Lexplug logoLexplug

National Petroleum Refiners Assn. v. Federal Trade Commission

United States Court of Appeals, District of Columbia Circuit
D.C. Cir., 482 F.2d 672 (1973)
ELI5:

Rule of Law:

Section 6(g) of the Federal Trade Commission Act grants the Federal Trade Commission (FTC) the authority to promulgate substantive rules of business conduct, known as Trade Regulation Rules, which define with specificity the 'unfair methods of competition' and 'unfair or deceptive acts or practices' prohibited by Section 5 of the Act.


Facts:

  • The Federal Trade Commission (FTC) is a federal agency tasked with preventing 'unfair methods of competition' and 'unfair or deceptive acts or practices in commerce.'
  • The FTC promulgated a 'Trade Regulation Rule' defining a specific business practice as unfair and deceptive.
  • The rule declared that the failure by gasoline refiners and distributors to post octane rating numbers on gasoline pumps at service stations constituted an unfair method of competition and an unfair or deceptive act.
  • The National Petroleum Refiners Association is a trade association whose members include gasoline refining companies.
  • These refining companies would be required to disclose octane ratings on pumps they own or lease under the new FTC rule.

Procedural Posture:

  • The Federal Trade Commission (FTC) promulgated a rule requiring the posting of octane ratings on gasoline pumps.
  • National Petroleum Refiners Association and 34 gasoline refining companies sued the FTC in the U.S. District Court for the District of Columbia.
  • The plaintiffs sought a declaratory judgment that the FTC lacked statutory authority to issue substantive rules.
  • The District Court, a court of first instance, ruled in favor of the plaintiffs, holding that the FTC lacked the claimed rule-making authority.
  • The FTC (appellant) appealed the District Court's decision to the U.S. Court of Appeals for the D.C. Circuit.

Locked

Premium Content

Subscribe to Lexplug to view the complete brief

You're viewing a preview with Rule of Law, Facts, and Procedural Posture

Issue:

Does Section 6(g) of the Federal Trade Commission Act empower the Federal Trade Commission (FTC) to promulgate substantive rules of business conduct that have the force of law?


Opinions:

Majority - J. Skelly Wright

Yes. The Federal Trade Commission Act empowers the FTC to promulgate substantive rules that define unfair or deceptive acts or practices with the force of law. The plain language of Section 6(g) of the Act, which grants the Commission the power 'to make rules and regulations for the purpose of carrying out the provisions' of the Act, is a clear grant of this authority. This interpretation is supported by the Act's broad purpose: to create an expert agency that can efficiently and expeditiously address unfair business practices, a goal best served by a combination of rule-making and adjudication. While Section 5 of the Act details an adjudicatory enforcement mechanism, it does not state this is the exclusive means for the Commission to define illegal conduct. Precedents from other administrative agencies with similar statutory language, such as the FCC and FPC, confirm that general grants of rule-making authority confer the power to issue substantive rules. Furthermore, rule-making is often more efficient and fairer to regulated parties than relying solely on case-by-case adjudication, as it provides clear notice to an entire industry and avoids singling out individual defendants to establish new policies.



Analysis:

This landmark decision dramatically expanded the power of the Federal Trade Commission, confirming its authority to act as a quasi-legislative body by creating binding industry-wide rules. By rejecting the argument that the FTC was limited to a quasi-judicial, case-by-case enforcement model, the court enabled the agency to regulate entire industries more efficiently and proactively. The ruling solidified the modern understanding of agency power, establishing that a general statutory grant of rule-making authority is sufficient to authorize substantive, legislative-type rules. This has had a profound impact on administrative law, encouraging other agencies to adopt a similar 'mixed system' of rule-making and adjudication to implement their statutory mandates.

🤖 Gunnerbot:
Query National Petroleum Refiners Assn. v. Federal Trade Commission (1973) directly. You can ask questions about any aspect of the case. If it's in the case, Gunnerbot will know.
Locked
Subscribe to Lexplug to chat with the Gunnerbot about this case.

Unlock the full brief for National Petroleum Refiners Assn. v. Federal Trade Commission