E7-9966. Access Requests From Foreign Law Enforcement Agencies for Consumer Protection Materials

AGENCY:

Federal Trade Commission.

ACTION:

Final rule amendment.

SUMMARY:

The Federal Trade Commission is amending Rule 4.11 of its Rules of Practice, which addresses disclosure requests, to add a new provision, Rule 4.11(j). The new provision conforms the agency's rules to its authority to share confidential information in non-antitrust matters with foreign law enforcers, with appropriate confidentiality assurances and subject to certain restrictions, as provided for under the recently-enacted U.S. SAFE WEB Act of 2006, Pub. L. No. 109-455, 120 Stat. 3372 (2006). The Commission is also amending Rules 4.10(d) and (e), which describe certain materials subject to prohibitions on disclosures and exceptions for specified circumstances, to cross-reference the new Rule 4.11(j).

DATES:

Effective Date: May 23, 2007.

FOR FURTHER INFORMATION CONTACT:

Joannie T. Wei, Attorney, Office of the General Counsel, Federal Trade Commission, 600 Pennsylvania Avenue, NW., Washington, DC 20580, [phone], [e-mail].

SUPPLEMENTARY INFORMATION:

The Undertaking Spam, Spyware and Fraud Enforcement With Enforcers beyond Borders Act of 2006 (U.S. SAFE WEB Act), Pub. L. No. 109-455, 120 Stat. 3372 (2006), was enacted to enhance the Federal Trade Commission's enforcement activities against a range of practices that harm U.S. consumers, including illegal spam, spyware, cross-border fraud and deception, misleading health and safety advertising, privacy and security breaches, and other law violations. The practices the FTC enforces against are increasingly global in nature, and the U.S. SAFE WEB Act improves the FTC's ability to cooperate with its foreign counterparts to combat such practices.

Authority to share certain materials with foreign law enforcement agencies. Information sharing is one area in which the U.S. SAFE WEB Act strengthens the Commission's authority to cooperate with its foreign counterparts. Sections 4 and 6 of the U.S. SAFE WEB Act amend sections 6(f) and 21(b)(6) of the Federal Trade Commission Act to allow the Commission to share certain confidential and compelled information in its files with foreign law enforcement agencies.^[1] 15 U.S.C. 46(f), 57b-2(b)(6). These sections of the U.S. SAFE WEB Act do not provide authority for the disclosure of material obtained in connection with the administration of the Federal antitrust laws or foreign antitrust laws (as defined in paragraphs (5) and (7), respectively, of section 12 of the International Antitrust Enforcement Assistance Act of 1994 (15 U.S.C. 6211)). 15 U.S.C. 57b-2(b)(6).

The Commission's disclosure authority under the U.S. SAFE WEB Act is subject to appropriate limitations and assurances. Under section 6 of the statute, the Commission must obtain certification from an appropriate official of the foreign law enforcement agency, either by prior agreement or memorandum of understanding or by other written certification, that such material will be maintained in confidence and will only be used for official law enforcement purposes. 15 U.S.C. 57b-2(b)(6). The foreign law enforcement agency must have set forth a bona fide legal basis for its authority to maintain the material in confidence. In addition, the foreign law enforcement agency must be using the materials for purposes of investigating or engaging in enforcement proceedings related to possible violations of: (1) Foreign laws prohibiting fraudulent or deceptive practices or other practices substantially similar to practices prohibited by any law administered by the Commission; (2) a law administered by the Commission if disclosure would further a Commission investigation or proceeding; or (3) with the approval of the Attorney General, other foreign criminal laws that are encompassed in an applicable mutual legal assistance treaty. 15 U.S.C. 57b-2(b)(6)(A), 57b-2(b)(6)(B).

If the materials to be provided to the foreign law enforcement agency are requested for the purpose of investigating or engaging in enforcement proceedings based on possible violations by a bank, savings and loan institution, or Federal credit union, the material will not be disclosed unless the appropriate Federal banking agency, or the National Credit Union Administration in the case of a Federal credit union, has given its prior approval. 15 U.S.C. 57b-2(b)(6)(C).

