implementing
or enforcing some of these proscriptions is unclear.
3
7. FHA Insured Condominiums -- Section 234 of the National
Housing Act provides for FHA insurance for mortgages on
condomimium units. Section 234 (c) authorizes the
Secretary (HPMC) to prescribe "such controls as he [sic]
determines to be necessary and favorable to promote and
protect individual owners of the multifamily project
and its occupants." Section 234 (d) (2) allows the
Secretary to regulate or restrict "rents, charges,
capital structure, rate of return, and methods of opera-
tion until the termination of all obligations under the
[Federal] insurance and during such further period of
time as the Secretary shall be owner, hol-er, or reinsurer
of the mortgage." Probably because of its quasi-consumer
protection elements, Section 234 has not been utilized
to any significant degree; however, it does represent
a consumer protection function mandated by statute.
8. Condominium Study -- HUD is currently undertaking an
investigation of condominium housing with a report to
Congress due in August of 1975. Among the issues to
be considered are whether disclosure or substantive
regulation of condominium sales are appropriate; the
relationship between the Federal and State regulation;
and what legislation is necessary to implement the
recommendations of the HUD study. Several bills have
already been introduced to provide for Federal regula-
tion of the condominium market and it seems clear that,
by the end of the session of Congress, HUD will have a
significant regulatory role in this area as well.
OGC has already prepared a model State statute concerning
condominiums and conversions which has not been publicly
disseminated.
9. HUD has another important consumer oriented function.
Section 518 of the National Housing Act was amended in
December 1970 to permit HUD to correct, or to compensate
owners for correcting structural or other defects which
seriously affect the use and livability of existing
houses insured under Section 235. In the period from
enactment to June 30, 1974, approximately 9,900 vouchers
were paid and $7.6 million was expended to correct or
compensate for the correction of structural and other
defects. The program has been essentially inactive since
4
June 30 due to the suspension of the Section 235 program
in January 1973 and the statutory requirement for a
claim to be filed within one year of purchase.
The Housing and Community Development Act of 1974 amended
Section 518 (b) to include on a one-time basis the correc-
tion, or the compensation for correction, of structural
or other major defects in existing houses insured by HUD
during the period from August 1, 1968, to January 1, 1973,
under Section 203 (b) or Section 221 (d) (2). Eligibility
was restricted to those properties with defects so
seriously affecting the use and livability of the dwelling
that a serious danger to the life or safety of the
inhabitants is created.
Section 518 (a) provides purchasers of all new FHA insured
homes with protection for four years after construction.
If a serious structural defect is found in a home built
under FHA inspection, FHA pays for the cost of repairs.
10. In an effort to deal with the dangers of lead-based paint,
FHA requires that for insurance to be provided on the
resale of houses built before 1950, a seller must remove
all lose, scaling paint and repaint with new (non-lead)
paint. If repainting is impossible, the area must be
covered over to a height at least equal to that of the
average 7-year-old child.
11. HUD publishes a substantial volume of consumer education
material, mostly pamphlets to inform consumers about
housing matters.
12. Finally, Wilbur Jones, Special Assistant to the Secretary,
is in the process of preparing a comprehensive study and
recommendation for a Consumer Affairs office within the
Department. The proposal envisions the Consumer Affairs
Office as a mechanism to expedite the control consumer
complaints and to coordinate consumer education functions
now handled elsewhere in the Department.
[ca.3/28/75]
TALKING POINTS FOR REPLY TO JAMES CANNON LETTER
1.
What specific problems does S. 200, the "Consumer Protection Act
of 1975" present to HEW?
There would be significant overlap between the tasks of the new
Agency for Consumer Advocacy (ACA) and HEW's Office of Consumer
Affairs and the Food and Drug Administration.
-- FDA's total job could be interpreted as within OCA's juris-
diction and subject to continuous and costly monitoring
and "double think."
In general, the bill provides the new agency with too broad authority
to intervene in the internal and the public decision-making processes of
the Department. The agency could seriously hamper our policy making and
significantly impact our staff time and costs. Specifically:
-- The functions and purposes of the ACA -- specifically,
representing "interests of consumers before Federal agencies
with respect to the
purity, potency, healthfulness
and cost of any
property
or goods, services or
credit" -- so closely track FDA's and ASH's responsibilities
in the health industry, that ACA staff would be permitted
under the Act to take part, as an advocate, in every health-
related decision we made. This would have significant cost
and time implications.
-- Section 6 would establish the Administrator's right to inter-
vene as a party to any Federal agency proceeding or activity
which may affect consumers. That would be virtually every
action this Department takes, and would subject us to
constant review by another official agency. This is parti-
cularly alarming because no clear guidelines are established
for the intervention.
-- Section 12 would require HEW to provide a status report,
"upon specific request by the Administrator," on "any action
which may substantially affect an interest of consumers."
Here, again, virtually all HEW actions would be included.
2.
What specific efforts are we making now to better represent the
consumer in HEW's decisions and activities?
There is a long list of areas in which consumer input and repre-
sentation has been expanded; it is an area we have paid much
attention to:
Health
-- Under the new Health Planning legislation (P.L. 93-641),
which HEW had a major role in developing, the role of con-
sumers in determining health needs and plans for each geo-
graphic area is expanded through the requirement that a
majority of local planning board members be consumer
representatives.
