When the Covington Bill reached the floor, there were several additional indications that any grant of substantive rulemaking authority to the proposed commission was not what the House intended. For the House majority view at that time was that an agency the exclusive function of which was to investigate and compile information for the use of the legislative and executive branches of government had no need of any substantive rulemaking authority. Since there were neither proscriptive provisions in the bill nor any provision for the enforcement thereof by the commission, the House reasoned, and understandably so, that no substantive rulemaking authorization was warranted.

Another bill (H.R. 1990), which authorized the commission to prohibit by the promulgation of rules and regulations any acts and practices which were contrary to the Act, was not acted on by the House. 51 CONG. REC. 8856 (1914). The House thus adhered to its intention to create an investigative agency with no substantive rulemaking authority. In a subsequent House debate, Representative Morgan made another attempt to modify the Covington Bill by replacing Section 8 thereof with a provision that:

"The Commission is hereby authorized and empowered to make and establish rules and regulations not in conflict with the Constitution and the laws of the United States in aid of the administration and enforcement of the provisions of this act, and may by such rules and regulations prohibit corporations subject to the provisions of section 9 of this act in conducting their business from engaging in any practice or from using any method or system, or from pursuing any policy or from resorting to any device, scheme, or contrivance that constitutes unfair competition or unjust discrimination as between competitors, individuals, or communities." [51 CONG. REC. 9047 (1914) (emphasis added).] In explaining his proposed amendment, Morgan made a statement making explicit the limited rulemaking powers which would have been granted to the commission by the Covington Bill:

"Mr. Chairman, under section 8, which says that the commission, from time to time, may make rules and regulations and classifications of corporations for the purpose of carrying out the provisions of this act-under that section the commission has very limited power to make rules and regulations, because under the provisions of the act the commission virtually has no power to enforce laws or to regulate the practices of corporations subject to the provisions of the bill." [51 CONG. REC. 9049 (1914) (emphasis added).]

Morgan continued by stating that his proposal would declare unfair competition and unfair discrimination to be unlawful, and would give the commission the power to promulgate rules which would prohibit specific acts or practices as violative of the act. The force and effect which the commission's rules would have had under the Morgan proposal was clarified by his comparison of these rules with rules promulgated by the Secretary of Interior:

"I have had considerable experience in the administration of the public-land laws. The statute gives to the Secretary of the Interior the power to make rules and regulations to govern the disposition of the public lands, and the Supreme Court of the United States has held that the rules and regulations made by the Secretary of the Interior, an executive officer, have the force and effect of law." [51 CONG. REC. 9050 (1914) (emphasis added).]

The Morgan amendment was rejected by the House, thereby reaffirming the intent of that body to establish a commission the only function of which would have been to conduct investigations. Id. Thus, it is again readily apparent that the quasi-judicial and enforcement functions of the commission as it was ultimately established were not intended by the House as a whole in these debates. Still another rulemaking proposal was made by Representative Dillon whereby Section 8 of the Covington Bill would have been retained, but an additional section would have been added providing as follows:

"[T]he commission is hereby empowered to make all necessary rules, regulations, orders, and decrees for the enforcement of the powers herein granted, and the rules, regulations, orders, and decrees of such commission in any such matter shall be binding and conclusive against all persons, firms, and corporations." [51 CONG. REC. 9056 (1914).]

The Dillon amendment was explained by its proponent:

"Give the trade commission powers, not to report the facts, but to decide the facts; not to become an adjunct of the judiciary, but independent of the judiciary, and provide that its determination of the facts shall be conclusive, and leave the courts to declare the law upon the finding of the commission and upon

the undisputed facts. Give the commission the power to enforce its rules, its regulations, and its decrees and the trade commission will be able to restore competition." [51 CONG. REC. 9057 (1914).]

Here again, a proponent of an amendment envisioned a commission which would be not only investigative, but quasi-judicial as well. The House as a whole, however, was not so disposed at that time and rejected the amendment in favor of the creation of a purely investigative commission.