Further, section 6 of the U.S. SAFE WEB Act does not permit disclosure to foreign law enforcement agencies from foreign states that the Secretary of State has determined, in accordance with section 6(j) of the Export Administration Act of 1979, 50 U.S.C. App. 2405, have repeatedly provided support for acts of international terrorism, unless and until such determination has been rescinded pursuant to section 6(j)(4) of that Act, 50 U.S.C. App. 2405(j)(4).

Rule provisions. To implement this new authority under the U.S. SAFE WEB Act, the Commission's Rules of Practice have been amended to create a new provision, Rule 4.11(j), that delineates the internal procedure for handling requests from foreign law enforcement agencies for nonpublic material other than material subject to disclosure pursuant to other delegations. Rule 4.11(j) is not intended to supersede existing Commission delegations or to preclude additional future delegations, subject to any statutory constraints.

The new provision, Rule 4.11(j), generally adopts the procedures of the current Rule 4.11(c) (sharing confidential information with Federal and State law enforcement agencies), and incorporates the requirements and restrictions of the U.S. SAFE WEB Act. Under the new provision, requests for nonpublic records from foreign law enforcement agencies will be addressed to the Director of the Office of International Affairs or the Director's designee. For any material requested that is subject to the disclosure restrictions in sections 6(f) ^[2] or 21(b) ^[3] of the FTC Act or Rule 4.10(d) of the Commission's Rules of Practice,^[4] the Director or the Director's designee will obtain any certification required by the U.S. SAFE WEB Act from an appropriate official of such foreign law enforcement agency. Rule 4.11(j)(3) establishes the requirements for access to such material in accordance with the U.S. SAFE WEB Act. The Director will then, with approval of the Bureau of Consumer Protection, forward the requests to the General Counsel with recommendations for disposition. The General Counsel or the General Counsel's designee is delegated the authority to dispose of the requests in accordance with the requirements of the U.S. SAFE WEB Act. Under Rule 4.11(j), the General Counsel may refer such requests to the Commission for determination, and must do so when the Bureau of Consumer Protection or the Office of International Affairs do not agree with the General Counsel's proposed disposition.

The Commission has also amended Rules 4.10(d) and (e) of its Rules of Practice, which describe materials that the Commission generally cannot make public at all or can make public only after finding the material is not confidential and giving ten days' notice to the submitter. These provisions also set forth exceptions to these restrictions, including, inter alia, certain disclosures to Federal and State law enforcement agencies. Rules 4.10(d) and (e) have been amended to include disclosure to foreign law enforcement agencies pursuant to the new Rule 4.11(j) as a specifically stated exception.

The amendments to Rules 4.10(d) and (e) and Rule 4.11(j)(3) will apply to all material that is subject to the disclosure restrictions in sections 6(f) and 21(b) of the FTC Act or in Rule 4.10(d) of the Commission's Rules of Practice, and that was submitted to the Commission on or after December 22, 2006, the date of enactment of the U.S. SAFE WEB Act.

Procedural matters. These amendments adopted herein will reconcile the Commission's rules with existing agency memoranda of understanding (MOUs), under which the Commission has an obligation to use its best efforts to share relevant consumer protection law enforcement material requested by applicable foreign agencies to the extent consistent with national laws, international obligations, enforcement policies and other important interests. Under these MOUs, the Commission has the implied obligation to implement any internal procedures required to allow the Commission to take into account all applicable laws, including the new U.S. SAFE WEB Act authority, in processing and considering applicable foreign agency requests for information. Because failure to make the proposed amendments would impair the Commission's ability to meet its foreign obligations, the amendments are exempt, by virtue of the foreign affairs exemption to the Act, 5 U.S.C. 553(a)(1), from both the Administrative Procedure Act's notice and comment requirement, 5 U.S.C. 553(b), and its restriction on the rules' effective date, 5 U.S.C. 553(d).