-- FDA has recently expanded a number of its committees to
include consumer representatives. Oñe of these, the Ad Hoc
Consumer Advisory Committee, which meets monthly with top
FDA staff, contains representatives of many major consumer
organizations and sponsors conferences on consumer subjects
(note recent conference on sugar, funded by FDA and National
Academy of Sciences).
-- FDA and NIH also have significant consumer representation in
their management structures: in FDA by the recent appointment
of an Assistant Commissioner for Professional and Consumer
Affairs; in NIH by the direct consumer representatives on
the Review Councils of the National Institutes of Health.
Social Services
-- The newly enacted Social Services legislation (Title XX),
which HEW is primarily responsible for, is a landmark in
open process and public participation. Some examples are:
- States must, for the first time, accept a 45 day
public comment period on their plans for services.
- Consumer advisory boards, while voluntary, will be
paid for under the Act if established.
-- The Department is publishing a citizens guide on how to get
into the social services process.
The Office of Consumer Affairs
-- OCA acts, of course, as a constant consumer advocate within
the Department. They review decisions, regulations, possible
rule changes and all other policy matters to provide con-
tinuing guidance on consumer impact.
-- Additionally, OCA publishes a bi-weekly "Consumer Register"
which pulls out of the Federal Register and records for
consumers those items which are of major consumer interest.
Instructions and forms for comment are provided. 25,000 are
published bi-weekly; and an increase in the percent of
consumer comments has been noticeable.
-- OCA has also been working with FDA on a major effort to
streamline regulations to make rulemaking easier to under-
stand and participate in.
Social Security Number Privacy Initiative
The Department has for some time been developing legislation
which would protect the consumer from abuse of his social security
number by government and private organizations. While generally
not included under "consumerism," it is nevertheless a significant
protective measure for the consumer.
Education
-- The Department has recently taken a number of major steps
against certain types of proprietary schools which abuse the
students' rights to maximize profits. In particular, we have
taken decisive action to protect student loan recipients' rights
to refunds when such schools fail to provide the educational
services the student has paid for. We are also requiring
truthful disclosure of basic information about the school
before the student takes out a loan.
-- We are working closely with the Education Commission of
the States to develop standards and model legislation to deal
with the problem of "degree mills."
-- We are reviewing standards for recognizing accrediting
associations and their role in determining the institutions
whose students are eligible for Federal aid.
-- There are numerous other consumer protection and participation
items included in our Higher Education package. The specifics
can be forwarded in a day or so, if required.
In implementation of the Education Act of 1974 (P.L. 93-380)
the Department undertook a series of regional conferences in-
volving members of the public, the education community, and
regional office staff to explain the implications of new portions
of the bill, our proposed regulation development process and
how to input into it, and anticipated applications, procedures
and deadlines.
In program areas which have substantially new dimensions we
have made special efforts to insure that these dimensions are
understood by all potential consumers (e.g., the new regulations
for Title IV of the Civil Rights Act permit funding for the
elimination for sex discrimination. Accordingly, a special
press release accompanied issuance of the regulations and letters
regarding their intent were sent to all potential applicants
and public interest groups).
The Commissioner of Education has initiated a series of meetings
with key State school officers to discuss all of the Office of
Education programs with them and any concerns that they may have
with regard to their operations. In addition, the Commissioner
has appointed a full time ombudsman to maintain continuous
liaison with Chief State school officers and to report their
concerns directly to him.
3.
What additional efforts could we take to better represent the
consumer in HEW's decisions and activities?
We intend to make expanded use of surveys and other instruments
to secure consumer views on potential action items. For
example:
-- FDA has recently surveyed consumer preferences in developing
nutritional labeling.
-- We contemplate a study to determine how to make consumer choice
a more powerful influence for assuring long term care quality.
We also intend to include key persons representing public and
other interested groups in some of our internal policy discussions
leading to the development of regulations and other decisions--
at least to enlarge our sense of the alternatives and of the
probable consequences of each policy option--much as we did with
Title XX. Additionally, we will
-- Extend the requirement that is now in some programs, for
state and local grantee public agencies to involve consumers
meaningfully in their planning, to more of the HEW funded
programs.
-- Continue to place high priority on seeking public input into
decisions from affected consumers, at an early enough stage.
to allow for meaningful participation.
-- Place priority on OCA and OE consumer education activities
directed toward increasing knowledge necessary for
intelligent marketplace decisions.
In the area of Education we expect to continue and expand our
use of regional consultations with public interest groups, press
releases regarding changes in policy, and close consultation
with congressional staff as we proceed with new legislation
development and/or implementation. Additionally, we expect to:
-- Continue present efforts to write summary statements for
all new Departmental regulations and to draft such regulations
in such a form as to be easily understood by the layman,
-- Continue on-going efforts to expedite the publication of
new regulations, and
-- hold special follow-up discussions with concerned interest
groups as appropriate (e.g., Title IX and Title VII of the
ESEA) .
4. What regulatory reforms would you suggest?
In areas of HEW's regulatory responsibility we see the need
for a number of changes:
-- The Department anticipates shortly reintroducing a bill to
require the enumeration of ingredients on labels for those
foods having mandatory formulations. In addition, statutory
authority will be sought to require drained weight labeling
for canned food measures. Both of these authorities,
sought for FDA, will provide greater information to the
consumer to assist in decision making on purchases.
-- FDA is also seeking authority to streamline and reduce the
time required for its rule-making under the Food, Drug and
Cosmetic Act. The expectation is that the desired revisions,
if achieved, will reduce unnecessary and harmful delays in
promulgation of food and drug standards and thereby increase
consumer protection.