Thus, the legislative history clearly shows that the House was determined to withhold substantive rulemaking authority from a commission which was contemplated to be merely a source of information for the Congress and the President. The legislative history also shows that in all instances where amendments were proposed which, if adopted, would have established an agency strikingly similar to the commission of today, with substantive rulemaking authority to proscribe violations of the act was an integral part of these amendments. This would indicate the realization of the House that a commission with quasijudicial and enforcement functions could more effectively administer the law if it had substantive rulemaking authority.

IV. SENATE BILL (S. 4160)

On June 5, 1914, the Covington Bill was passed by the House. 51 CONG. REC. 9911 (1914). The following day it was received by the Senate and referred to the Senate Committee on Interstate Commerce. 51 CONG. REC. 9929 (1914). On June 13, 1914, the Senate Commerce Committee reported out the Covington Bill by recommending the passage of a substitute bill (S. 4160). 51 CONG. REC. 10376 (1914).

The substitute bill provided for the creation of a "Federal Trade Commission." In addition to authorizing the commission to investigate corporate activities and require information, statements, and records from corporations engaged in interstate commerce, this bill also declared "unfair methods of competition in commerce" to be illegal and authorized the commission to prevent such competition. 51 CONG. REC. 10377 (1914).

The thrust of the Senate bill, in contrast to that of the House bill, was to create a commission with quasi-judicial functions. The Commerce Committee Report clarified the purpose of the commission:

"[T]he committee has aimed to provide a body which will have sufficient power ancillary to the Department of Justice to aid materially and practically in the enforcement of the Sherman Act and to aid the business public as well, and, incidentally, to build up a comprehensive body of information for the use and advantage of the government and the business world.

*

"The committee gave careful consideration to the question as to whether it would attempt to define the many and variable unfair practices which prevail in commerce and to forbid their continuance or whether it would, by a general declaration condemning unfair practices, leave it to the commission to deter. mine what practices were unfair. It concluded that the latter course would be the better, for the reason . . . that there were too many unfair practices to define and after writing 20 of them into the law it would be quite possible to invent others." [S. Rep. No. 597, 63d Cong., 2d Sess. 13 (1914) (emphasis added).]*

This substitute bill conferred a power upon the commission to determine what practices were "unfair," and the clear intent of the Senate was that this power be exercised prospectively.

V. CONFERENCE REPORT

On August 7, 1914, both houses of Congress agreed to a conference on the two bills (H.R. 15613 and S. 4160) to resolve the differences. 51 CONG. REC. 13438, 13450 (1914). The conference committee quickly reached agreement and

2 It should be noted that the debates in the Senate were restricted to the complaint and cease-and-desist order procedure for purposs of commission enforcement of the mandate of Congress, since the Senate bill contained no rulemaking provision. Hence the lack of discussion thereof.

"(g) From time to time to classify corporations and to make rules and regulations for the purpose of carrying out the provisions of this Act." [H.Rep. No. 1142, 63d Cong., 2d Sess. (1914) (emphasis added.)]

It was not until this Conference Report was considered by the House and Senate that the Commission's present rulemaking authority was before the Congress for discussion. Thus, any congressional debates prior to the conference bill are clearly irrelevant to a determination of the force and effect of this rulemaking authority.

Of vital importance to the interpretation of the Commission's rulemaking authority is the wording of Section 6(g) as the conference committee reported it. By a stroke of the pen that committee could have substituted the word "section" for "Act" in Section 6(g), thereby limiting the application of subsection (g) to the Section 6 informtational and investigative powers. But the word "Act" was used, and the plain meaning of the wording of the subsection is that the Commission may promulgate rules for the purpose of carrying out the provisions of the entire Act. To restrict the application of such unambiguous language to less than the entire Act would be to subvert the purpose and intent of Congress. This was confirmed by the holding in United States v. Morton Salt Co., 338 U.S. 632, 647-51 (1950).

The Conference Report recommended that "unfair methods of competition in commerce" be declared unlawful, thereby broadening the proscription of the bill from the more narrow "unfair competition" contained in the Senate version:

If Congress were "It is impossible to frame definitions which embrace all unfair practices. There is no limit to human inventiveness in this field.

to adopt the method of definition, it would undertake an endless task. It is also practically impossible to define unfair practices so that the definition will fit business of every sort in every part of this country. Whether competition is unfair or not generally depends upon the surrounding circumstances of the particular case." [H.Rep. No. 1142, 63d Cong., 2d Sess . (1914).]

