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I feel that the authority that is being granted by the provisions in the Minish bill parallel the provisions that we presently have under antitrust statutes, and I feel that it would certainly be adequate to initiate actions on behalf of individuals within our respective States.
I am not sure that I completely understand the concern from the question of the chairman, but I feel that the provisions are satisfactory to permit me, as a State attorney general, to bring actions on behalf of consumers in State.
Mr. GONZALEZ. How much of a track record do we have of experience under this doctrine in the case of antitrust? Is that not a recent Federal enactment?
Mr. ANAYA. Mr. Chairman, the legislation was enacted in 1976. It was funded last year, last October. My office, for example, got one of the first grants to initiate an antitrust unit. We have now been in operation for some 8 or 9 months.
One of the decisions, the so-called Illinois Brick decision, that made it to the supreme court has now perhaps left some of the powers under that particular provision in shambles, and there is legislation presently pending in the Senate, hopefully, to be able to correct that.
But the general concept will be, I feel, extremely valuable in permitting the State attorneys general to use Federal statutes in Federal courts on behalf of State consumers.
And also, an equally important provision is forcing, in effect, the Federal agencies to cooperate with the local law enforcement agencies. I feel this will be extremely valuable, not only in these areas. but other areas, to permit a State attorney general to enforce Federal laws in a Federal court on behalf of his constituency.
Mr. GONZALEZ. Thank you very much.
I just was wondering, the ongoing arguments I heard when I last visited New Mexico was that Texas had brought up at least the southeastern one-third of New Mexico.
Mr. ANAYA. Mr. Chairman, one thing I can say about your constituency: They were a lot brighter than some of the others who have bought--they have bought up all of the land with the oil and gas. Other constituents are hoping to do the same thing, but have not been so successful.
Mr. GONZALEZ. Thank you very much.
Aren't vou really in your testimony saying that the need for the Federal law is to protect the mail order land purchase, the purchase by people from out of State, and that you are not really suggesting that the Federal Government attempt to police what are legitimately intrastate sales?
Mr. Anaya. Mr. Kelly, that is basically correct, although the sales techniques are not strictly limited to a mail order type operation, but my concern is primarily addressed to interstate sales, legitimate inter
In New Mexico we refer to them as the ma-and-pa subdivisions. I think the ma-and-pa subdivisions, the intrastate subdivisions, if they are truly intrastate sales, then I believe those, the State of New Mexico and local authorities should be prepared to try to police.
Mr. Kelly. Well, let me ask you this. Don't you think that a legiti
mate criteria for determining whether or not it is an intrastate as opbeys posed to interstate sales is if they advertise only in local newspapers or and if they do not solicit by mail or telephone on an interstate basis, D
so that when advertising in local papers can be used as a criteria for y establishing it as an interstate sale, that is not the kind of recommenda
tion you have, is it?
Mr. Anaya. Mr. Chairman, the whole impact, I suppose, would be ofer on the solicitation-how do the subdividers go about soliciting, and * where do they solicit. It is probably a little bit difficult to limit adver
tising strictly to the four boundaries of the State of New Mexico because even our local newspapers, for example, are sold in Texas, Colorado, Arizona, and Nevada and maybe in other States, so that if you get an advertisement in one of our local newspapers, that newspaper is sold in Texas. Conceivably, a court would uphold that as being involved in interstate commerce, unless it was more clearly defined.
Mr. KELLY. But that is not really a legitimate concern, because I don't want to slight the Albuquerque press, but they don't get a pretty wide national circulation, do they?
Mr. Anaya. Mr. Chairman, I am glad you made the statement and not me. [Laughter.]
I don't think we would find the Albuquerque newspapers would have the kind of circulation that the New York Times does.
Mr. Kelly. And for instance, if the Albuquerque papers would suddenly start and do something funny just to accommodate some sort of a land promotion deal on an interstate basis, that would not be the normal publication of the local newspaper.
Mr. Anaya. I believe that any restrictions or limitations of this type I could certainly, personally, as attorney general, live with in terms of trying to distinguish between intrastate and interstate. I believe it would be important to give someone in an administrative capacity, HUD, for example
, the ability to try to distinguish what is intrastate and interstate.
