On January 6, 1976, the FTC published in the Federal Register the proposed rules covering "disclosure and other regulations concerning the sale of used motor vehicles." These are the regulations that hit the newspaper at the first of the month that caused glaring headlines about how the consumer would be protected when buying a car in the near future. I will not outline the proposed rules, but some of the proposals are probably all right except that they are just more encroachment upon business operations. Other proposals are completely impossible for example, they propose to allow the prospective buyer 8 hours to take the used car and have it inspected for faulty parts, including the removal of certain parts for inspection. Another impossible proposal notifying the buyer if the car had ever been in commercial use. Still, another difficult proposal, any oral statement of fact about the car by the salesman is a warranty. This puts the salesman in a straight jacket and it could call for all salesmen to carry tape recorders and record all conversations with prospective buyers in order to protect themselves from scrupulous customers. The National Automobile Dealers Association has stated that many of the FTC's proposed rules for used motor vehicles may exceed the congressional mandate concerning warranties and warranty practices as set forth in section 109 (b) of the Magnuson-Moss Warranty Act. The Federal Trade Commission, acting pursuant to a new grant of authority under the Federal Trade Commission Act, has adopted a rule prohibiting clauses in consumer credit contracts whereby a debtor agrees not to raise any claims or defenses on the contract against an assignee of the contract, such as the bank or finance company. The waiver of defenses clause has generally been sanctioned under most State laws b ythe so-called "holder-in-due-course doctrine." Under that doctrine, a debtor who believes he has been sold defective merchandise may not withhold payment on his credit contract once it has been assigned to a bank or finance company that took the contract without knowledge of the debtor's claim. The new FTC rule eliminates the holder-in-due-course doctrine on consumer credit transactions, and makes an assignee bank or finance company subject to the debtor's claims and defenses. The new FTC rule will take effect May 14, 1976. Since there are 12 States that have not abolished the holder-in-duecourse doctrine to date, it is felt that these States should have the opportunity to air their views on FTC's jurisdiction in eliminating it at the State level. The Georgia Automobile Dealers Association feels very strongly that the Federal bureaucrats should not be allowed to continue to make State laws void with their ever-increasing number of regulations. Attached to this testimony is a cony of a resolution that was passed by the Georgia Automobile Dealers Association's board of directors concerning the powers of the Federal regulatory agencies.1 The resolution was sent to each member of Georgia's congressional delegation. The 100.000 or more Federal workers who keep busy writ 1 See p. 82. ing, revising and enforcing rules and regulations have come up with quite a list of accomplishments. Much of our lives and our business relationships are being more and more controlled by Federal bureaucrats that are not responsible to the voters at election time nor to the business they regulate and, apparently, have no interest in how their regulatory decisions affect the profit and loss of the business, or the ultimate cost to the consumer. The consuming public and the businessmen who try to serve them are literally strangled by redtape. The EPA spent some $3.8 billion last year to regulate what they called mobile sources-that figure is projected to increase to $10.5 billion by 1979. For that health sum the buying public is forced to pay-according to EPA-$327 more for their new car and another $200 in higher maintenance and operating costs, like 2 or 3 cents more per gallon for unleaded gasoline. The EPA now admits that after the hundreds of millions in added cost forced onto the motoring public, they have discovered that the catalytic converter not only smells bad but emits sulfuric acid fumes that injure the lungs and cause cancer. Let's look at some other costs that are bureaucratical and dreamed up for our protection. These are July 1975 figures per vehicle if we could spread the cost over 10 million units per year: Seatbelt buzzer system, $25 per car, $250 million per year-remember, 2 years after the car-buying public spent $500 million and raised a storm of protest, Congress repealed the seat belt buzzer system; head restraints, $15 per car, $150 million per year; side door beams, $13 per car, $130 million per year; 5 mile per hour bumpers, $128 per car. $1.28 billion per year; and catalytic converter, $125 per car, $125 billion per year. None of these is cost effective in the judgment of many respected scientists. Add to these the costs of all other Government-required standards, and you get a total of $700 per vehicle for the Governmentmandated gadgets so far. Now to the $700 per car let's add the goodies Washington is currently proposing as additional future standards: Airbags, $300 per car, $3 billion per year; high-speed impact standards, $600 per car. $6 billion per year; and new emission standards, $280 per car, $2.8 billion per year. Now that's another $1.800 per car on top of the $700 we already have for a total of $1,880 and that's not allowing a dime for future inflation. Now we can't do much about the $3 billion the new car buyers wasted in 1974 for buzzers, lights, harnesses, and other mandatory junk, which they didn't want and wouldn't use and promptly disconnected or otherwise rendered inoperative. But, perhaps we can learn something. What we need now is protection from the protectionists, not more redtape and regulations that serve in the end only to prevent progress and keep the free enterprise, competitive, capitalistic system of ours from developing, producing, and distributing new and better products or processes at lower costs to win and hold the patronage of our customers, and hopefully make a profit for the investors. [Resolution referred to follows:] 69-084 O-76-7 RESOLUTION WHEREAS, The Federal Trade Commission announced on November 14, 1975, the promulgation of a trade regulation, effective May 14, 1976, which eliminates the "holder-in-due-course" doctrine and which, if allowed to stand, will void long established state laws without any Congressional action; and WHEREAS, If the Federal Trade Commission is permitted to promulgate this regulation or other regulations which void state laws, then the Federal Trade Commission has created the power to legislate in areas heretofore reserved to the various states; and WHEREAS, The Congress of the United States, and not the Federal Trade Commission, is charged with the responsibility of enacting laws which may preempt enacted state laws; NOW THEREFORE BE IT RESOLVED, That the Georgia Automobile