AAF Government Report

March 19, 2010

Clark Rector Jr., Executive Vice President – Government Affairs
Alaina Flaherty, Federation Intern

Senate Committee Examines FTC Rulemaking Procedures

On March 17, the Senate Committee on Commerce conducted a second hearing to consider changes to the Federal Trade Commission's rulemaking authority.

Currently the agency may conduct rulemakings under what are commonly known as the "Magnuson-Moss" procedures. These include prior notice to Congress, opportunities for hearings and cross-examination of witnesses, and a requirement that an act be prevalent before undertaking rulemaking. AAF supports these important safeguards and has joined in letters to Congress urging that they be maintained.

FTC Chairman Jon Leibowitz was the only witness at the initial hearing in early February and he testified in favor of doing away with the Magnuson-Moss procedures. The second hearing was more balanced. FTC Commissioner William Kovacic submitted testimony in support of retaining the procedures. Former FTC Chairman Timothy Muris was a witness at the hearing and made a compelling case that increased authority was not needed, and could in fact harm the agency by making it in effect a legislative body and by taking needed resources away from enforcement actions.

The changes have already passed in the House of Representatives as a part of the legislation to create a new Consumer Financial Protection Agency. Next steps in the Senate are unclear due to the uncertainty of the CFPA legislation in the Senate Banking Committee.
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First Lady Addresses Childhood Obesity

First Lady Michelle Obama recently spoke to a meeting of the Grocery Manufacturers Association and its member companies. She urged them to join the voluntary labeling campaign which the FDA will be launching this fall. The labeling campaign is calling for "clear, consistent, front-of-the-package labels" for food products, especially those which are healthier options. She also asked them to join her cause of fighting childhood obesity by lobbying for the reauthorization of child nutrition programs this year.

The First Lady encouraged the food companies to reformulate their products to have less sugars, salt and fats. She also asked that they rethink and limit their marketing to children. Most food companies have already begun to do so and participate in the National Advertising Division's Children's Food and Beverage Advertising Initiative.
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New Proposed Child Nutrition Program

Senate Agriculture Chairwoman Blanch Lincoln, D-Ark., proposed the Healthy, Hunger-Free Kids Act of 2010, providing $4.5 billion in funding for child nutrition programs over the next ten years. This bill would act as a vehicle for reauthorizing the child nutrition programs for another five years. Sen. Lincoln's bill provides the largest amount of funding for child nutrition programs thus far, while creating offsets for the funding.

Senate Agriculture ranking member Saxby Chambliss, R-Ga., supports the bill, but has "concerns with some of the offsets," most of which come from removing funding from other food programs, such as the food stamp education program.
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FCC National Broadband Plan

The Federal Communications Commission released their long awaited 360-page blueprint for bringing broadband to 90 percent of the country by 2010. It is made up of roughly 200 policy proposals for advancing the nation's network, most of which will require additional action from either the FCC or Congress.

The plan received a generally positive reaction from businesses and consumer groups, believing that it could encourage more competition in the broadband market. However, nearly all cautioned that many of the specific proposals may be controversial. For example, the National Association of Broadcasters is concerned that some of the proposals may force broadcasters to sell or give away portions of their spectrum space against their will.

The FCC did not reveal any cost estimates, although it believes most of the initiatives will be self-supporting and other costs will be covered by spectrum auctions. The plan will rely heavily on industry investment and cooperation. Both the House and the Senate Commerce Committees have scheduled hearings to discuss the proposal.
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FDA Issues Tobacco Advertising Rules

The U.S. Food and Drug Administration announced rules to restrict advertising and marketing for cigarettes and smokeless tobacco products.  The rules, which take effect June 22, will:

  • Ban tobacco companies from sponsoring sporting and entertainment events,

  • Prohibit free samples and giveaways of non-tobacco items,

  • Require vending machine sales be in adult-only facilities,

  • Provide for federal enforcement of violators.

The agency is still considering whether to issue rules for outdoor advertising.

A rule limiting all advertising not in adult magazines to black text with no colors or graphics was previously struck down in Federal Court.  The Court stated that outdoor advertising restrictions would likely be unconstitutional but did not rule since the FDA had not yet issued regulations. AAF joined in an amicus brief to the Court challenging the advertising restrictions based upon First Amendment guarantees of free speech.

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Vermont Legislature Questions Hospital Advertising

The Vermont legislature will consider a ban on hospital advertising to help control state health care costs. This ban is part of a larger piece of legislation introduced by Middlebury Representative Steve Maier. Rep. Maier estimates that Vermont hospitals spend $10 million on advertising and marketing costs each year. He believes the idea of hospitals advertising emphasizes the problems with the current healthcare payout system.

Rep. Maier stated, "The whole reason you would advertise to bring patients your way is based on the way you pay our hospitals and our doctors and we pay them based on volume or numbers of procedures." He stresses that the ban would not prevent hospitals from advertising open positions. Critics feel advertising is necessary to keep patients in each community and that the ban would put hospitals on state lines at a disadvantage.

AAF believes that banning the advertising would be a clear violation of the First Amendment protections for commercial speech.
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