Thus, the Conference Report evidences a clear intent that those unfair practices not extant when the statute was enacted but later invented could be condemned as "unfair methods of compeititon" under the statute.

On September 8, 1914, the Senate passed the bill recommended by the conference committee. 51 CONG. REC. 14802 (1914). There was very little discussion on the bill, and none on the "rules and regulations" provision of Section 6(g). House debate on the conference bill was more extensive generally, but for purposes of interpreting the rulemaking provision, was ambiguous and of little value when considered in toto. While Mr. Covington stated that the Commission would have "no power to prescribe the methods of competition to be used in the future" [51 CONG. REC. 14932 (1914)], reference to his subsequent expressions places this statement in the proper context-that Covington was referring to Commission Section 5 cease and desist orders. There was nothing in this statement by Mr. Covington which would indicate that he was referring to the rulemaking authority vested in the Commission by Section 6(g):

"The Federal trade commission [sic] will have no power to prescribe the methods of competition to be used in future. In issuing its orders it will not be exercising power of a legislative nature. The basis, therefore, upon which the validity of the "narrow" court review provided by the Hepburn Act rests will be lacking." [51 CONG. REC. 14932 (1914) (emphasis added).]

Further, it should be noted that Covington was the author of the House version of the act which would have conferred only investigatory authority on the Commission, and that he was naturally thinking in terms more confining and stringent than his colleagues. Indeed, had it been Covington's decision, the Commission would have been vested with no quasi-judicial or law-enforcement functions, and it is clear from the legislative history of the Covington

Bill that its author did not envision the Commission which was ultimately created-with broad investigative, quasi-judicial, law-enforcement, and rulemaking powers. See Federal Trade Commission Bill, Comparative Print, S. Doc. No. 573, 63d Cong., 2d Sess. (1914).

Representative Stevens, a member of the Conference Committee, thereafter described the type of commission that committee intended to create:

***** In this measure there is not one single function of public importance which is not now performed by some public authority, either by the executive or the legislative or by the judicial branches of our Government-not one single new subject in it.

"The only thing this bill does or attempts is to correlate the different functions now performed by the different public authorities into one organization and make it a practical, efficient, harmonious organization of our Federal Government to work out a concededly beneficial purpose. A commission of this broad scope must necessarily embrace within itself functions or powers belonging to the three different departments of our Government—the executive, the legislative, and the judicial. That is the very purpose of its existence, else the work could be done, as now, by the separate bureaus or courts or committees having public powers. It is because they have not succeeded that this combination of functions is made." [51 CONG. REC. 14934 (1914) (emphasis added).] Mr. Stevens further summarized the expectations of the conference committee by discussing what it hoped would be the result of the legislation. It should be noted that he refers not only to the evolution of "a body of law," but to "rules" as well:

"It is to be hoped that there will be gradually evolved a body of law and rules upon this subject which shall be comprehensive and wise and enlightening, and which, while amply protecting the general public and its interests, may at the same time encourage the struggling and worthy who seek to make a place for themselves in the commercial world, and be the basis for a higher standard and such a consistent and practical standard for our business that it shall lead the commerce of the earth.

"This bill will thus help by information, encouragement, admonition, advice, and, if necessary, restraint. No power is lacking." [51 CONG. REC. 14937 (1914) (emphasis added).]

However, a colloquy between Representatives Sherley and Stevens exemplifies some ambiguity of the House debate on the conference bill. In this exchange, Mr. Stevens appears to assume the position that the commission would be granted no power to prescribe future violations of the act:

"Mr. SHERLEY [Ky.]. If the gentleman will permit, the Federal trade commission [sic] differs from the Interstate Commerce Commission in that it has no affirmative power to say what shall be done in the future?

"Mr. STEVENS of Minnesota. Yes. The gentleman is entirely right. We desired "Mr. SHERLEY. In other words, it exercises in no sense of legislative function such as is exercised by the Interstate Commerce Commission?

