tion or documentary evidence shall be advised with respect to the purpose and scope of the investigation.

§ 2.7 Subpoenas in investigations.

(a) The Commission or any member thereof may issue a subpoena, directing the person named therein to appear before a designated representative at a designated time and place to testify or to produce documentary evidence, or both, relating to any matter under investigation by the Commission. Any motion to limit or quash such subpoena shall be filed with the Secretary of the Commission within ten (10) days after service of the subpoena, or, if the return date is less than ten (10) days after service of the subpoena, within such other time as the Commission may allow.

(b) The Commission has delegated to the Directors and Assistant Directors of the Bureaus of Deceptive Practices, Restraint of Trade, Textiles and Furs, Industry Guidance, and Economics, without power of redelegation, the authority, for good cause shown, to extend the time prescribed for compliance with subpoenas issued during the investigation of any matter.

§ 2.8 Investigational hearings.

(a) Investigational hearings, as distinguished from hearings in adjudicative proceedings, may be conducted in the course of any investigation undertaken by the Commission, including rulemaking proceedings under Subpart B of Part 1 of this chapter, inquiries initiated for the purpose of determining whether or not a respondent is complying with an order of the Commission or the manner in which decrees in suits brought by the United States under the antitrust laws are being carried out, the development of facts in cases referred by the courts to the Commission as a master in chancery, and investigations made under section 5 of the Export Trade Act.

(b) Investigational hearings shall be presided over by the Commission, one or more of its members, or a duly designated representative, for the purpose of hearing the testimony of witnesses and receiving documents and other data relating to any subject under investigation; and the term "presiding official," as used in this part, means and applies to the Commission or any of its members or designated representative when so presiding. Such hearings shall be steno

graphically reported and a transcript thereof shall be made a part of the record of the investigation.

(c) Unless otherwise ordered by the Commission, investigational hearings shall not be public.

§ 2.9 Rights of witnesses in investigations.

(a) Any person compelled to submit data to the Commission or to testify in an investigational hearing shall be entitled to retain a copy or, on payment of lawfully prescribed costs, procure a copy of any document submitted by him and of his own testimony as stenographically reported, except that in a nonpublic hearing the witness may for good cause be limited to inspection of the official transcript of his testimony.

(b) Any witness compelled to appear in person in an investigational hearing may be accompanied, represented, and advised by counsel as follows:

(1) Counsel for a witness may advise his client, in confidence, and upon the initiative of either himself or the witness, with respect to any question asked of his client, and if the witness refuses to answer a question, then counsel may briefly state on the record if he has advised his client not to answer the question and the legal grounds for such refusal.

(2) Where it is claimed that the testimony or other evidence sought from a witness is outside the scope of the investigation, or that the witness is privileged (for reasons other than selfincrimination, as to which immunity from prosecution or penalty is provided by section 9 of the Federal Trade Commission Act) to refuse to answer a question or to produce other evidence, counsel for the witness may object on the record to the question or requirement and may state briefly and precisely the grounds therefor.

(3) Any objections made under the rules in this part will be treated as continuing objections and preserved throughout the further course of the hearing without the necessity for repeating them as to any similar line of inquiry. Cumulative objections are unnecessary. Repetition of the grounds for any objection will not be allowed.

(4) Counsel for a witness may not, for any purpose or to any extent not allowed by subparagraphs (1) and (2) of this paragraph, interrupt the examination of the witness by making any objections or

statements on the record. Motions challenging the Commission's authority to conduct the investigation or the sufficiency or legality of the subpoena must have been addressed to the Commission in advance of the hearing. Copies of such motions may be filed with the presiding official as part of the record of the investigation, but no arguments in support thereof will be allowed at the hearing.

(5) Following completion of the examination of a witness, counsel for the witness may on the record request the presiding official to permit the witness to clarify any of his answers which may need clarification in order that they may not be left equivocal or incomplete on the record. The granting or denial of such request shall be within the sole discretion of the presiding official.

(6) The presiding official shall take all necessary action to regulate the course of the hearing to avoid delay and to prevent or restrain disorderly, dilatory, obstructionist, or contumacious conduct, or contemptuous language. Such official shall, for reasons stated on the record, immediately report to the Commission any instances where an attorney has refused to comply with his directions, or has been guilty of disorderly, dilatory, obstructionist, or contumacious conduct, or contemptuous language in the course of the hearing. The Commission, acting pursuant to § 4.1 (d) of this chapter, will thereupon take such further action, if any, as the circumstances warrant, including suspension or disbarment of the attorney from further practice before the Commission or exclusion from further participation in the particular investigation.

The Commission may order testimony to be taken by deposition in any investigation at any stage of such investigation. Such depositions may be taken before any person having power to administer oaths who may be designated by the Commission. The testimony shall be reduced to writing by the person taking the deposition, or under his direction, and shall then be subscribed by the deponent. Any person may be compelled to appear and depose and to produce documentary evidence in the same manner as witnesses may be compelled to appear and testify and produce documentary evidence as provided in §§ 2.7 through 2.9.

§ 2.11

Orders requiring access.