These amendments are also exempt from the notice and comment requirement and effective date restriction of the Commission's Rules of Practice by virtue of the good cause exceptions in Rules 1.26(b) and 1.26(e). 16 CFR 1.26(b), (e). In these circumstances, providing a period of public comment would delay implementation of these rules and is both unnecessary and contrary to the public interest.^[5]

Finally, these amendments are not a collection of information for purposes of the Paperwork Reduction Act, 44 U.S.C. 3501 et seq., and are not subject to the requirements of the Regulatory Flexibility Act, 5 U.S.C. 601(2).

List of Subjects in 16 CFR Part 4

• Administrative practice and procedure
• Freedom of Information Act
• Sunshine Act

For the reasons set forth in the preamble, the Federal Trade Commission amends Title 16, chapter I, subchapter A, of the Code of Federal Regulations as follows:

Subchapter A—Organization, Procedures, And Rules Of Practice

PART 4—MISCELLANEOUS RULES

1. The authority citation for part 4 continues to read as follows:

Authority: 15 U.S.C. 46, unless otherwise noted.

2. Amend § 4.10 by revising paragraphs (d) and (e) to read as follows:

§ 4.10

Nonpublic material.

* * * * *

(d) Except as provided in paragraphs (f) or (g) of this section or in § 4.11(b), (c), (d), (i), or (j), no material that is marked or otherwise identified as confidential and that is within the scope of § 4.10(a)(8), and no material within the scope of § 4.10(a)(9) that is not otherwise public, will be made available without the consent of the person who produced the material, to any individual other than a duly authorized officer or employee of the Commission or a consultant or contractor retained by the Commission who has agreed in writing not to disclose the information. All other Commission records may be made available to a requester under the procedures set forth in § 4.11 or may be disclosed by the Commission except where prohibited by law.

(e) Except as provided in paragraphs (f) or (g) of this section or in § 4.11(b), (c), (d), (i), or (j), material not within the scope of § 4.10(a)(8) or § 4.10(a)(9) that is received by the Commission and is marked or otherwise identified as confidential may be disclosed only if it is determined that the material is not within the scope of § 4.10(a)(2), and the submitter is provided at least ten days notice of the intent to disclose the material.

* * * * *

3. Amend § 4.11 by adding a new paragraph (j) to the end that reads as follows:

§ 4.11

Disclosure requests.

* * * * *

(j)(1) The procedures specified in this section apply to disclosures of certain records to foreign law enforcement agencies in specified circumstances in accordance with the U.S. SAFE WEB Act of 2006. Nothing in this section authorizes the disclosure of material obtained in connection with the administration of the Federal antitrust laws or foreign antitrust laws, as defined in paragraph (j)(5)(i) of this section.

(2) Requests from foreign law enforcement agencies, as defined in paragraph (j)(5)(ii) of this section, for nonpublic records shall be addressed to the Director of the Office of International Affairs or the Director's designee, who shall forward them to the General Counsel with recommendations for disposition after obtaining any required certification described in paragraph (j)(3) of this section and approval of the Bureau of Consumer Protection. With respect to requests under this paragraph, the General Counsel or the General Counsel's designee is delegated the authority to dispose of them. Alternatively, the General Counsel may refer such requests to the Commission for determination, except that requests must be referred to the Commission for determination where the Bureau of Consumer Protection or the Office of International Affairs disagrees with the General Counsel's proposed disposition.

