As part of its periodic review of agency rules, the FTC recently announced proposed changes to its rules of practice concerning investigations. With the proposed revisions, the FTC seeks to keep pace with the prevalence of electronic discovery, to help expedite Commission investigations, and to minimize compliance burdens on both targets and third parties.
The proposed changes deal primarily with Part 2 proceedings – the FTC’s nonadjudicative or investigations phase. With the revised rules, the FTC aims to minimize the burden on entities that are tasked with responding to compulsory process like a Civil Investigative Demand or “CID.” Often, after the agency initiates an investigation and determines that no corrective action is required, the agency will likely close the investigation. Under the current rules, both targets and third parties are under a continuing obligation to preserve documents responsive to an FTC request unless and until they receive notification that the investigation has been closed. Although in some cases “closing letters” will be issued to the targets of an investigation notifying them of this fact, this is not always done. Further, where the recipient of the CID is a third party and the investigation is non-public, it is rare that such notification will be given at all. Thus, recipients of compulsory process often do not know when they are relieved of their obligations and will continue to preserve documents, often unnecessarily and at considerable expense. To address these concerns, the revised rules would do away with this requirement and relieve parties of their obligation to preserve documents after a year passes without any written communication from the agency. The revised rules would also require parties receiving compulsory process to “meet and confer” ten days after receipt to attempt to resolve any anticipated compliance issues.
Public comments on the revised rules will be accepted through March 23, 2012.