I found that with each limitation that Congress or the State legislature places, there is always some subdivider that is going to try to find some way to get out from under. Mr. KELLY. All right, let me ask you this. A personal inspection, requiring personal inspection goes a long way toward alleviating the really serious fraud situation, doesn't it? Mr. Anaya. Yes; it does. Mr. Kelly. All right. Let me ask you something else. Is there not a legitimate market for unimproved land? I mean, aren't there some people that want unimproved land because they can't afford improved land; they don't want the paved roads and sewers running out to the property because they can buy 5 acres of land, if it is unimproved, and they may not be able to buy 1 lot if it is.
Mr. Anaya. I am sure that there is a legitimate market for unimprored lots.
Mr. Kelly. I want you to know I am really enjoying this elevation and status that you have bestowed on me.
Mr. Anaya. I fully recognize the position of the Congressman, and
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There is a legitimate market for unimproved land. I think the key would be, the purchaser of that unimproved land know exactly what he or she was purchasing.
The general impression that I was brought up with and have only changed in the last 2 or 3 years was that any piece of real estate was a good investment, any piece anywhere, and that is not true. In New Mexico, much of the land, as I referred to earlier in my statement, is a negative investment. Some of the land that was worth $12 an acre 10 years ago is still worth $12 an acre today, even in spite of inflation.
So I think the key is, does the purchaser in Florida or New York City or Texas or wherever, does that purchaser know the full value of that land and what its potential value is, or is that person being sold a piece of real estate, unimproved real estate with the misrepresentations that somehow he or she is going to have a substantial investment.
Mr. Kelly. But if someone knew he was buying a lot on a dirt road, I am betting that for political considerations you are not going to announce that everybody that lives on a dirt road is a dummy.
Mr. ANAYA. Mr. Chairman, that would destroy me politically because I live on a dirt road. (Laughter.]
Mr. Kelly. I just thought there might be some people in New Mexico on dirt roads.
But you mentioned earlier about the lobbyists and the special interest pressures and so forth, but would you believe that there is another group of lobbyists and special interests that are real hot to go on sewers and all kinds of engineering and reports and studies and all of this other stuff that costs money and runs up the price of real estate?
Mr. AxAYA. Congressman, there is no question but that the consumer protection movement can be carried to such an extreme that the consumer is the one who ultimately winds up suffering, and I think we have to strike some kind of a balance between both extremes, and I think that that is basically what I would be asking this committee to do.
Mr. KELLY. Well, you don't think this committee should mandate that everybody has got to be living on a municipal sewer system, for instance ?
Mr. AxAYA. No, I don't, Mr. Chairman.
Mr. KELLY. I mean, being from New Mexico, I thought you might be able to appreciate the limitations that kind of a system would have.
Mr. Anaya. Again, I think the key would be in terms of the representations that are being made in the sale of whatever land.
Mr. KELLY. As long as the people knew what they were buying, that is really the criteria we are trying to get at so that people aren't hornswaggled into believing they are going to be hooked up to a sewer when there isn't one for 75 miles.
Mr. ANAYA. The big concern, Mr. Chairman, would be one of full disclosure and remedies in the event that those disclosures were not complied with.
Mr. KELLY. Thank you, Mr. Chairman.
Do the land sale abuses that you are familiar with involve residents of your neighboring States or primarily neighboring States or do they involve residents of States like New York, New Jersey, and so forth, which are some distance from New Mexico.
Mr. AXAYA. Congressman, most of the land subdivisions that we have proceeded against have been involving residents from the east coast and the Midwest ; very few involve purchases by New Mexicans.
Arizonans can purchase their own worthless land, if they so wish. [Laughter.]
And they are very much aware of that.
Mr. Browx. You, of course, support this legislation. It almost sounds as though you are more concerned about residents of other States than you are about residents of the same State but in a more remote place from the development, because, obviously, this act is not going to protect a New Mexican resident from a bad sale in a remote part of New Mexico.
Mr. AXAYA. Mr. Chairman, I am concerned, as attorney generalI am concerned with any illegal activities that occur within the four boundaries of the State of New Mexico.
