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Copyright Dow Jones & Company Inc Jun 3, 1985 "This could triple {the used car dealers'} paper work and I'm afraid in some cases absolutely cripple the Used Car Dealers' effort to maintain his place under the American Free Enterprise System." This was part of the comment W.H. Wilcox filed March 19, 1976, with the Federal Trade Commission in response to the FTC's proposed "window sticker rule" for used vehicles. On Nov. 19, 1984 -- eight years after the FTC's initial proposed rule (and a year after Mr. Wilcox's death) -- the FTC finally promulgated its controversial "Used Motor Vehicle Trade Regulation Rule," which took effect this May 9. A matter Mr. Wilcox complained about in the original proposal was the requirement that used car dealers keep the window sticker and sales contracts for three years after the sale. The May 9 promulgated rule deleted this requirement. (The rule has already been challenged in court by a consumer group. The reviewing court refuses to stay the rule pending the case's outcome.) The FTC rule and Mr. Wilcox's reaction to it are an example of how an obscure federal publication -- the Federal Register -- can be used by businesses (or anyone) to practice preventive law. Federal regulations are made in what is basically a four-step process. First, Congress passes an enabling act. By so doing, Congress gives an agency the authority to make regulations (also called "rules") and provides a policy or guideline for the agency to follow in making the rules. Once the agency has the enabling act's authority, it takes step two: gathering evidence to propose a regulation fulfilling the enabling act's directive. Ideally, an agency will conduct or commission one or more studies. Agencies must have enough evidence, because agency rules and regulations are subject to court review. Assuming the agency completes a study and comes up with its proposed regulation, it publishes it in the Federal Register, a newspaperlike federal publication appearing every business day. The Federal Register is the public's official notice of what rules federal agencies want to make, plus other tidbits such as federal meeting announcements, presidential proclamations and promulgated ("final") regulations. Generally a rule cannot become law unless the proposing agency first publishes it in proposed form in the Register. Next comes the third and crucial step in the rule-making process -- where preventive law can occur -- the public comment period. Except where the agency for "good cause" finds it necessary to waive the period, the proposing agency must give the public at least 30 days to file comments on the proposed rule. This is the opportunity to speak out and educate the regulator about the ins and outs of the business to be regulated. Point out refinements in the regulation that could take account of some facet of your business unknown to the regulator. Or show the regulator how industry or trade-association activities already provide public protection from the evil the agency perceives. Or indicate a misconception implicit in the regulation itself. For example, part of Mr. Wilcox's comment letter to the FTC noted that the original proposal appeared to be based on journalists' allegations of shenanigans in the used car industry. In so doing, he questioned the FTC's evidentiary basis for the rule, alleging that it lacked "hard data" to support its proposal. Had, for example, the FTC conducted a study of consumer satisfaction in used car purchases? If so, what was "n," the number of observations in the study? It may well be true that unethical conduct occurs, but what is its frequency and magnitude? This is the sort of articulateness that catches regulators' (and reviewing courts') attention. While an agency has no legal obligation to do more than "consider" commenters' suggestions, they can serve as a barometer of public sentiment. Also, agencies are not mavens in all matters of business; they can learn. It is particularly crucial to comment on proposed regulations, because at this point in the regulation's life, the regulator's position is relatively fluid. The final step in the regulation's development is when the agency promulgates it -- again by publishing it in the Federal Register. Generally, promulgation refers to the time the regulation takes effect, although when highly technical regulations (for example, banking rules) are involved, their effective date is often delayed. Preventive law through the filing of comments is fine, you might say. But how am I supposed to pay $300 a year for a Federal Register subscription and then read the Federal Register? Actually, one need not even subscribe. Trade associations ride herd on the agencies by following regulatory developments in the Register and filing comments on their members' behalf. Trade association representatives also roam the agency halls to see what is in the works even before a proposed regulation reaches the Federal Register. Also, the Regulatory Flexibility Act of 1980 encourages regulators to send copies of proposed regulations to trade publications. After a regulation goes into effect, the general rule is that a person or organization may challenge it in court even though he or it did not comment on the proposed regulation or raise the objection later made in the lawsuit challenging the rule. In the case of a very few federal agencies' rule-makings, the Hobbs Act requires that a person file comments on proposed rules to later challenge the promulgated rule. Is the example of Mr. Wilcox's comment on the early version of the used car rule and the later deletion of the record-retention requirements really a reflection of the power of public comments to proposed regulations, or is it something else? A recent issue of Consumer Reports notes that the used-car trade contributed over $1 million to members of Congress. Also, there was a change of administration and regulatory personnel between the rule's first proposal in 1976 and its last promulgation in 1984. Thus, it could be argued that broader forces in the political and economic environment were as much responsible for the FTC's change of position as was Mr. Wilcox's comment. But such thinking misses the point: Campaign contributions, voting and commenting on proposed regulations are all legal and ethical means the business community can use to make its case with the public and nation's lawmakers. If it makes it convincingly and the regulators subscribe to its views, it is the Zeitgeist. --- Mr. Fisher, a professor at the University of Tennessee's business school, was a lawyer at the Environmental Protection Agency during the Ford administration.

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