-- Legislation is presently being prepared to expand the Center
for Disease Control's authority to deal with interstate
clinical laboratories which are not meeting standards.
Increased authority would permit more rapid CDC actions, under
its regulatory authority, to require interstate compliance
with high professional standards.
FEDERAL
ENERGY
FEDERAL ENERGY ADMINISTRATION
WASHINGTON, D.C. 20461
ADMINIST
RATION
March 28, 1975
OFFICE OF THE ADMINISTRATOR
Honorable James S. Cannon
Assistant to the President
for Domestic Affairs
The White House
Dear Jim:
This is in response to your request yesterday for my views
on four questions you posed in the context of the Consumer
Advocate Bill, S. 200.
Before addressing the specific questions you raised, I
should state that my general view is that Federal agencies
should keep their own houses in order, and accordingly, each
agency should provide internally for representation of
consumer interests so that this important element can be
reflected in each agency's decisions and programs.
This bill, which is similar to legislation considered during
the last several Congresses, would add a new dimension to
the concept of consumer representation by providing this new
agency litigation and advocacy powers similar to organi-
zations in the private sector. Though there is always
uncertainty as to the institutional competence and responsi-
bility that such a novel agency would develop, I believe
that under this bill the Agency for Consumer Advocacy might
be a potential irritant to FEA's operations, but would not
present any substantial problems in carrying out FEA's
responsibilities. We have some experience with the GAO as a
potentially adverse agency permitted unusually broad access
to FEA records, and, of course, being the target for litiga-
tion by public interest-oriented groups is something we have
learned to live with.
FEA currently has in place an Office of Consumer Affairs/
Special Impact, which is our internal consumer-oriented
element which has frequent opportunities to participate in
the policy development process. Moreover, under FEA's
- 2 -
organic legislation and the agency's procedures, we encourage
participation by the public in every significant aspect of
development of our regulatory programs. For example, in
nearly every instance, FEA rulemakings involve prior public
hearings, and all FEA Advisory Committee meetings are open
to the public with general public observers permitted to
present oral statements during such meetings.
Absent a major reorientation of limited resources, additional
efforts to represent consumer interests in FEA largely would
involve improvements in the carrying out of the existing
structure whereby the agency is exposed to consumer concerns
in its decision-making procedures. The visibility and
significance of FEA's activities are such that we are very
exposed to public scrutiny and aware of public sentiments on
our activities. Regulatory reforms which have been suggested
in prior studies, such as the Ash Council Reports, focused
largely on the collegial, adjudicative form of agency
structure and the shortcomings associated with such organiza-
tions. While these critical examinations would not appear
to be particularly relevant to FEA, if you wish, I would be
happy to give the general subject of regulatory reforms
additional thought in the future.
JulgBail
Administrator
UNITED STATES.
PROTECTION AGENCY
UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
WASHINGTON, D.C. 20460
MAR 28 1975
OFFICE OF
PLANNING AND MANAGEMENT
SUBJECT: S. 200
FROM:
Alvin L. Alm
Assistant Administrator
for Planning and Management
alin.aa
TO:
James Cannon
Executive Director
Domestic Council
Attached are our responses to the questions you posed
to Russ Train informally yesterday about S. 200.
Attachment
S. 200
Questions:
1. What impact will S. 200 have on EPA?
Answer:
S. 200 has the potential for far-reaching impact on virtually every
EPA activity. Since the reach of S. 200 includes not only formal and
informal rule-making and adjudicatory proceedings, but also all other
proceedings or actions "which may substantially affect an interest
of consumers, "it is difficult to identify any EPA actions which would
not fall within that scope. Under these circumstances, our many rule-
making proceedings could be encumbered by the involvement of the
CPA, which would have independent authority to conduct separate
interrogatories of all parties. Also, under S. 200, numerous
discretionary actions of the Administrator could involve the CPA. In
addition, numerous notice requirements with respect to anticipated
or scheduled activities which could have consumer impact, would have
to be provided to the CPA. The potential for delay and red tape is
significant, especially if economic impact statements were required
on each EPA action (as contemplated by one amendment).
The extent to which S. 200 will impact EPA is not known. Thus
far, consumers have not involved themselves significantly in EPA's
programs.
2. What is EPA doing in its present activities to represent consumer
interests?
Answer:
EPA is conscious of the need to take into account consumer interests.
In carrying out our responsibilities we endeavor to assess the impact
of our various programs and activities on the economy. We generally
include members of the public who do reflect consumer views on many
of the advisory committees established under statute or under our
own initiative to advise with respect to many of our program activities.
We also routinely assess the energy costs and impact of many of
our regulatory program requirements. These assessments, of course,
often have significant impact upon consumers. As a part of our energy
conservation program we have been compiling facts with respect to
fuel economy of motor vehicles and have been making this information
available to the public. We expect this information to have a profound
impact on consumer activity in the vital area of automobile purchases.
An additional specific program which favorably impacts consumer
interests is the Agency's pesticides labeling program.
2
3. What additional things could EPA do under its present authorities?
Answer:
Although we believe we have been conscious of the impact of our
programs and activities upon the consumers, it appears that some of
those activities could involve greater citizen, i.e., consumer
participation. For example, in the development of transportation
control plans as a part of State implementation plans for the achievement
of air quality standards, earlier and more extensive public discussion
with consumers immediately affected would have been desirable. It
is now our plan to pursue such policy in the development and revision
of such plans. It must be remembered, however, that many of our
responsibilities under law are greatly circumscribed by specific
criteria, i.e., considerations of public health and the environment.