I have likened it in local testimony to when I was being pressured, as I testified earlier, to not bring a lawsuit against a major subdivider who had been making sales out of State, and I was being pressured not to bring the lawsuit because it was going to hurt the local tax base and the local economy, and just think of all these millions of dollars that we are bringing in fraudulently from out of State.
I likened it at that time to another problem that I have been in Washington testifying on, the subject of na scotics smuggling from Mexico. If we want to use the two examples, your argument to the community that was suggesting I not proceed against illegal subdividers, their argument would be likened to my not proceeding against narcotics smugglers who are bringing in narcotics from Mexico into New Mexico and dispensing it throughout the Nation. It really wasn't New Mexicans that it was being sold to; it was people in other States.
I think I have to be concerned about any illegal activity in the State of New Mexico that affects anybody.
Mr. Brown. But this illegal activity that you are referring to, would not be illegal unless it involved å nonresident of the State of New Mexico. But, you said that your laws in New Mexico, insofar as they protect residents of New Mexico, are inadequate.
Mr. ANAYA. Mr. Chairman, I probably should not have used the word “illegal” in that particular phrase. The fraudulent, even though at this point they may not be prohibited, or we may not have the remedies to go against the individuals involved—the fraud that is being perpetrated on consumers is there, whether it is intrastate or interstate.
Mr. Browy. But there is no protection from fraud if you are a resident of New Mexico and you are not engaged in interstate land sales, because you have no law on the books in New Mexico, apparently, that would be comparable to the Interstate Land Sales Act.
Mr. ANAYA. We do have legislation on the books which I feel is totally inadequate at the present time to deal with the large-scale fraudulent practices. Were we able to distinguish between interstate and intrastate, and given the parens patriae powers that we are asking
for, combined with existing statutes, and we have had to go beyond subdivision laws—we have had to use our securities laws, our unfair trade practices laws and other statutes—given all of these tools together with the additional Federal authority, I feel that we could bring land fraud under control in our State.
Mr. Brown. Under section 301 of the Clayton Act, you can bring an action on behalf of any individual. It doesn't have to be a class right.
Mr. ANAYA. That is correct, Mr. Chairman.
Mr. Brown. In other words, the provision in the Minish bill is comparable to section 301 of the Clayton Act, as far as standing to sue.
Mr. ANAYA. That is correct. I understand that they parallel very closely.
Mr. Brown. Have you looked at the Nelson bill in the Senate?
Mr. Brown. That bill, of course, provides the 100-mile exemption provided there has been onsite inspection.
Don't most of the abuses occur because there is not onsite inspection?
Mr. ANAYA. I believe that the two principal reasons for the abuses are, first of all, the lack of onsite inspection and, secondly, the representations that are made even with onsite inspection in terms of future developments or future amenities and things of this nature. So the onsite inspection would cure a large number of the problems but it still would not take care of the misrepresentations.
Mr. Brown. Thank you, sir.
Mr. KELLY. There is no reason why New Mexico could not have whatever laws are appropriate to handle purely intrastate lands sales.
Mr. ANAYA. There is no legal reason why we shouldn't or couldn't.
Mr. KELLY. And if you don't have them, it is just because you have, in vour wisdom, decided not to impose them.
Mr. ANAYA. Mr. Chairman, I would not characterize it in the same way. I believe the reason, as I indicated earlier, that we don't have tougher laws now has been because of the strong lobbying efforts at the local level.
I have not been any too bashful to come to the Congress before to ask for authority in other areas where we need it, where the States have failed to take care of the problem. And I suggest that is what I am doing today.
Mr. Kelly. Then, to really focus this thing, what you are saying is that because the State of New Mexico has not done as you think they should do in this area, then you think the Federal Government, through the device of a strained "interstate" definition, we should start monitoring the activity in New Mexico.
Mr. ANAYA. No, Mr. Chairman, that is not it at all. What I am suggesting is that, under the existing statutes, it gives HUD particularly-and other Federal agencies—some authority in the area ; that, first of all, they are not doing their job. And one of the reasons they are not doing their job is because they don't have the necessary authority to do the job.
And second, to the extent that the authority can be extended to permit State attorneys general to exercise that authority in court on behalf