(a) The Commission may issue an order requiring any corporation being investigated to grant access to files for the purpose of examination and the right to copy any documentary evidence. Any motion to limit or quash such an order shall be filed with the Secretary of the Commission within ten (10) days after service of the order, or, if the date for compliance is less than ten (10) days after service of the order, within such other time as the Commission may allow.

(b) The Commission has delegated to the Directors and Assistant Directors of the Bureaus of Deceptive Practices, Restraint of Trade, Textiles and Furs, Industry Guidance, and Economics, without power of redelegation, the authority, for good cause shown, to extend the time prescribed for compliance with orders requiring access issued during the investigation of any matter.

(a) The Commission may issue an order requiring a corporation to file a report or answers in writing to specific questions relating to any matter under investigation.

(b) The Commission has delegated to the Directors and Assistant Directors of the Bureaus of Deceptive Practices, Restraint of Trade, Textiles and Furs, Industry Guidance, and Economics, without power of redelegation, the authority, for good cause shown, to extend the time prescribed for compliance with orders requiring reports or answers to questions issued during the investigation of any matter.

§ 2.13

Noncompliance with investigational processes.

In cases of failure to comply with Commission investigational processes, appropriate action may be initiated by the Commission or the Attorney General, including actions for enforcement, forfeiture, or penalties or criminal actions. § 2.14 Disposition.

(a) When a matter is not subject to informal nonadjudicative disposition pursuant to § 2.21 and investigation indicates that corrective action is warranted, further proceedings may be instituted pursuant to the provisions of Subpart C of this part and the provisions of Part 3 of this chapter: Provided, however, That any individual, partnership, or corporation being investigated may be

afforded an opportunity to submit through the Division of Consent Orders a proposal for disposition of the matter in the form of an executed consent order agreement complying with the requirements of § 2.33, for consideration by the Commission in connection with a proposed complaint submitted simultaneously by the Commission's staff.

(b) When the facts disclosed by an investigation indicate that corrective action is not necessary or warranted in the public interest, the investigational file will be closed. The matter may be further investigated at any time if circumstances so warrant.

(c) The Commission has delegated to the Directors and Assistant Directors of the Bureaus of Deceptive Practices, Restraint of Trade, Textiles and Furs, and Industry Guidance, without power of redelegation, limited authority to close investigations. The closing action of a Bureau Director or Assistant Bureau Director does not become effective until the files have been sent to the Secretary of the Commission and no member of the Commission has objected within five (5) working days after receiving the notice to close from the Secretary.

Subpart B-Informal Enforcement Procedure

§ 2.21

Voluntary compliance.

(a) The Commission, when it has information indicating that a person or persons may be engaging in a practice which may involve violation of a law administered by it, and if it deems the public interest will be fully safeguarded thereby may afford such person or persons the opportunity to have a matter disposed of on an informal nonadjudicatory basis.

(b) In determining whether the public interest will be fully safeguarded through such informal administrative action, the Commission will consider: (1) The nature and gravity of the alleged violation; (2) the prior record and good faith of the parties involved; and (3) other factors, including, where appropriate, adequate assurance of voluntary compli

ance.

Subpart C-Consent Order
Procedure

§ 2.31 Notice of proposed adjudicative proceeding.

Where time, the nature of the proceeding and the public interest permit, the

Commission may notify a person, partnership, or corporation of its intention to institute a formal proceeding against such party, charging him with having violated one or more of the statutes administered by the Commission. Such notice will be accompanied by a form of complaint which the Commission intends to issue, together with a proposed form of order.

§ 2.32 Reply.

Within ten (10) days after service of such notice the party named in the proposed complaint may file with the Secretary of the Commission a reply stating whether or not he is interested in having the proceeding disposed of by the entry of a consent order. If the reply is in the negative or if no reply is filed within the time provided, the complaint will be issued and served forthwith. If the reply is in the affirmative, the party served will be afforded an opportunity to execute an appropriate agreement for consideration by the Commission. The party may appear personally or he may be represented by counsel who has entered an appearance under § 4.1 of this chapter. § 2.33 Agreement.

Every agreement shall contain, in addition to an appropriate order, an admission of all jurisdictional facts and express waivers of further procedural steps, of the requirement that the Commission's decision contain a statement of findings of fact and conclusions of law, and of all rights to seek judicial review or otherwise to challenge or contest the validity of the order. The agreement shall also contain provisions that the complaint may be used in construing the terms of the order; that the order shall have the same force and effect and shall become final and may be altered, modified, or set aside in the same manner and within the same time provided by statute for other orders; that the agreement shall not became a part of the official record of the proceeding unless and until it is accepted by the Commission; and that the Commission may withdraw its acceptance of the agreement if, within thirty (30) days after such acceptance, comments or views submitted to the Commission disclose facts or considerations which indicate that the order contained in the agreement is inappropriate, improper, or inadequate. In addition, the agreement may contain a statement that

the signing thereof is for settlement purposes only and does not constitute an admission by any party that the law has been violated as alleged in the complaint. § 2.34 Disposition.

