Howard Beales and Tim Muris on Antitrust and Consumer Protection Policies at the FCC

Tom Lenard:

Hello, and welcome back to the Technology Policy Institute’s podcast, Two Think Minimum. It’s Friday, June 17th, 2022. I’m Tom Lenard, president emeritus, and senior fellow at TPI. And I’m joined by my colleagues: Scott Wallsten – TPI’s president and senior fellow – and TPI senior fellow Sarah Oh Lam. Current debates over antitrust and consumer protection policies, plus the appointment of Lina Khan who’s promised to be a very activist chair, have combined to make the Federal Trade Commission one of the most controversial agencies in Washington these days. There are few, if any people as qualified to discuss FTC issues as Tim Muris and Howard Beales, and we’re delighted to have them as our guests today.

Tim was chairman of the FTC from 2001 to 2004. He was director of the Bureau of Consumer Protection from 1981 to 1983 and of the Bureau of Competition from 1983 to 1985 and an assistant to the director of the Office of Policy Planning and Evaluation from 1974 to 1976. [He] currently is George Mason University Foundation Professor of Law at the Antonin Scalia Law School, senior counsel at Sidley Austin and a visiting senior fellow at AEI [American Enterprise Institute].

Howard was director of the Bureau of Consumer Protection at the FTC from 2001 to 2004. He was associate director for policy and evaluation from 1983 to 1987. He was an assistant to the director from 1981 to 1983 and a staff economist from 1977 to 1981. He currently is emeritus professor of Strategic Management and Public Policy at the George Washington University School of Business and a visiting senior fellow at AEI. So, welcome. We’re delighted to have both of you here.

You have coauthored a recent paper that’s been put out by AEI titled “Back to the Future: How not to Write a Regulation”, which is motivated by some of the early developments that the agency under Chair Kahn and in particular, her stated preference for regulation over the case-by-case enforcement approach the commission has traditionally taken. You start by making some provocative statements, so I’ll start that way too. You start by saying that activists at the FTC want to remake the American economy to match their progressive vision and to achieve that goal by becoming the second most powerful legislature in Washington. So, let me ask you two questions about that. How would you describe the progressive vision at the FTC? And secondly, how could the FTC become the second most powerful legislature in Washington? I’ll let you guys decide who wants to start out.

Tim Muris:

Well, let me take the first part and let Howard take the second part and to say I’m smart enough not to go anywhere to talk about the FTC in general and consumer protection in particular, without Howard. So, as I often say, when I – especially when I’m – talking about consumer protection, Howard’s lips are moving somewhere. When you’re talking about the people who have taken over the agency, calling themselves neo-Brandeisians in homage to the late Louis Brandeis, very famous. He ended up as a justice on the US Supreme Court – and Brandeis was opposed to bigness. The neo’s do not follow Brandeis in all of his traits. He was, for example, opposed to all bigness, including big government. The neo-Brandeisians are definitely not opposed to big government. They want to use government and Howard will get into that. But let me give you some examples.

They begin by rejecting as failed the last 40 years of work at the FTC and at the Department of Justice. They had President Biden make that pronouncement about 11 months ago in a ceremony for a competition executive order. That includes 16 years of Clinton and Obama. They’re not shy about claiming this was all, this has been all wrong, especially the use of economics. They favor transportation regulation. I came into all of this in the mid-seventies as Howard did, and I met Justice Steven Breyer (who’s leaving the Court) when he was on leave from Harvard convincing Ted Kennedy and other Democrats to support transportation deregulation.

They echo President Roosevelt who channeled Brandeis in 1936. When FDR attacked the “economic royalists.” four and a half years later, FDR was singing their praises as the arsenal of democracy. The world had changed and, you know, Hitler was in danger of taking it over. And of course, if Brandeis had had his way and there was no arsenal of democracy, this podcast would probably be in German. So, I could go on and on.