The Agency has recently been given authority to set drinking
water standards, and we are presently developing criteria to do
that. Additionally, the Agency is attempting to develop an auto
emission warranty program for catalysts.
4. What regulatory reforms generally, if any, would EPA recommend?
Answer:
We are already including a relatively new procedure which provides
citizens a right to be directly involved in our regulatory activities.
Most of the EPA legislation includes the citizen suit provision. This
authority, whereby citizens may bring suit, has been limited to non-
discretionary actions. We note that S. 200 would extend citizen
involvement through the CPA well beyond non-discretionary actions
into virtually every discretionary action of government.
DIFECTMENT or COMMERCE
THE SECRETARY OF COMMERCE
Washington, D.C. 20230
UNITED STATES or AMERICA
[ca 3/28/75]
Honorable James M. Cannon
Assistant to the President
for Domestic Affairs
The White House
Washington, D.C. 20500
Re: S. 200
Dear Mr. Cannon:
As requested in your letter of March 27, please find
enclosed this Department's response to the four ques-
tions posed therein concerning the captioned bill.
Sincerely,
Secretary of Commerce
Enclosure
Comments of Department of Commerce
on S. 200
1. What specific problems does the bill present to your department?
This bill is the latest of a series of consumer advocacy bills introduced
in previous Congresses. While all have some degree of similarity, this
one is probably most similar to S. 707 of the last Congress. However, it
is more complex and involves the interests of factions other than consumers
such as farmers and small businesses to a degree that is vague and subject
to many interpretations. Further, it requires Federal agencies not only to
take actions that would directly support the new Agency for Consumer
Advocacy established by the bill, but would require each agency to issue
appropriate interpretations, guidelines, standards, or criteria, and rules
of procedure relating to rights of individuals who may be affected by
agency action (Sec. 23a).
The following provisions of the bill merit specific comment:
Sec. 4(b)(5). Authorizes the Agency to utilize with their consent and
on a reimbursable basis, the services, personnel, and facilities of
other Federal agencies.
Sec. 5(b)(2). The Administrator is authorized to conduct and support
research, studies, and testing of any kind which may be in the interests
of consumers. This is an almost unlimited scope and means that the
Agency could conduct research in product safety, building technology,
energy, product performance, etc.
Sec. 5(b)(4). The Agency would obtain information and publish and
distribute material of interest to consumers. This kind of activity is
carried on by many agencies. There are no limitations to prevent
duplication and overlap. On the other hand, in Sec. 5(b)(6) author-
izing the conduct of conferences, surveys, and investigations, such
activities may not be undertaken if they are duplicative in significant
degree of similar activities conducted by other Federal agencies.
Sec. 5(b) (4) should contain similar restrictions.
Sec. 5(b)(14). Promotes the consumer interests of farmers in obtain-
ing a full supply of goods and services at a fair and equitable price.
This requirement is not only completely out of place for this bill, but
defies interpretation.
- 2 -
Sec. 11(b)(2). The implication of this subsection is that the Agency
will act as a Consumers Union type of organization, not only in doing
testing, but reporting tests of others and rating products. There are
no restrictions as to objective requirements for testing or rating. If
properly carried out, this could be a useful function, but the absence
of detailed requirements or restrictions makes this provision subject
to great abuse.
Sec. 18(a). This is the small businessman's equivalent of the
agricultural restriction in Sec. 16(b). It states, "It is the sense of
the Congress that small business enterprises should have their varied
needs considered by all levels of government in the procedures pro-
vided for throughout the Act. 11 Based on this statement and the one
for farmers, it appears as though the needs of the large businessman
and industry can be ignored by Government.
Apart from the foregoing, a major problem that would result from
enactment of S. 200 in its present form would be the procedural and
substantive consequences of the sweeping authority for intervention
or participation by the proposed agency in formal or informal pro-
ceedings and activities of other Federal, State or local agencies,
and in court proceedings, to represent consumer interests. Annex A
contains a listing of proceedings and activities of the Department
which would appear to be subject to adversary intervention by the
proposed Consumer Advocates, as a party or otherwise, most of
which would be seriously hampered or compromised by such inter-
vention.
ANNEX
1. The establishment of watch quotas for the insular possessions under
P.L. 89-805 (19 U.S.C. 1202).
2. The processing of applications for foreign-trade zones under the
Foreign-Trade Zones Act, as amended (19 U.S.C. 8la et seq.).
3. The processing of applications for adjustment assistance for firms
under the Trade Expansion Act of 1962 (19 U.S.C. 1801 et scq. ).
4. The processing of applications for federal recognition of a domestic
exposition under the International Expositions Act (22 U.S. C. 2801
et seq. ).
5. The processing of applications for importation of foreign excess
property under the Federal Property and Administrative Serices Act of
1949, as amended (40 U.S.C. 512).
6. The textile program under Executive Order 11651 of March 3, 1972
(37 F.R. 4699).
7. The functions of the Department (as a member of the Trade Staff
Committee established under the Trade Expansion Act of 1962, 19 U.S.C.
section 1801, ct seq. ) in the formulation of recommendations to the
President in international trade matters such as extension, reduction
or termination of tariff concessions, relief under section 337 of the
Tariff Act of 1930, etc.