Dealers Association's Board of Directors assembled in session on January 15, 1976, respectfully urges and requests Congress to take whatever steps are necessary to require the Federal Trade Commission to render void the regulation of November 14, 1975, and to further take whatever steps are necessary to prohibit the Federal Trade Commission and all other governmental agencies from promulgating regulations which will supercede laws passed by the various states, without Congressional approval, BE IT FURTHER RESOLVED, That a copy of this Resolution be sent to the United States Senators and United States Representatives from the State of Georgia. S. Walter Kelly, Jr., Marietta Julian M. Harrison, Jr., Rome H. Calvin Stovall, Jr., Cornelia Ed Holcomb, Toccoa Lamar Nash, Buford C. C. Brooks, Crawford Darrell Johnson, Thomson W. B. Winter, Athens Stewart P. Walker, Jr., Augusta J. H. Brooks, Jr., Millen R. E. Roberts, Douglas J. C. Sherwood, Valdosta Dale C. Critz, Jr., Savannah Hix H. Green, Jr., Atlanta Warren E. Greene, Fort Valley King S. Cone, Thomasville John B. Prince, III, Tifton T. T. Holt, Adel C. M. Shirley, Hazlehurst Senator NUNN. Thank you very much Mr. Morie and Mr. Paul. We appreciate very much your appearing. The cost analysis on this is very interesting. Mr. MORIE. We would be happy to submit any additional information. Senator NUNN. Our next witness, Dr. Jack Nix. Dr. Nix, we have talked a lot together in private conversations about this. I assume, Dr. Nix, this is not your testimony in the package but perhaps is a demonstration project. TESTIMONY OF DR. JACK P. NIX, GEORGIA SUPERINTENDENT OF SCHOOLS, ATLANTA, GA. Dr. Nix. Mr. Chairman, Congressman Levitas, no, that is not my testimony but I will refer to it. First of all, I would like to say to both of you people, it is a privilege to face you in the position that you now hold. I have faced you as members of the House of Representatives in the State of Georgia, pleading more money and passage of legislation. I am pleased to say to you and to make it public that I am most grateful for the work you both have done and are doing in Washington to help us. The stack of material to my right has a blue ribbon around it. We did not have a red ribbon or we would have put the red ribbon around it to represent redtape because what you see here, Mr. Chairman, is 24 pounds of forms and rules and regulations on how to fill out those forms that relate to public education receiving Federal support. I would like to also indicate that those, that stack of forms and instructions on how to fill out those forms, do not include the forms relating to school lunch or to civil rights or to the CETA program. If I had those added to this, it would be more than 24 pounds and a considerable higher stack. I have submitted the required copies of my written testimony and I would like to request that that become a part of the record. Senator NUNN. Without objection, it will become a part of the record. Dr. Nix. And I will not leave you with this stack of material here to put into the record. Senator NUNN. I wish we could get a picture of that. We do not have a camera. When you take it back, if you can, get somebody in your department to take a picture. Dr. Nix. And I will put a red ribbon around it and put it in color.1 Mr. LEVITAS. Could I ask a question, Dr. Nix, about that. Those are for various programs and forms, in other words, if you had to go through, say, an application for a particular grant program, that is the type of materials that you would have to read and work through? Dr. Nix. These are the forms, Congressman Levitas, that relate to vocational education programs, all of the titles that we will get, title I program, title II, title III, special education, all of those excluding 1 The photograph requested and subsequently supplied may be found in the subcommittee files. the three categories I mentioned, school lunch, CETA program, civil rights programs. Mr. Chairman, I would like to make two or three comments about some specifics, other than perhaps what is designed completely in my written testimony. It has been my privilege to work with the Federal officials and the Congress some 15 or 16 years, as vocational director of the State and for the last 10 years as superintendent of schools in this period of time. It has been my privilege to work with a number of Secretaries of HEW and a number of Commissioners of Education, and many. many lower bureaucrats. I believe that I can accurately say to you that things get worse rather than better. This is, there is, in my opinion, entirely too much specificities in the rules and regulations; there is certainly not enough input from the operators, from the State and local levels of programs. I am getting a little bit concerned about some of the specificity now being written in some of the legislative programs that come through. I think we can get more from the dollars we are spending because as you can see, it costs literally millions of dollars across this Nation to fill out these forms and get them back up there. Many of these dollars could be better utilized closer to the child, because each dollar you spend to get the form represents someone sitting in a school superintendent's office or State department of education or U. S. Office of Education working up figures for forms. You could get a lot more mileage if that were put near the child, in terms of staff or additional materials relating to learning. The process, I have gathered, takes place up there in Washington, and goes something like this. The Congress passes a piece of legislation; the President signs it into law, and it is handed to a Cabinet officer to implement. He has lawyers on his immediate staff and they look at it and they say well, I believe we would like to have this kind of information, so we are going to require these rules and regulations. When it finishes that level of bureaucracy, it passes to the next level, the under-Secretary and assistant Secretaries add their increased desires. Then it gets to the Commissioner of Education and he and his attorneys decide they would like to have a little bit more information. It drops on down to some of the program operators and they decide it would sure be nice if we had this additional information and they put their additional requirement to the implementation of that particular law, so you can readily see by the time it gets to us, we really have a tremendous problem satisfying all those levels of power and levels of bureaucracy. Many times, this is done with little, or no, input from those of us who are legally responsible for public education in the individual States. In fact, last year, the previous Secretary of HEW refused to even let the Commissioner send to us some of the proposed rules and regulations to implement 93-380. This created a real problem for us and it is still creating a problem. My staff and I have identified a process that is now being utilized concerning just one title of that piece of legislation. title I. |