One of the worst things is they favor reinstating the Robinson-Patman Act. The newest commissioner yesterday wrote that the Robinson-Patman act, which I’ll discuss substantively in a second, was the Magna Carta of small business. The Robinson Patman act was passed in 1936. Its draftsman – they didn’t write the law this way, but they intended to hamper chain stores, especially the Great Atlantic & Pacific Tea Company (which is one of the subjects of the last podcast that I did with you, Tom) and no one in the antitrust world, or virtually no one in these ‘failed’ 40 years supported the Robinson-Patman Act.

So, “big is bad” is returning with a vengeance. They want regulation of all sorts, but let me turn to Howard to describe how they intend to do that.

Howard Beales:

Well, they made fairly clear that what they intend to do as much as possible is to change policies by writing rules – competition rules that are based on section 6G – and try to identify unfair methods of competition, consumer protection rules based on unfair deceptive practices. And many of those rules have competition rationales. We’ve been down this road before, and we talk about it at some length in the paper. In the 1970s, Congress gave the FTC explicit rulemaking authority to define unfair and deceptive practices. There was a Supreme court opinion that seemed to bless expansive use of the notion of an unfair practice. And the commission took advantage of it. When the law passed in the first year, the Commission launched 16 rules that were mostly transformative of industries that affect pretty much every aspect of everyday life from antacids, to used cars, to vocational schools. All of those would’ve been subject to extensive federal regulation. That’s where the Commission really was trying to be the second most powerful legislature in Washington. To implement their agenda through rules, that’s what they have to do again – is to go down that same road. Unfortunately, the 1970s experience was nearly disastrous for the agency. Congress imposed new restrictions on its rulemaking authority, and in a first-ever, Congress refused to fund the agency for a brief period of time over a policy dispute, not for the usual sorts of budget reasons that we’re so familiar with today. The risk to the agency is very real of going down this road, but they haven’t yet been specific about exactly what these rules might look like or exactly what they might try to do.

Tom Lenard:

So do you think that they feel, for example, that, you know, there’s obviously there’s a bunch of pending antitrust – there’s a lot of antitrust legislation that’s been introduced and is being considered now. There’s obviously privacy legislation that’s been considered for the last 20 years, and there’s a bill pending now, or at least a proposal. Do you think that they feel that it is within their domain to be a – if Congress fails to act – to enact those proposals through rules? I mean, for example, if Congress fails, just abstracting from the merits of the case, if Congress doesn’t pass, its anti-self-preferencing legislation that’s on the table now, do you think they could adopt that by rule?

Howard Beales:

Well, let me let Tim address that. But on the privacy stuff, they’ve been quite explicit that they want to write a privacy rule based on defining unfair and deceptive acts or practice that potentially puts them in conflict with whatever Congress does. Presumably they would take that into account, and they haven’t come forward with any specific privacy proposals as yet, but that’s an area where they clearly seem to feel they have the authority to act. And I agree they have the authority to write rules that define specific, unfair, and deceptive practices. I’m just pretty skeptical that you can write a useful privacy rule that does that.

Tom Lenard:

Tim, do you – what do you think they could do in the antitrust area by rule?

Tim Muris:

Well, Lina Khan was involved in the House report that led in many ways to the antitrust – the legislation, the self-preferencing legislation that you mentioned. In the 1970s, as we point out, in using the statute, the FTC’s statute that allows rulemaking, it allows rulemaking for what sound like consumer protection rules. And now they claim they want to do competition rules. There is no necessarily bright line between the two; the procedures would be different and that’s something to keep in mind. But in answer to your specific question, I think there’s little doubt that if Congress does not pass the self-preferencing law, there’s little doubt in my mind that they will think long and hard at the FTC about, you know, doing their own version.

Tom Lenard:

I mean, and do you think – obviously it’s hard to predict – but do you think, you know, if that happened, that would stand up in the courts, or would the court say no?