"Mr. STEVENS of Minnesota. Yes. The gentlema nis entirely right. We desired clearly to exclude that authority from the power of the commission. We did not know as we could grant it anyway. But the time has not arrived to reconsider or discuss such a question." [51 CONG. REC. 14938 (1914).)

Subsequently, Mr. Stevens reiterated the opposite view as he more succinctly stated his position:

"I have already stated that it is to be hoped that a body of commercial rules may be evolved which may be a safe and wise guidance on the high plain for the business concerns of the country. They should not be technical merely, but, amplified with breadth and experience may be safely accepted as the best expression of the business world.

"This measure, for the first time in the country, attempts an administrative regulation of commerce itself. We have regulated the instrumentalities such as transportation and finance, but here we attempt to rule and help commerce. An executive alone with power of enforcement merely, or even a wise discretion, could not do it. The courts under their ruling could not wisely and liberally accomplish the needed results. The legislative branch can only prescribe rules for the future. It requires a combination of all of those powers in one organization, with the highest obtainable talent well and thorough to work out the difficult problems which will be met. Because it is in a sense permanent and without partisanship, and can lay down a policy which can be pursued or

changed as may be wise and necessary, without the charge of personal or political advantage, must this important commission perform such work." [51 CONG. REC. 14938-39 (1914) (emphasis added).]

Thus, an overall consideration of these statements by Mr. Stevens makes it clear that the Commission would be authorized to promulgate rules interpreting and implementing the statute.

VI. CONCLUSION

In conclusion, while the legislative history of the Federal Trade Commission Act is irrelevant in large part to a consideration of the Commission's rulemaking authority, and while some inconsistent views were expressed in the House debates on the report of the conference committee, there is nevertheless substantial support in that history for the proposition that Section 6(g) was intended to confer a substantive rulemaking auhority on the Commission.

In the United States District Court for the District of Maine, Southern Division Civil Action No. 12-82

LEVER BROTHERS COMPANY, PLAINTIFF, and THE PROCTER & GAMBLE COMPANY, INTERVENOR,

V

FEDERAL TRADE COMMISSION, MILES W. KIRKPATRICK, PAUL RAND DIXON, DAVID S. DENNISON, JR., A. EVERETTE MACINTYRE, MARY GARDINER JONES, MEMBERS OF THE FEDERAL TRADE COMMISSION, DEFENDANTS

CROSS MOTION FOR SUMMARY JUDGMENT OF INTERVENOR, THE PROCTER & GAMBLE COMPANY

Intervenor, The Procter & Gamble Company, moves for summary judgment and issuance of an injunction directing the defendants to withdraw the Commission's notice initiating the proceeding for the promulgation of a Trade Regulation Rule concerning the advertising and labeling of synthetic detergents, which proceeding was noticed to commence on April 26, 1971, and restraining the defendants and all persons acting under their direction and authority from filing or conducting any further proceedings with respect to said Rule.

The grounds for this motion, all of which appear more fully in intervenor's complaint and in its memorandum in support of this motion, are as follows: 1. The Commission has not been delegated by Congress authority to promulgate substantive legislative-type Trade Regulation Rules having the effect of law, as asserted in the Commission's Regulations and Notice of Rulemaking; 2. The objective which the proposed Rule seeks to achieve, by discouraging the use of certain products and encouraging the use of others, lies outside the Commission's jurisdiction and has been entrusted by Congress to other Federal agencies specially charged with environmental and public health responsibilities; 3. Further proceedings in connection with proposed Rule would result in irreparable injury to intervenor and to the public, and there is no valid reason to defer judicial review of the legal authority asserted by the Commission. Respectfully submitted.

ROGER A. PUTNAM,

Verrill Dana Philbrick Putnam & Williamson, 57 Exchange Street, Portland, Maine, Attorney for Intervenor, Procter & Gamble Co.

Of Counsel:

DANIEL M. GRIBBON, JOHN S. KOCH, CHARLES LISTER,

Covington & Burling,

888 Sixteenth Street NW,

Washington, D.C.

Dated April 15, 1971

CERTIFICATE OF SAVINGS

I certify that I have served the foregoing Cross Motion for Summary Judgment of Intervenor, The Procter & Gamble Company, and accompanying Memo