8. The activities of the Department in preparing for trade negotiations
with foreign governments, such as the establishment and utilization of
federal advisory committees to assist in multilateral trade negotiations,
as well as activities of other committees established pursuant to the
Federal Advisory Committee Act (5 U.S.C. App. I), such as the
National Industrial Energy Conservation Council.
9. Although exempt from the rule making and other provisions of the
Administrative Procedures Act (other than the Freedom of Information
portion thereof), activities under the Defense Production Act of 1950,
FORD LIBRARY
2
as amended, (50 U.S.C. App. 2061 et seq. ) and the Export Adminis-
tration Act of 1969, as amended (50 U.S. C. App. 2401 et seq. ) could
be subject to CPA participation if public notice is given with opportunity
for comment - a situation which occurs periodically.
10. The development of voluntary energy conservation specifications
pursuant to this Department's voluntary labeling program for house-
hold appliances and equipment as set forth in Part 9 of title 15, Code of
Federal Regulations (38 F.R. 29574, October 26, 1973).
11. The development of voluntary product standards to reduce undue
proliferation of weights, measures, or quantities of consumer com-
modities in connection with the Fair Packaging and Labeling Act, as set
forth in Part 12 of title 15, Code of Federal Regulations.
12. The development of voluntary product standards pursuant to the pro-
cedures set forth in Part 10 of title 15, Code of Federal Regulations.
13. Research activities carried out by the National Bureau of Standards
on behalf of the Consumer Product Safety Commission under the terms
of the Consumer Product Safety Act.
14. The development, publication, and issuance of consumer informa-
tion booklets disseminated by the National Bureau of Standards.
15. The establishment of fees or charges for services performed or
for documents or other publications furnished by the National Technical
Infomation Service pursuant to 15 U.S.C. 1153.
16, The preparation and review of environmental impact statements
by the Office of Environmental Affairs.
17. The issuance of regulations, as authorized by 15 U.S.C. 277, relating
to the functions and activities of the Office of Telecommunications.
18. The processing of loans to fishermen for new vessel construc-
tion, old vessel repair, or acquisition of new fishing gear under the Fish
and Wildlife Act of 1956, as amended (16 U.S.C. 742 a. et seq. ).
19. The voluntary fishery inspection program of the National Marine
Fisheries Service.
3
20. The activities of the Department in preparing for negotiations of
international fishing conventions and in implementing such conventions.
21. Programs under the Coastal Zone Management Act of 1972
(16 U.S. C. 1451 et seq.).
22. Commercial fishing operations under the Marine Mammal Protec-
tion Act of 1972 (16 U.S.C. 1361 et seq. ).
23. Patent Office proceedings in certain instances under both the patent
and trademark laws.
24. The Economic Development Administration's business loan program.
2. We need to know what specific efforts you are making now to better
represent the consumer in your department's decisions and activities.
Departmental Ombudsman. The Department Ombudsman for Busi-
ness Office was set up in 1970 to respond to inquiries from U.S.
businessmen about the Federal establishment. Today it offers
assistance and counseling to both business and consumers on a timely
basis.
Consumer inquiries to the Department and referrals from other agen-
cies and the Congress are acted upon by the Ombudsman. Assistance
can be given to many consumers by obtaining clarification of the facts
from all parties involved and expediting resolution. In others, the
consumer is directed to the state or local agency with jurisdiction
(e. g., insurance complaints are handled by the state insurance com-
missions). Requests for general consumer-related information,
including product availability matters and consumer education, are
answered and appropriate data provided.
Complaints under the purview of various other Federal agencies are
forwarded and the consumer advised of the action being taken (e. g.,
an air charter complaint is directed to the Civil Aeronautics Board
Consumer Advocate, a mail complaint to the Postal Service Consumer
Advocate, an unfair trade practice to the Federal Trade Commission).
Some of the interagency contacts for complaint resolution are shown in
a list attached.
Commerce Department Liaison with the President's Special Assistant
for Consumer Affairs. In addition to its daily contacts with consumers,
and continuing liaison with other Federal agencies with jurisdiction,
the Ombudsman exchanges information with the Office of Consumer
Affairs. It thus is able to provide a consumer perspective as requested
in Departmental activities considered to have a bearing on consumer
welfare.
Under an ongoing relationship, the Department also is an active member
of the Federal Liaision Committee for Consumer Affairs. The group is
responsible for coordinating and improving Federal program efforts in
the consumer field. In addition, the Department actively assists the
President's Consumer Affairs Assistant in resolving many consumer
complaints directed to that Office.
REWAUD LIBRARY FORD
- 2 -
Consumer Affairs Handbook. Earlier this year, the Department made
available to all District Offices a revised Consumer Affairs Handbook.
This Handbook contains timely information on Federal and State legis-
lation and activities, directories of consumer affairs offices, voluntary
action guidelines and suggestions, speeches, and other pertinent consumer
affairs information. The first edition of the Handbook, which was pre-
viously distributed by the Bureau in 1971, proved to be a useful and well-
balanced reference source for District Office professionals. Consumers
and businessmen use the Handbook as an aid to identify appropriate
channels and means to solve consumer problems and to keep abreast of
developing issues which impact on consumer recourse and business
operations. The new edition has been updated, expanded, and will be
revised and updated on a regular basis.