Tim Muris:

Well, I think they have, I think they have two problems. One, I don’t think they have the authority to do “unfair method of competition” rules, the way we think of rules. And second, the reason – one of the reasons they want to do these rules is because they think, you know, rules would help them run the economy, but they also don’t like something in the failed 40 years that they don’t like is the law is governed by economics. And it’s very hard to write the kind of rules for the economy based on sound economic principles. And that’s one of the reasons that they want to rewrite the competition policies. And it’s going to be very hard for them to do that case-by-case in court. I think it’s going to be hard for them to do that using rules. I think courts will strike that down, but they have this procedural problem: do they have the authority to do those kind of rules? And, they have a substantive problem: can they circumvent the antitrust laws? So I think it’s an uphill fight for them, but they clearly want to take it on.

Howard Beales:

Tom, I think it’s worth noting – the only thing the Commission has ever claimed for 6G rulemaking is a very different kind of rule than the civil penalty rules that the Commission enforces on the consumer protection side. [With] consumer protection rules, there’s civil penalties for violation. When the Commission was using its- was claiming authority under 6G those rules would just answer a legal question in a subsequent proceeding where the only sanction was a cease and desist order. And the Commission’s rules said: anybody we allege is in violation will have an opportunity to make the case that the rule doesn’t apply to them. When the DC Circuit upheld that rulemaking authority in the octane case [1995 ruling regarding Gilbarco, Inc], it specifically cited that provision that makes the rule almost more of a guide and not really the kind of rule that we think about as completely binding with no room for exceptions or litigation, everything would still have to go through individual cases.

Tim Muris:

And that’s a third problem that they face, but they don’t read those, you know, that case – and their powers to be so limited. But the assertions of authority that the Commission made 50 years ago were limited in that way. So that’s another reason that, you know, they have an uphill fight, but look, it’s very odd as Howard and I were in the Bureau of Consumer Protection 40 years ago, and we turned the FTC from– we were the same age as Lina Khan is now. And we turned the FTC– Jim Miller was the chair and he had more experience than we did. Fortunately, we turned the FTC from doing cases from doing rules to cases and they want to make the opposite change.

Even though Howard and I had a vision for the agency and another guy was this young guy named Fred McChesney, who unfortunately is no longer with us, but we wanted to do cases. We especially wanted to do fraud cases. We couldn’t have done a fraud case if we put a gun to our heads. So we went out and hired people. We hired– happened to be women, who were partners in law firms who had litigation experience. We found people within the agency with litigation experience.

One of the oddities about what’s going on now is they could walk into the people running the FTC who want to do rules, they could walk into any major DC law firm, find good Democrats at the right age (you know, 40-ish who would like to work in the Biden administration) who know how to do rules and they won’t hire these kind of people because they think if you work in big law firms, you work for these big corporations, then there’s something tainted about you.

Tom Lenard:

You’ve kind of talked around, but talk about the pros and cons in terms of the development of sound policy in the long run of a rules approach, a case-by-case approach.

Howard Beales:

Well, rules – I mean the case-by-case approach is much more flexible. It lets you take into account all of the particular circumstances that lead to a particular practice in figuring out whether it’s good for consumers or bad for consumers. Rulemaking is an exercise in generalization. You’ve got to figure out how you’re going to draw a line that presumably needs to be a pretty bright line between what’s acceptable and what’s not. And that requires a lot of information about the structure of the industry, and why practices occur in a particular industry, and what effects they have on consumers in different circumstances. I mean, unlike an agency that regulates specific industry, the FTC doesn’t have that kind of experience or that kind of knowledge of any industry. Its expertise is really applying general principles – don’t engage in unfair or deceptive practices – to a wide range of particular circumstances. There is some uncertainty in that case-by-case approach as to how it’s going to play out in any particular instance, but that uncertainty also lets you take into account what is important in the situation that you’re actually looking at.

