CONTENTS Page Hon. Philip A. Hart, U.S. Senator from the State of Michigan. Hon. Chet Holifield, U.S. Congressman from the 19th Congressional Hon. Benjamin S. Rosenthal, U.S. Congressman from the Eighth Congres- Hon. Don Fuqua, U.S. Congressman from the Second Congressional Virginia H. Knauer, Special Assistant to the President for Consumer Affairs, accompanied by Elizabeth Hanford, William Walker, and Roger C. Cramton, Chairman, Administrative Conference of the United States, accompanied by Richard Berg- George P. Lamb, general counsel, Association of Home Appliance Man- Wynne A. Stevens, representing the Gas Appliance Manufacturing 1. Text of S. 1177, a bill to establish a Council of Consumer Advisers in the Executive Office of the President and to establish an inde- pendent Consumer Protection Agency.. 2. Text of H.R. 10835, an act to establish an Office of Consumer Affairs in the Executive Office of the President and a Consumer Protection 5. Comparison of S. 1177 and H.R. 10835, prepared by the staff of the Committee on Government Operations of the House of Representa- 11. "How the FDA Lets Bologna Become Baloney," from the New York Post, October 15, 1971, and "Broker Fee Rulings of SEC Draw Suit," from the Washington Star, October 10, 1971, submitted for 12. Statement of Peter H. Schuck, Esq., Center for Study of Responsive Law, before the Subcommittee on Public Health and Environment of the House Interstate and Foreign Commerce Committee, Sep em- 14. Statement of Roger C. Cramton, Chairman, Administrative Conference 15. A paper entitled "The Procedures by Which Informal Action Is Taken,' by Warner W. Gardner, Shea & Gardner, submitted for the 16. Letter from Roger C. Cramton to Senator Ribicoff, November 3, 1971-- 17. Statement of George P. Lamb, general counsel, Association of Home 21. Letter from Eugene Adams Keeney to Senator Ribicoff, November 30, 1971, and response to questions prepared by the subcommittee 24. Letter from John W. Partridge to Senator Ribicoff, November 3, 1971. 25. Letter from J. Edward Day to Robert Wager, November 15, 1971, 26. Letter from Hilton Davis to Senator Ribicoff, November 15, 1971, and statement submitted for the record from the Chamber of Commerce of the United States by Kenneth F. Stinger. 27. Letter from Mrs. Earl Marvin to Senator Ribicoff, November 17, 1971, and statement from the National Council of Jewish Women_. 28. Letter from Gov. Mike O'Callahan to Senator Ribicoff, November 22, 29. Letter from E. B. Mayo, Jr., to Robert Wager, November 23, 1971_. 30. Letter from James A. Wilson to Senator Ribicoff, November 24, 1971- 31. An article entitled "Informal Action-Adjudication-Rulemaking: 32. Statement of George Gordin, Jr., legislation coordinator, National Consumer Law Center, Boston College Law School, and an article entitled "Apathy Perils U.S. Plans to Bar Negative Option Sales Method," by John D. Morris, from the New York Times, November 23, 279 TO ESTABLISH A CONSUMER PROTECTION AGENCY THURSDAY, NOVEMBER 4, 1971 U.S. SENATE, SUBCOMMITTEE ON EXECUTIVE REORGANIZATION AND GOVERNMENT RESEARCH, COMMITTEE ON GOVERNMENT OPERATIONS, Washington, D.C. The subcommittee met, pursuant to notice, at 10 a.m., in room 3302, New Senate Office Building, Senator Abraham Ribicoff (chairman of the subcommittee) presiding. Present: Senators Ribicoff, Javits, Allen, and Percy. Also present: Robert Wager, general counsel; Mark E. Greenwold and Gerry Simons, professional staff members; John R. Graff, minority consultant; Stuart M. Statler, minority counsel; and Pamela J. Gell, chief clerk. Dennison Young, Jr., from Senator Javits' staff, was also present. Senator RIBICOFF. The committee will be in order. Our first witness this morning is the distinguished Senator from Michigan, Senator Hart. There are a few statements that we would like to make first. Senator HART. I would be delighted to hear them. OPENING STATEMENT OF THE CHAIRMAN Senator RIBICOFF. I would just like to say that this committee has worked very hard and long to reconcile our differences as to what should be contained in this act. Two and a half years ago, when we began hearings on legislation to establish a Department of Consumer Affairs, few people thought anything would come of them. A strong independent Consumer Protection Agency, representing the consumer interest throughout the Federal Government, was a remote dream. But now we are on the verge of enacting an effective consumer agency bill. Last year the Senate passed what is now S. 1177. This year, the House approved H.R. 10835, which has been referred to us. These bills demonstrate that today there is a large majority in the Congress favorable to an independent agency for advancing the consumer interest. These bills have gained wide support because there is a growing awareness in Congress and the public that the Federal Government is not adequately protecting the consumer. This is evident in a myriad of actions ranging from delays in implementing auto safety standards, to laxity in regulation of drugs by the Food and Drug Administration and the Agriculture Department. There is a need for a (1) strong arm of the Federal Government to police the departments and agencies to make sure they are doing their job for the consumer. That is the basic purpose of the bills before us today. Let me say at the outset that neither of these bills is perfect. Improvements are needed in both of them, and I am confident that the final product of our efforts will reflect these improvements. When the hearings are concluded, we will consider all the suggestions made to us and report to the Senate promptly a strong and fair bill. (See exhibits 1 and 2, pp. 76-117.) Senator RIBICOFF. Senator Javits? REMARKS OF SENATOR JAVITS Senator JAVITS. Thank you very much, Mr. Chairman. I have enjoyed the collaboration we have had together on our bill. We open these hearings on a note of optimism. I think at last we will pass legislation that will establish an independent consumer protection agency. It is very important, Mr. Chairman, now to narrow the differences between the House and Senate bills, insofar as we can. I do believe that ultimately we will have to determine the final form of the bill as between the House and Senate in conference. I am a cosponsor of the Senate bill which we will be considering today because I continue to believe that it is substantially sound and would aid the consumer greatly. It will allow the Government to act where there is serious and substantial consumer interest which needs asserting or protecting, yet it will not unduly infringe upon the legitimate activities of both Government and business. Nothing since this bill overwhelmingly passed the Senate dissuades me from believing that a bill such as this must be passed and I believe the Senate bill now before us provides a good framework for us to start with in these hearings. Mr. Chairman, I am glad a profound interest has been taken in this bill. It has served to strengthen and perfect it. I believe that it is one of the hallmarks of our time. Hopefully we will have a bill passed quickly before we adjourn this first session of the Congress. With your efforts and those of the others in both bodies I am confident we will be able to produce a very credible bill from the conference. Mr. Chairman, with the unanimous consent, on behalf of my colleague, Congresswoman Florence P. Dwyer, of New Jersey, I would like to insert her statement into the record. She is unable to be here with her colleagues from the House who will testify because she is attending the markup session at Banking and Currency, on the Economic Stabilization Act. Senator RIBICOFF. Without obpection. (See exhibit 3, p. 149.) Senator RIBICOFF. Senator Allen. REMARKS OF SENATOR ALLEN Senator ALLEN. Mr. Chairman, I wish only to say that I certainly want to congratulate and commend you for the leadership that you have given in this most important work and to commend the other members of the committee on their dedication and hard work in |