Consumer Product Safety Center. The National Bureau of Standards has
established a Center for Consumer Product Safety to help the Consumer
Product Safety Commission improve safety aspects of a wide variety
of consumer products, including toys, electrical appliances and textile
products. Work at the center provides the technical bases for standards
that will be applied to potentially hazardous consumer goods.
Injuries and Products. NBS has investigated a series of injuries and
the products involved to develop methods for defining, identifying
and measuring sharp points and the injury potential of various pro-
jectiles. The flammability of sleeping bags, slumber bags and play
tents was studied under real-life conditions. An analysis was conducted
of the injury potential of objects with which a falling person comes in
contact. A study of the tractive properties of children's footwear was
begun and arrangements were made with industry to conduct a coopera-
tive program in this area. Evaluations of babywalkers, highchairs,
and other children's furniture for strength and stability are being made.
Test methods were established to protect consumers from the noise
produced by such articles as cap pistols and small cannons.
Safety Analysis. NBS has been analyzing consumer product safety to
determine what there is about a consumer product that constitutes an
unreasonable hazard. As a result, NBS will have the capability to
develop methods for evaluating alternative governmental actions, such
as voluntary or mandatory standards or user education, and for
dealing with hazards identified in consumer products. Another project
is the analysis of data describing accidental injuries from consumer
products. This effort involves determining whether it is possible to
associate hazards with the characteristics of products, rather than
with an individual product.
- 3 -
Children's Strength. In designing safe products, especially toys,
the designer must consider a child's ability to misuse the product
by pulling it apart or by manipulating potentially hazardous parts.
Since fundamental information on the forces children are able to
exert in pushing, pulling and twisting, was not available, NBS com-
pleted a study of the capabilities of 556 children, ages two through
six, in day schools and day-care centers in the Washington area.
Burn and Fire Hazards. Many household products have hot surfaces.
Whether a painful burn results from touching a hot surface depends
upon both the temperature and the surface material. NBS published
a study which established the relationship between the thermal
properties of materials and thermal injury to human tissues. From
this study and with funds from the CPSC, NBS designed an instru-
ment that yields a single temperature measurement which is directly
related to burn hazard and automatically accounts for differences in
surface material and the time of contact. With this "thermesthesio-
meter, 11 a product designer can test a hot surface and determine in
a few seconds whether the surface will be harmless to touch, painful,
or will inflict an injury.
Upholstered Furniture. NBS is also assisting the CPSC in reducing
the hazard from fires in upholstered furniture. After alerting the
public and industry through a "Notice of Possible Need for a Flamma-
bility Standard, " NBS developed a small scale upholstered chair with
the characteristics of upholstered furniture found in the home. Using
the mock-up, a series of cigarette ignition tests measures the flam-
mability of upholstered furniture. Objective of the work is to provide
the basis for a new performance standard to minimize this fire
hazard.
Mattresses. Like upholstered furniture, mattresses are a substantial
flammability hazard when ignited. An NBS-developed test method is
included in the new federal performance standard for mattresses,
which took effect June 22, 1973. The standard is expected to reduce
substantially accidental mattress fires started by cigarettes.
Children's Sleepwear. To protect young children from the dangers
of flammable sleepwear, NBS developed the "Standard for the Flam-
mability of Children's Sleepwear. 11 This standard (which became
fully effective July 29, 1973) requires that sleepwear in sizes 0 through
6X pass a strict flammability test. Work on a proposed standard for
children's sleepwear in sizes 7 through 14 followed.
- 4 -
Voluntary Engineering Standards at NBS. Work on three voluntary
standards is under way: "Safety Requirements for Home Play-
ground Equipment," sponsored by the National Association of
Children's Home Playground Equipment; "Safety Requirements
for Toys," sponsored by the Toy Manufacturers of America, Inc.,
and "Carbonated Soft Drink Bottles, 11 sponsored by the Glass
Container Manufacturers Institute, Inc., and the National Soft
Drink Association. NBS works with manufacturers, distributors,
and consumers to develop acceptable drafts of the standards.
NBS has published a revised and enlarged edition of its "Tabulation
of Voluntary Standards and Certification Programs for Consumer
Products." The new edition covers 700 product areas in 17 broad
categories taken from the National Electronic Injury Surveillance
System of the Food and Drug Administration. It lists the voluntary
national and international performance and safety standards which
have been published in each product area and describes how to
obtain them.
The new edition also includes, for the first time, information on
standards that are still under development. The tabulation was
designed for use by anyone interested in consumer problems, parti-
cularly standards-writing groups, consumer organizations, labor unions
and trade associations. The broad product categories covered by the
tabulation are: kitchen appliances, space heating, cooling and venti-
lating appliances, housewares, home communications, entertainment and
hobbies, home workshop tools and attachments, household maintenance
products, farm supplies and equipment, packaging and containers,
sports and recreational equipment, toys, yard and garden equipment,
child nursery equipment, personal use items, home structures and
construction material.
3. What additional efforts could you take to better represent the consumer
in your departmēnt's decisions and activities?
Consistent with our responsibility to provide assistance to the business
community, we are vitally interested in maintaining an active profile in
consumer affairs as it relates to encouraging voluntary business action
which would impact on both the business community and the consumer.
Toward this end, the following program efforts are in our planning
process.
