Judges concluded that the FTC failed to conduct a necessary preliminary regulatory analysis that should have been issued for public review when proposing amendments to the 1973 Negative Option Rule. Industry groups argued this lack of analysis hindered their ability to contest findings effectively. The judges noted that the alternatives presented in the final analysis were insufficiently elaborated, limiting the effectiveness of the Commission's overview regarding cost benefits. Based on statutory language, a separate preliminary analysis was required once the financial threshold was reached.
The statutory language, 'shall issue,' mandates a separate preliminary analysis for public review and comment 'in any case' where the Commission issues a notice of proposed rulemaking and the $100 million threshold is surpassed.
By the time the final regulatory analysis was issued, Petitioners still did not have the opportunity to assess the Commission's cost-benefit analysis of alternatives, an element of the preliminary regulatory analysis not required in the final analysis.
The Commission's discussion of alternatives in the final regulatory analysis was perfunctory.
Possible alternatives to the final Rule included either terminating the rulemaking altogether or limiting the Rule's scope to negative option plans marketed in-person or through the mail.
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