Scott Wallsten:

Let me ask a question about a couple of the things that you’ve said in the Wall Street Journal article, and of course also in your paper. You talk about the problems that the agency had in the 1970s. And then it created rules that couldn’t be upheld, and it was just a disaster, and they were ultimately defunded for a while and then turned into kind of the agency that we now know. And then, but you also say that Lina Khan will have an uphill struggle to make the changes that she wants to make now, and that they won’t hire the kind of people who would know how to, kind of, do the sorts of cases that they want. So is the net effect that Lina Khan will just waste her time – and that the FTC has become a stronger institution that will survive this – and she’s basically missing an opportunity to use the agency in the way it is to achieve the goals that she otherwise would in principle want to achieve?

Tim Muris:

Well, she’s in charge and you can still do a lot of damage. I do think she’s missed some opportunities. One of the big opportunities is the career staff. People who work in the government tend to be, you know, want to use the government, but they’ve turned on the career staff. The OPM (the Office of Personnel Management) does surveys every year. And the FTC has gone from being a happy agency to being an unhappy agency. And there’s been a real brain drain and the Bureau of Consumer Protection that Howard headed 20 years ago and I headed 40 years ago – there were a lot of very experienced people who have left and that’s a problem.

But they have hired some quite capable people recently, the new general counsel and the new head of policy planning. And I believe they will get over this problem. To some extent, that they have lost your first six to 12 months — are worth much more than the time that follows. And that time has now passed. You know, the new team has been there a year, but they have already changed a lot of policies and they are starting to bring cases. They have a majority now. So they are in a position to do things. There’s a new head of the antitrust division. They’re about to change the merger guidelines. You know, there are going to be some real conflicts here, especially on issues like mergers, where they can’t control the merger agenda completely because the business community decides when to merge.

Tom Lenard:

One of the things you, you talk about in the paper, presumably what’s been motivating what Lina Khan has been doing, or one of these, is that she wants to do it more quickly. I mean, a case-by-case approach of change of developing policy is by its nature kind of slow-moving. And maybe that’s- some people would consider that an attribute and some would consider it a negative. But presumably what she wants to do is she wants to do things faster. You make the point in the paper that the procedural changes that she has made are going to be counterproductive in that regard and actually will not achieve the objective of doing things faster. Can you explain, first of all, explain what the procedural changes were and how she kind of got them through, and why they may not achieve her objectives?

Tim Muris:

Well, let me talk in general and then let Howard get into the specifics. What they simply did was sit down and read the legislation. And in some cases incorrectly – but say, how can we make the procedure, the rulemaking go faster. It was as if “our rules, of course, will be perfect”. So we’re not worried about the quality of the rules. We’re just worried about getting them out the door faster. Howard and I are not opposed to rules. We did, of course, you know, our 15 minutes of fame in life was the National Do Not Call Registry, which was done through a rule. We think there many cases of targeted rules. Sometimes there are rules to explain how to, you know, amplify legal procedure. But when we did Do Not Call, we actually changed the rule significantly from the rule we proposed. So the rulemaking procedures are very important and Howard can explain just how odd what happened was.

Howard Beales:

Well, the first thing that was odd about it was the way it was done. This was a public meeting, but there was no public input, no one outside the Commission saw these proposed changes or had any opportunity to comment on them, which is different than the way they’ve done, even rules implementing their rulemaking process in the past. They have put many of those proposals out for public comment and made changes based on public comment. Not so here. There’s also very little involvement by the professional staff. This was done out of a commissioner’s office with very little involvement from the Republicans or very little consultation with the agency staff that’s actually been through rulemaking procedures to figure out what worked and what happened. And the result was a three to two party line vote that is highly unusual in terms of the way the FTC has proceeded. Among the changes they made were – I think the net effect of the changes they made is – more political control of the rulemaking process and less public input. And that happens in a number of ways. One is with less explanation: the rules that have been in place since 1975 required that the Commission explain its reasons for a proposed rule with particularity. They got rid of that. They’re going to explain their reasons, but they dropped the notion of particularity. Unfortunately, that’s the wrong way to go. Every attempt that’s looked at 1970s rulemaking concluded that a big part of the problem was the Commission was not clear enough about its rationales for the rule or its legal or substantive theories for the rule. And that led to a very disjointed process that took forever and had no focus. Less explanation is going to make things worse. A second set of changes is the role of the presiding officer. If you’re going to have a hearing, you have to have somebody to preside. And that’s the presiding officer. The consensus at the Commission in 1980 in the Carter Administration Commission was that the Commission should rely more on presiding officers as a check on the rulemaking staff, because staff members who have been involved in rulemaking – for years in some cases – get committed to what the original proposal was, even if the evidence isn’t as strong as they might have hoped that it would be. Presiding officers could be a check on that. Congress, in the 1980 Improvements Act, tried to codify that by requiring that the presiding officer be independent – reporting in no other official of the Commission, except a chief presiding officer. The rules changes make the chair the chief presiding officer. So, this “independent” somebody is going to report to the chair and only the chair in overseeing the rulemaking. And that’s part of the recipe for more political control. The law also requires that the presiding officer make a report and a recommended decision about the rule that takes into account all relevant and material evidence. The rules changes, to try to speed things up a little, limit that role and say the presiding officer should only address the specific questions that the Commission itself will ask, leave out anything else. If the Commission didn’t ask you this question, you cannot address it, presiding officer – even if it’s central to what a sensible recommendation might be. The third change worth note – and again, this goes to public input – is FTC rulemakings have always concluded with a staff report that summarizes the rulemaking record and what evidence is in it. And those have been very useful documents. Even if you didn’t agree with the rule, you could tell from the staff report what was there and what was missing. Outside parties have relied on them. Reviewing courts have relied on staff reports. This Commission abolished the staff report. There will still be a staff report, but only the commissioners will see it. People outside the agency will not see the staff’s final recommendation until the Commission makes a final decision as to what the rule is going to look like. And there will be no opportunity for public comment on that report. And there will be no opportunity for a comment from the presiding officer on that report, which is the way the process has been set up. So less public input, more political control. And you know, there’s a couple of other changes that we could talk about, but I think those are the main ones.

Tim Muris:

For listeners who know about rulemaking, the FTC – just to remind, the FTC has special procedures – these are not the way rules normally work. And Congress put these in, in the mid 1970s because they were concerned that if the FTC was going to be able to write these industrywide rules with these very general statutes, that the FTC needed to have robust procedures to really be able to allow the public and then the courts to have a very fulsome rulemaking record. And that’s why these many procedures existed. And rather than learn the lessons of the 1970s, when they rewrote these rules, they’ve gone the opposite way and tried to reduce public participation, as Howard said, and increase political control.

Scott Wallsten:

Aside from their, the specific, you know, stated objectives and what they want for the economy – this sounds almost like a conversation we would be having about Trump appointees. You know, appointees to agencies who had no respect for the history of the institution or how it functioned. Now, is that what we’re seeing here is? Is this just, is this, are they as Trumpian as the Trumpians, but with, you know, different political objectives? Or, you know, does this fit more along the, is it more like the way a new chair tries to do new things?

Tim Muris:

Well, the Trump FTC was run by people that had worked with Howard and me. It was, and it was part of the failed 40 years. The FTC was a very bipartisan place for quite awhile.

Scott Wallsten:

Through the Trump administration actually. Yeah.

Tim Muris:

Yes, yes, that’s correct. And what’s happened here is in many ways a repeat of what happened in the 1970s, but without, but with this dramatic difference, when there were these changes in the 1970s, there had been a widespread rejection that what the FTC was doing before was trivial. There was a Blue Ribbon, American Bar Association commission. The Nixon administration had placed people in that tried to start over. And there was no, even when we came in 1981, there was no (for the most part in the leadership) a career staff where people had been there for 20 or 30 years and were, you know, widely respected. So it was a completely different kind of place that they inherited – the Biden people. And they’ve gone out of their way to be hostile. The chief of staff, for example – there’s a Politico article about this – wears a necklace with the F-word and she and others and the new team – not all of them, but some of them – were openly disdainful of the career staff. And that’s part of the reason for the brain drain.