(3) Access under this section to any material subject to the disclosure restrictions in sections 6(f) or 21(b) of the FTC Act or § 4.10(d) may not be granted unless—

(i) An appropriate official of the foreign law enforcement agency has certified, either by prior agreement or memorandum of understanding or by other written certification, that such material will be maintained in confidence and will be used only for official law enforcement purposes; and

(ii)(A) The foreign law enforcement agency has set forth a bona fide legal basis for its authority to maintain the material in confidence;

(B) The materials are to be used for purposes of investigating, or engaging in enforcement proceedings related to, possible violations of:

(1) Foreign laws prohibiting fraudulent or deceptive commercial practices, or other practices substantially similar to practices prohibited by any law administered by the Commission;

(2) A law administered by the Commission, if disclosure of the material would further a Commission investigation or enforcement proceeding; or

(3) With the approval of the Attorney General, other foreign criminal laws, if such foreign criminal laws are offenses defined in or covered by a criminal mutual legal assistance treaty in force between the government of the United States and the foreign law enforcement agency's government;

(C) The appropriate Federal banking agency, (as defined in section 3(q) of the Federal Deposit Insurance Act (12 U.S.C. 1813(q)) or, in the case of a Federal credit union, the National Credit Union Administration has given its prior approval if the materials to be provided under paragraph (j)(3)(ii)(B) of this section are requested by the foreign law enforcement agency for the purpose of investigating, or engaging in enforcement proceedings based on, possible violations of law by a bank, a savings and loan institution described in section 18(f)(3) of the Federal Trade Commission Act (15 U.S.C. 57a(f)(3)), or a Federal credit union described in section 18(f)(4) of the Federal Trade Commission Act (15 U.S.C. 57a(f)(4)); and

(D) The foreign law enforcement agency is not from a foreign state that the Secretary of State has determined, in accordance with section 6(j) of the Export Administration Act of 1979 (50 U.S.C. App. 2405(j)), has repeatedly provided support for acts of international terrorism, unless and until such determination is rescinded pursuant to section 6(j)(4) of that Act (50 U.S.C. App. 2405(j)(4)).

(4) A copy of the certificate described in paragraph (j)(3) of this section will be forwarded to the submitter of the information at the time the request is granted unless the foreign law enforcement agency requests that the submitter not be notified.

(5) For purposes of this section:

(i) “Federal antitrust laws” and “foreign antitrust laws” are to be interpreted as defined in paragraphs (5) and (7), respectively, of section 12 of the International Antitrust Enforcement Assistance Act of 1994 (15 U.S.C. 6211); and

(ii) “Foreign law enforcement agency” is defined as:

(A) Any agency or judicial authority of a foreign government, including a foreign state, a political subdivision of a foreign state, or a multinational organization constituted by and comprised of foreign states, that is vested with law enforcement or investigative authority in civil, criminal, or administrative matters and

(B) Any multinational organization, to the extent that it is acting on behalf of an entity described in paragraph (j)(5)(i)(A) of this section.

By direction of the Commission.

Donald S. Clark,

Secretary.

Footnotes

1.  “Foreign law enforcement agency” means—(1) any agency or judicial authority of a foreign government, including a foreign state, a political subdivision of a foreign state, or a multinational organization constituted by and comprised of foreign states, that is vested with law enforcement or investigate authority in civil, criminal, or administrative matters; and (ii) any multinational organization, to the extent that it is acting on behalf of an entity described in paragraph (i). 15 U.S.C. 44.

2.  Section 6(f) of the FTC Act protects from public disclosure “any trade secret or any commercial or financial information which is obtained from any person and which is privileged or confidential,” except in certain specified circumstances. 15 U.S.C. 46(f).

3.  Section 21(b) of the FTC Act protects from public disclosure material received by the Commission “pursuant to compulsory process in an investigation, a purpose of which is to determine whether any person may have violated any provision of the laws administered by the Commission,” except in certain specified circumstances. 15 U.S.C. 57b-2(b).

4.  In addition to the two categories listed above, Rule 4.10(d) also protects from mandatory disclosure under the Freedom of Information Act, 5 U.S.C. 552, material submitted to the Commission voluntarily in lieu of compulsory process in a law enforcement investigation and marked or otherwise identified as confidential. 16 CFR 4.10(d).

5.  See Int'l Brotherhood of Teamsters v. Peña, 17 F. 3d 1478 (D.C. Cir. 1994) (applying APA foreign affairs exemption and good cause exception of agency rule).