National Petroleum Refiners Association v. Federal Trade Commission

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Plaintiff

National Petroleum Refiners Association

Defendant

Federal Trade Commission

Facts

Defendant created a rule that said that gas stations that did not post octane rating numbers on gasoline pumps at service stations was an unfair practice.

Issue

Can the plaintiff, under its organic statute (Trade Commission Act), create substantive rules of business conduct?

Procedural History

The plaintiff first brought this case to district court. The district court ruled that Commission lack authority to create substantive rules under its organic statute. The defendant is appealing to the United States Court of Appeals, District of Columbia Circuit.

Discussion

Section 5(b) of the TCA allows the "issuance of a complaint, a hearing, findings as to the facts, and issuance of a cease and desist order." The court however, states that although these are adjudicatory language, it is exclusive. Furthermore, section 6(g) of the statute talks about rulemaking. The court rejects that argument that the section 6(g) rulemaking power is procedural, because in the past courts have read rulemaking power to extend to substantive rules. Reading the holding in Storer, the court concludes that rulemaking power can be used at the very least for "shortening, and simplifying the adjudicative process and of clarifying the law in advance."

The court also concedes that substantive rulemaking can intrude on asserted rights. Furthermore, the authority to make these substantive rules does not have to be in explicit language, despite the contention that the FTC is a prosecuting agency. Rulemaking can be implied from other provisions.

In this opinion, the court also talks a lot of the benefits of granting broad rulemaking power and of the legislative history of the TCA.