Sarah Oh:

Have you noticed similar attitudes towards the [CFPB]? So Rohit Chopra moved over from FTC to the Consumer Financial [Protection] Bureau. It seems like there’s, I don’t know, a lack of understanding of administrative boundaries because [CFPB] is also trying to do privacy rules and there’s kind of a, a mixing and matching and just any effort to regulate with any agency.

Tim Muris:

Howard, do you want to – you were just on an expert committee. You might want to talk about that.

Howard Beales:

Yeah. You mean the Consumer Financial Protection Bureau?

Sarah Oh:

CFPB.

Howard Beales:

Yeah. I was on the– during the Trump administration, there was a task force on federal consumer financial law that issued a report. I think it came out about January 17^th of 2021, when it got released somewhere in early January, right before the change of administrations. It’s a thousand page report looking at consumer financial law and what works and what doesn’t; couple hundred pages of recommendations. And let’s just say that clearly does not seem to be the Chopra agenda in terms of what he is trying to do. And again it is a little hard to tell, I think, in some places where they’re really going, because the– no they’ve done, for example, requests for information on things that could be really problematic depending on what they do. Or maybe not, again, depending on what they do. There’s a, a notice of– there’s a request for information on “junk fees”, for example. And you know, if the notion is “credit card companies can’t charge late payment fees”, well, there’s going to be a lot more late payments and a lot more people are going to be denied credit. I mean, that would be really problematic, but they haven’t actually proposed that yet. They’ve sort of talked about the virtues of all-in pricing, which would seem to say no late fees, but that just doesn’t make a whole lot of sense. And hopefully reason will prevail.

Tom Lenard:

Do you all have a, a feeling about the FTC’s priorities in terms of what you think they’re going to try to do first, second, third in terms of rulemaking?

Howard Beales:

Well, on the consumer protection rules, what they’ve certainly talked most about is privacy related rules. And I would think those would be relatively early ones, but I don’t really know. They do have some other rules/rulemakings that have been initiated with advanced notices of proposed rulemaking that are mostly ways to try to codify existing rules. There’s potential for a lot of mischief in that. Well, for example, there’s an advanced notice of proposed rulemaking on misrepresenting yourself as a seller. You can’t misrepresent yourself as the government, and there’s a ton of cases that are based on that principle. You can’t say you’re the government when you’re not, and you can’t say you’re anybody else when you’re not. Writing that into a rule can be really tricky. But some of those kinds of rules they’ve launched, they will have serious unintended side effects, but they’re sensible principles and pretty well-established principles. But the goal there is just to be able to get civil penalties, in light of the Supreme Court’s AMG decision that said they couldn’t get equitable relief in those cases.

Tim Muris:

They do have a rule about earnings claims. Part of which– the idea of earnings claims is, for example, when you advertise the potential compensation that you might get. These are especially people who are paid, maybe on some sort of commission. And that rule will be controversial and it will test how they’re going to use these procedures in practice. It’ll be the, probably the first one out the door. They’ve already, as Howard is stating, they’ve already had some work on that. That rule is interesting because it will apply to some disparate groups. For example, multi-level marketing on the one hand, gig workers on the other. And it will test one of the problems that Howard and I see. Howard and my report discusses [how] the FTC has a lot of experience in multi-level marketing, for example, with pyramid schemes, but less experience with companies out there that have never run afoul of the law. And it’s the same thing with gig workers. There was a tendency, especially in the seventies but it’s happened since, to draft, try to draft rules based on cases that were designed to go after companies that were clearly problematic. And those cases, principles of those cases didn’t necessarily work against companies that were law-abiding. Rules, after all, apply to everybody. So that’s going to be an issue and we’ll see how that plays out.

Howard Beales:

And that’s really what I mean by the potential for serious unintended side effects. The core principle that you shouldn’t misrepresent what people are going to make, or shouldn’t misrepresent who you are… that’s pretty straightforward. But writing that into a rule that everybody has to follow all the time is a difficult proposition in many cases. And we don’t know yet what that’s going to look like, because they haven’t said yet.