Business-Consumer Seminar Program. The program will be packaged
for and eventually conducted by District Office personnel. The seminar
is intended to bring together Government (Federal, State, and local) and
private consumer affairs officials and spokesmen in a forum to discuss
relevant problem issues with a view toward advancing voluntary business
action solutions. It is planned to initiate a pilot program with Washington
office assistance in a selected District Office. A format for this pilot
effort is attached. After the pilot is completed, a package of seminar
materials can be assembled and distributed to all District Offices for in-
clusion in their own seminar program responsibilities. Speech material,
discussion topics, speaker and panel suggestions, etc., will be part of
the package. Washington assistance will be available to District Offices
as necessary. See attachment for additional information.
Pilot Task Force on Food Retailing and the Consumer in the Inner City.
Supermarkets are disappearing from the inner city at an alarming rate.
Inner city residents, those who can least afford to pay, must deal with
small retailers whose prices are high. There is an immediate need
for a program to explore ways to reverse the exodus with those parties
who are in the position to effect change.
A pilot program could be initiated to attack the problem of the return
of supermarkets to the inner city. The Department would organize an
action group composed of representatives from the supermarket indus-
try, consumer groups and appropriate Federal and local agencies. The
group would develop possible government incentives and/or other public
or private actions to make commercial operations profitable in the inner
city.
Consumer Arbitration. The Department can play a major role in
furthering its goal of encouraging positive business-consumer action
by initiating a program to establish consumer arbitration panels
nationwide. The Department, by utilizing its field office network and
numerous private organizations, would take the lead in establishing
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the groundwork for arbitration mechanisms. Such arbitrations
would be privately structured. This would interface with the new
Warranty-FTC Improvement Act (P. L. 93-637), one of the most
important consumer laws ever enacted. This act has a provision
which says that the FTC may require written consumer product
warranties to include arbitration availability information.
Consumer Credit Program. Help to consumer credit recipients can
be given by identifying and analyzing problem areas of the consumer
credit industry with a view toward isolating principal factors in-
fluencing the availability and cost of consumer credit in the United
States. A survey of major credit holders such as commercial banks,
consumer finance companies, retailers and credit unions will be
crucial in evaluating the availability and cost of consumer credit
and in determining the competitive position of credit sources.
Appropriate sections of the study will be transmitted to consumers
to increase awareness of the cost of credit. Policy recommendations
and/or legislative initiatives will be directed to appropriate regula-
tory agencies and Congressional committees in an effort to resolve
the consumer credit issues identified.
National Business Council for Consumer Affairs. The National
Business Council for Consumer Affairs was established in August
1971 by Executive Order 11614 and was organized by the Secretary of
Commerce to research key consumer issues and provide reports and
recommendations on how to increase the level of business responsi-
bility to consumers in the marketplace. (Descriptive folder, "Mission
and Membership," is attached.)
The Council's reports (copies attached) were submitted to the Secre-
tary and disseminated with his enthusiastic endorsement to thousands
of business executives and others involved in consumer relations
problems. Ultimately, more than 250, 000 of the reports were dis-
tributed by the Department. These reports were universally praised
for their straightforward, practical approach to solving consumer
problems.
Follow-up action on the voluntary implementation could be taken by
reestablishment of the Executive Committee of the National Business
Council for Consumer Affairs, reporting to the Secretary of Commerce
and actively pursuing adoption of its guidelines by business firms.
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Implementation of NBCCA recommendations would include business
liaison, tie-in with trade associations, and the issuance by the NBCCA
of an identifying seal of cooperation (similar to the E award) to firms
participating in guideline implementation.
Other Initiatives. A considerable part of the activities of the Patent
Office, the Office of Environmental Affairs, the Office of Telecommun-
ications, the Office of Product Standards, and the National Technical
Information Service, as well as the National Bureau of Standards,
are directed toward serving the public through making more products
available to the public, making them safer or making more information
about these products available to the consumer. While there might be
some marginal utility in expanding efforts in this direction, it would
appear to be more profitable to consider new programs such as in-
creased information transfer, metrification, and studies of the effect
of regulatory programs in the area of pollution on the cost of energy
(thus, ultimately, on the price of consumer products).
FACT SHEET
Bysiness-Consumer Seminar Program
Purpose
To provide a forum for Covernment, business and
private loaders to discuss positive voluntary
solutions to consumerism problems and challenges.
Participants
Panel members will be drawn from Federal, State,
and local consumer protection agencies and private
organizations.
The District Office will chair the seminar and will
deliver a presentation.
Audience
The audience will be primarily composed of
marketing and financial managers from consumer
goods and services firms, and other appropriato
individuals.
To be effective, at least 25 individuals should
be present.
Timeframe
Sominar in designed to be half day in duration.
Can be shorter or longer depending upon topics,
audience and participant schedule demands.
Subject Matter
Current consumer issues and problems will be
discussed with emphasis on product safety and
voluntary solution actions.
Specific topics, designed for targeted audiences
CEN be casily adopted within general seminar franc-
work. The nature of local interests and available
participants will guide specific subject matter
topics.
GERALD FORD LIBRARY
Pilot Seniner
A pilot seminer will be held in carly 1975 in
Cincinnati, Ohio (tentative).
After the pilot, evaluation and changes will be
made for subsequent seminars in District Office
areas.
Arrangements
Mtor the pilot, District Offices will initiate
their own seminars following general format and
guidelines provided by DDC.
BDC Role
BDC will initiate the pilot sominar, with District
Office assistance, and will ancist in meminar
arrangements.