(a) Within thirty (30) days after the filing of an affirmative reply under § 2.32, an executed agreement conforming with the requirements of § 2.33 may be submitted to the Commission through the Division of Consent Orders.

(b) Upon receiving such an agreement, the Commission may: (1) Accept it; (2) reject it and issue its complaint and set the matter down for adjudication in regular course; or (3) take such other action as it may deem appropriate. If an agreement is accepted, the Commission will place the order contained therein on the public record for a period of thirty (30) days, during which it will receive and consider any comments or views concerning the order that may be filed by any interested persons. Within ten (10) days thereafter, the Commission may either withdraw its acceptance of the agreement and so notify the other party, in which event it will take such other action as it may consider appropriate, or issue and serve its complaint (in such form as the circumstances require), and decision, in disposition of the proceeding.

(c) If an agreement is not so submitted, or if at any time it appears to the Division of Consent Orders that the execution of a satisfactory agreement is unlikely, the Division of Consent Orders, after notification to the proposed respondents of its intention to do so, shall submit the matter to the Commission, together with any written offers of settlement which the proposed respondents desire to have the Commission consider. The Commission will thereupon take such action as may be appropriate.

(d) After a complaint has been issued, the consent order procedure described in this part will not be available. However, in exceptional and unusual circumstances, the Commission may, upon request and for good cause shown, withdraw a matter from adjudication for the purpose of negotiating a settlement by the entry of a consent order. In such event, the Commission will treat the matter as being in a nonadjudicative status and may consult with and receive advice from its staff members and others. This rule will not preclude the settlement of the case by regular adjudicatory process through the filing of an admission an

SOURCE: The provisions of this Part 3 appear at 32 F.R. 8449, June 13, 1967, unless otherwise noted.

Subpart A-Scope of Rules; Nature of Adjudicative Proceedings

§3.1 Scope of the rules in this part.

The rules in this part govern procedure in adjudicative proceedings. It is the policy of the Commission that, to the extent practicable and consistent with requirements of law, such proceedings shall be conducted expeditiously. In the conduct of such proceedings the hearing examiner and counsel for all parties shall make every effort at each stage of a proceeding to avoid delay.

§ 3.2 Nature of adjudicative proceedings.

those

Adjudicative proceedings are formal proceedings conducted under one or more of the statutes administered by the Commission which are required by statute to be determined on the record after opportunity for an agency hearing. The term includes hearings upon objections to orders relating to the promulgation, amendment, or repeal of rules under sections 4, 5, and 6 of the Fair Packaging and Labeling Act. It does not include other proceedings such as negotiations for the entry of consent orders; investigational hearings as distinguished from proceedings after the issuance of a complaint; hearings for the purpose of inquiring into the manner and extent of compliance with outstanding orders; proceedings for the promulgation of industry guides or trade regulation rules; proceedings for fixing quantity limits under section 2(a) of the Clayton Act; investigations under section 5 of the Export Trade Act; rulemaking proceedings under the Fair Packaging and Labeling Act up to the time when the Commission determines under § 1.16(g) of this chapter that objections sufficient to warrant the holding of a public hearing have been filed; or the promulgation of substantive rules and regulations, determinations of classes of products exempted from statutory requirements, the establishment of name guides, or inspections and industry counseling, under sections 4(d) and 6(a) of the Wool Products Labeling Act of 1939, sections 7, 8(b), and 8 (c) of the Fur Products Labeling Act, sections 5(c) and 5(d) of the Flammable Fabrics Act, and section 7(c), 7(d), and 12(b) of the Textile Fiber Products Identification Act.

§3.11

Subpart B-Pleadings

Commencement of proceedings.

(a) Complaint. Except as provided in §3.13, an adjudicative proceeding is commenced by the issuance and service of a complaint by the Commission.

(b) Form of complaint. The Commission's complaint shall contain the following:

(1) Recital of the legal authority and jurisdiction for institution of the proceeding, with specific designation of the statutory provisions alleged to have been violated;

(2) A clear and concise factual statement sufficient to inform each respondent with reasonable definiteness of the type of acts or practices alleged to be in violation of the law;

(3) Where practical, a form of order which the Commission has reason to believe should issue if the facts are found to be as alleged in the complaint; and

(4) Notice of the time and place for hearing, the time to be at least thirty (30) days after service of the complaint.

(c) Motion for more definite statement. Where a reasonable showing is made by a respondent that he cannot frame a responsive answer based on the allegations contained in the complaint, he may move for a more definite statement of the charges against him before filing an answer. Such a motion shall be filed within ten (10) days after service of the complaint and shall point out the defects complained of and the details desired.

(a) Time for filing. A respondent shall have thirty (30) days after service of the complaint within which to file an answer thereto: Provided, however, That the filing of a motion for a more definite statement of the charges shall alter this period of time as follows, unless a different time is fixed by the hearing examiner: (1) If the motion is denied, the answer shall be filed within ten (10) days after service of the order of denial or thirty (30) days after service of the complaint, whichever is later; (2) if the motion is granted, in whole or in part, the more definite statement of the charges shall be filed within ten (10) days after service of the order granting the motion and the answer shall be filed within ten (10) days after service of the more definite statement of the charges.