Tom Lenard:

So, stepping back for a minute and taking a look at the bigger picture, how do you all explain how this, what you’ve called the neo-Brandeisian approach or this– you know– in the– how this has kind of taken over a large part of the– of people who are involved in this, in these issues so rapidly. I mean, just in the space of… seems to me like a couple of years, you know, there’s just been this, this – I mean, obviously it hasn’t affected everybody, but it’s obviously affected some of the major enforcement agencies, major academic institutions. You know, you listen to, you listen to a conference at the Stigler center and it’s pretty well dominated by that school of thinking. I mean, how do you explain how rapidly that kind of thought revolution has taken place? Is it just a general populist–

Tim Muris:

Look, that’s a really interesting question. And of course public choice literature has never been very– it’s been good at talking about incentives and stuff — but never very good at explaining timing. Differentiating your product has always been a way to get ahead in academics and Lina Khan burst onto the scenes by writing this article about Amazon – a student note – which stood antitrust on its head and it was differentiated and it went viral. Part of the problem was that the people in the – not all of them, but many of the Clinton and Obama antitrust officials who naturally expected that they would be the people who a Biden administration would, would turn to, did not want to offend the neo-Brandeisians. And they had nice things to say about them. Of course, they didn’t realize that they would become failures. And so, you know, you see a literature of people almost agreeing, gee, we weren’t aggressive enough. But I think if those people had known – and many of them have now reacted to being called failures and they’re actually defending themselves – but part of what was going on at these conferences, I think that you’re talking about Tom, was an effort to try to bring everyone in with the idea that of course the people who know something are going to be running things, and that’s not the way it’s turned out.

Tom Lenard:

Right, right. Just as a– this may be opening up too big a subject at the end here, but you talk about the, you know, the different ways rulemaking can be done at the FTC and the fact that you, you know, the Magnuson-Moss procedures and the, and the regular APA procedures and the fact that you, when you did the Do Not Call List rulemaking – you did it under the normal APA notice and comment procedures. Can you explain briefly why you decided to do that? And obviously it turned out successfully, but you had a choice, didn’t you? Or maybe… I think, right?

Howard Beales:

Well, there was pretty clear statutory authority – we thought to do it as an APA rule. The telemarketing sales act and telemarketing consumer protection act specifically told the commission to address Do Not Call. And when it first wrote implementing rules, it had done company-specific do not call lists. There was a required regulatory review of– that Congress required. That was started in 2000, that addressed Do Not Call, and so the stage was sort of set to do Do Not Call under the APA procedures that we were clearly authorized to use, we thought. We talk in some length in the paper – we think that could have been done under Magnuson-Moss procedures. The problem with Magnuson-Moss rulemaking in the past was the lack of clear theories, and the failure to develop systematic evidence about what was going on in an industry, and about the likely effects of proposed remedies. We think we had that in Do Not Call. There was a clear record of consumers [who] weren’t happy with this one bit. There was pretty clear evidence about what was the cause of the overfishing of consumers, if you will, by telemarketers – and a very simple and straightforward solution of letting consumers make their own choice about whether they wanted to get those calls or not. We think we could have done that under Unfair or Deceptive Acts or Practices, and under the more elaborate rulemaking procedures, it would’ve taken a little longer, but not drastically longer, because the foundation for the rule was there. And that was what was missing in the early rules– is the evidentiary and theoretical foundation that lets a rulemaking go from start to finish as opposed to start… meander around… meander around… and eventually come to the conclusion that you don’t know enough to make a decision, which is what happened in most of the rules.

Tim Muris:

And it’s a pretty simple rule too.Which helped.

Tom Lenard:

Right. Right. Okay. Well this has been a very interesting conversation, and we appreciate you taking the time to join us for this. So thank you very much!

Howard Beales:

Thanks for having us.

Tim Muris:

Thank you.