Following the pilot, BDC will develop the following:
(1) make available speeches for District Office
personnel, (2) provide a general scuinar format,
(3) develop Fact Sheets covering key insues,
relevant organizations and their activities/respon-
sibilities, develop and make available other
distributive material as necessary, (4) assist in
identifying key organizations for panel partici-
pation and audiences, (5) update Consumer Affairs
Handbook on a regular basis.
The above material will be "packaged" and made
available to all District Offices.
BUSIURSS-CONSUMER SEMINAR FORMAT
I. Welcome = District Office Director
Introduction
Purpose and Scope of Seminar
Expected Output of Seminar
II. The Consumer Movement Today - DDC
Where We are and Why
Key Issues
Need for Positive Action
III. Business Responsibility Under the Law
A Foderal View - Federal Trade Commission
Federal Law and Regulation Review
Current Activities and Responsibilities
Role of Voluntary Solutions
A Local View - County/State Consumer Protection Agency
State/local Laws and Regulations
Local Issues and Role of Local Protection Agency
Community Action and Voluntary Solution
IV. Business Relations and Responsibilities to Consumers
Business Consumer Relations - Office of Consumer Affairs/MM
Current Problems of Consumers
Voluntary Action Solutions
Business Consumer Relations - Local View - Local Consumer
Action Group
Community Issues
Voluntary Action Solutions
V. Product Safety - A Now Federal Force - Consumer
Product Safety Commission
Functions/Activitics of CPSC
Current Issues in Product Safety
Working with CPSC
=:-
VI. Voluntary Action - Business Solutions to Consumer
Problems - EDC
o Suggested Action
VII. Questions and Answers - District Office Moderator
VIII. Conclusion - BDC and District Office
4. What regulatory reforms would you suggest to assist the consumer?
Itis difficult to review quickly all of the regulations and regulatory authori-
ties which impact on consumers. Literally all decisions made by the Federal
government have a consumer impact through changes in economic condi-
tions resulting from these decisions. The understanding of these processes
and their total impact on the "public interest, " however, can be facilitated
through a number of actions, as noted below.
The type of regulatory reform most needed immediately is the moderation
of mandatory requirements in the area of pollution abatement, particularly
where the standards have been established without adequate data or attention
to the economic effect of the standard. Present pollution abatement programs
under several statutes, including the Clean Air Act, the Federal Water
Pollution Control Act as amended, and the Federal Insecticide, Fungicide
and Rodenticide Act, require massive expenditures by industry for testing,
monitoring and construction which do not return fair value in terms of cost/
benefit of pollution abatement and the cost of which is passed on to the
consumer in terms of an energy penalty and inflationary price increases.
Greater emphasis on voluntary participation by industry in pollution regu-
latory programs could probably be expected to accomplish substantially
the same objectives (under threat of perhaps even more onerous mandatory
requirements) at less cost to the manufacturer and to the consumer.
In the same vein, "unnecessary" regulatory activities should be eliminated,
and "necessary" regulatory activities should be structured in such a manner
that they may serve the "public interest" rather than solely the needs of
special interest groups.
The primary requisite toward achieving this general goal is the acquisition
and analyses of data on the effect and impact of specific regulatory policies
and practices. The first step therefore should be a comprehensive effort
on the part of both the Congress and the Executive Branch to obtain the
objective facts and to analyze them in terms of the effect on the public
welfare as a whole. (It must be noted that we believe evaluation should be
done around the impact on the "public welfare" rather than special interests
and consider that evaluation based solely on the impact on the "consumer, "
at least as defined by many consumerists, would simply shift the emphasis
from one "special interest" group (the regulated) to another (the user). )
Following acquisition of the necessary data, two steps should be undertaken.
First, eliminate "unnecessary" regulation. Second, "necessary" regulatory
activities must be restructured SO that the impact of all decisions on the
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public welfare can be considered prior to regulatory action. To accomplish
this end, agency practices will need to be restructured SO that there is an
affirmative burden on them to acquire information on the overall impact of
their actions. Implicit in this restructuring must be the recognition that
most individuals affected by regulatory decisions do not have the financial
ability, awareness, or means to come forward to the regulators with
their own views. Toward this end the agencies must actively seek out
this impact through a number of devices, such as: educational campaigns
to inform the general public of issues affecting them and their means of
participating in decision making, and undertaking of public opinion studies.
The above process of regulatory reform could be immediately implemented
by consideration of the following:
An executive order requiring each activity and decision made by a
regulatory agency to take into active consideration the "public
interest" (also, containing the interests of business as a consumer)
and to detail the analysis which was used in reaching a decision, i.e.,
economic analyses, cost/benefit statements, etc.
The granting of authority to a designated agency within the Executive
Branch to be informed of decisions being made, and to have responsi-
bility for making a direct input into the regulatory process through
the "advisor" route, thereby carrying out the "public interest. "
The establishment of a committee in the Domestic Council for the
purpose of undertaking an analysis of "unnecessary" and "necessary"
regulatory processes with the responsibility of advising the President
of actions he can, and should, take in this area.
The establishment of a National Commission on Consumer Protection
Reform. Such a commission would study current regulatory agencies
with a view toward recommending initiatives to restructure those
agencies whose actions directly affect consumers. Emphasis will be
on the FTC, CPSC, USDA and other Federal agencies whose decisions
impact the consumer. The proliferation of Federal consumer protec-
tion activities and lack of responsive accountability justifies the
establishment of a commission to analyze and recommend initiatives
to improve Federal consumer protection decision making.