## Facts

- The Federal Trade Commission (FTC) issued a Trade Regulation Rule addressing gasoline marketing.
- The rule declared that failing to post octane rating numbers on gasoline pumps at service stations constitutes an “unfair method of competition” and an “unfair or deceptive act or practice.”
- The FTC relied on § 6(g) of the Federal Trade Commission Act (FTCA), which authorizes the agency to “make rules and regulations for the purpose of carrying out the provisions” of the Act.
- Two trade associations and numerous gasoline refining companies challenged the rule, arguing the FTCA limited the FTC to case-by-case enforcement under § 5 through adjudication and cease-and-desist orders.
- The challengers also pointed to the FTC’s long history of limited reliance on § 6(g) for substantive trade regulation rules, contending that history supported a narrower reading of the statute.
- The district court set aside the rule solely on statutory-authority grounds, holding the FTC lacked power under the FTCA to issue substantive rules of this kind.
- The FTC and intervenors supporting the rule appealed to the U.S. Court of Appeals for the District of Columbia Circuit.

## Issues

1. Whether FTCA § 6(g) authorizes the FTC to promulgate substantive Trade Regulation Rules defining conduct that constitutes “unfair methods of competition” or “unfair or deceptive acts or practices” under FTCA § 5.
2. Whether the existence of § 5’s case-by-case adjudicatory enforcement mechanism implies Congress withheld substantive rulemaking authority from the FTC.
3. Whether the FTC’s historical nonuse or earlier disclaimers of substantive rulemaking authority under § 6(g) limit the statute’s meaning.

## Decision

- The D.C. Circuit reversed the district court’s judgment setting aside the rule for lack of statutory authority.
- The court held that FTCA § 6(g) authorizes the FTC to issue substantive Trade Regulation Rules that specify and give content to the statutory standards the FTC enforces under § 5.
- The court rejected the view that § 6(g) is confined to procedural or internal “housekeeping” regulations.
- The court concluded that rulemaking and adjudication are not mutually exclusive; rules may define governing standards ex ante, while adjudication determines whether a respondent violated the rule and supports cease-and-desist relief.
- The court found the FTC’s prior limited reliance on § 6(g) did not bar the agency from exercising that authority where the statute’s text and purpose support it.
- The court remanded for further proceedings on challenges to the validity of the procedures used to promulgate the rule, leaving procedural validity unresolved.

## Legal Principles

- A statutory grant empowering an agency to “make rules and regulations for the purpose of carrying out” an act may authorize substantive rules defining regulated parties’ obligations, not merely procedural rules.
- The presence of an adjudicatory enforcement scheme does not, by itself, negate an agency’s authority to use rulemaking to specify the content of broad statutory standards.
- Substantive rules can operate within an adjudicatory system by serving as the governing standard applied in later enforcement proceedings seeking cease-and-desist orders.
- An agency’s historical nonuse of a statutory power, or earlier statements limiting its authority, is not determinative when statutory text, structure, and purpose support the broader authority.

## Conclusion

The D.C. Circuit held that FTCA § 6(g) authorizes the FTC to promulgate substantive Trade Regulation Rules defining conduct that violates the Act’s prohibition on unfair methods of competition and unfair or deceptive acts or practices, reversed the district court’s contrary ruling, and remanded for consideration of procedural challenges to the rule’s promulgation.


Nat'l Petrol. Refiners Ass'n v. FTC, 482 F.2d 672 (D.C. Cir. 1973)