FTC Troubles Raise Broader Questions on Future of Independent Agencies: AEI Experts

The FTC, in contrast to the FCC, has been in disarray, with Republican Commissioners Christine Wilson and Noah Phillips having left, Jamison said. Wilson cited Chair Lina Khan’s “disregard for the rule of law and due process” in announcing her resignation in February (see 2302140047).

“The FTC is using every tool it has available to do what it has always done, which is to protect consumers and promote competition," a spokesperson emailed: "Consumers and honest businesses should demand nothing less.”

Khan also has supporters. Sen. Brian Schatz, D-Hawaii, recently defended Khan (see 2302150047). She's “doing extraordinarily well, and she’s doing a lot of things that are appreciated on a bipartisan basis,” which “is why she was confirmed expeditiously,” he said. Democrats have a “very different” opinion about the direction and success of the agency under Khan, House Innovation Subcommittee ranking member Jan Schakowsky, D-Ill., said at recent House hearing (see 2304180077).

“In normal times” the FTC “operates as a collegial body at arm’s length from the White House, with open debates and disagreements, as well as unanimous decisions,” Jamison said. Its work “had been about protecting consumers, high-quality products with low prices, efficiency and innovation and not unduly burdening legitimate business activity,” he said. “The Biden administration has not been normal times.” The FTC “is in disarray” and “many career staff have recently left” and others are demoralized, he said. Information wasn’t shared with the two Republican commissioners who left the agency, he said.

“The agency is operating beyond its authority according to some agency veterans,” Jamison said: “It has embarked on a rulemaking spree … on such topics as data collection, employee noncompete agreements and television advertising.” The power has shifted to the chair's office, he said: “If there are problems, are agencies and the courts up to the task of holding agencies accountable for laws and process?”

Ohlhausen, now at Baker Botts, said the FTC was always seen in the past as a “bipartisan, fairly collegial body” that “took a more bipartisan approach to competition and consumer protection issues.” Ohlhausen noted the FTC had numerous acrimonious, partisan fights in the 1970s, which made Congress “very, very unhappy.” The FTC was defunded and temporarily shut down, she said: “The agency almost didn’t survive.” That had a “real impact” on the thinking of the FTC for years after, she said.

O’Rielly said in 20 years as a Capitol Hill staffer he “got to see how agencies abuse the statute” and “their own procedures and other commissioners.” He said he took that mindset with him when he was confirmed to the FCC. O’Rielly, who served with FCC Chairwoman Jessica Rosenworcel, said he has no quarrels with how she has run the agency, although he said some past chairs “abused the process.”

O’Rielly said he proposed probably 60 suggestions for process changes when he was a commissioner “and I probably got a handful through.” He cited the current FCC policy of publishing draft items three weeks before a meeting. “Procedures really matter to me,” he said. At times, the FCC has also had process abuses, “on timing, on sleight of hand, on information not being shared with other commissioners,” all “things that were not necessary to run a good ship,” he said.

O’Rielly supports Congress “writing really strict statutes.” It would be helpful for Congress to tell agencies “what they’re not to do," he said. Congress tends to tell agencies what to do and then hope for the best, he said.

Ohlhausen said Congress should give more guidance to the FTC on how to “carry out its mission.” The courts are now looking at regulatory actions differently (see 2305050038), she noted. The U.S. Supreme Court, in particular, is asking whether an agency has “this authority, where is it in the statute,” she said. The FTC operates under “a very vague” statute and is now “using it in ways that start to raise a lot of hackles,” she said. Her advice to the FTC is “avoid doing things that unite your enemies.”

Courts

For the past 40 years, the Supreme Court told lower courts “to be deferential to agencies’ interpretations of the law. Congress writes these laws in broad terms, there’s a lot of policy discretion,” said Adam White, AEI senior fellow. SCOTUS is starting to recognize that “if agencies start flip-flopping wildly from one administration to the next in … significant policies you get terrible uncertainty,” he said. Even the late Justice Antonin Scalia, the “biggest defender” of Chevron deference, “warned against this,” he said.

SCOTUS recognizes “you’re getting huge swings in policy” on issues like climate policy, net neutrality and antitrust from one administration to the next, White said. Justices Clarence Thomas and Neil Gorsuch in particular “are very worried about the breadth of delegation,” he said: Chief Justice John Roberts “seems particularly worried about the flip-flop problems and the fact that you do get such uncertainty from one administration to the next.”

Jamison noted Rosenworcel has been widely praised on how she has led the agency with two Democrats and two Republicans, though that could change soon with the pending nomination of Anna Gomez as the third Democratic commissioner (see 2305220065).

The FCC “is still functioning,” with most items approved 4-0, O’Rielly said. But that’s not how the authorizing statute reads, he said: “It’s supposed to be three members from the president’s party and two from the other side.” A 3-2 split often leads to concentrating power in the chair’s office, he said.

“Different formulations can work -- it’s a little bit more about the desire to get things done than necessarily the numbers,” O’Rielly said. Some more contentious issues like net neutrality will likely reemerge “but that’s how Congress structured it,” he said.