Groups Closely Watching FTC’s Thursday Vote on Rulemakings

Industry groups and consumer advocates will watch closely Thursday when the FTC expects to vote on streamlining internal Magnuson-Moss rulemaking procedures. An affirmative vote could set the stage for an agency rulemaking on privacy, a proposal for which Democrat and Republican commissioners have shown interest (see 2102120046).

Commissioners are scheduled to vote on four agenda items, all of which could have significant policy implications for the agency. One would streamline procedures for FTC Act Section 18 on rules of practice for promulgating a Magnuson-Moss rule.

The agenda sends the signal that Chair Lina Khan is “keen on making Magnuson-Moss rulemaking easier and faster,” said ex-General Counsel Stephen Calkins, now a Wayne State University law professor. “If there are dramatic changes to the Magnuson-Moss rules and if there’s an intention to bringing lots of Magnuson-Moss rulemakings, then that’s very dramatic.”

Public Knowledge supports the FTC streamlining its rulemaking procedures, said Policy Counsel Sara Collins. Magnuson-Moss rulemaking is understood to be a more cumbersome process than Administrative Procedure Act rulemaking, she said. PK sees the vote as an attempt to remove internal obstacles, she said. The FTC must follow statutory guidelines for Mag-Moss procedures, but the internal procedures can be modified and streamlined, she said. Mag-Moss rulemaking procedures have essentially shut down the FTC’s ability to protect consumers, and it’s because the “process itself is designed to be dysfunctional,” said Public Citizen Regulatory Policy Advocate Amit Narang.

NetChoice fears Khan is attempting to circumvent public process and remove the opportunity for notice and public comment, said Vice President Carl Szabo. “The FTC can’t just throw away” federal law because it’s “inconvenient,” he said. His concerns are based partly on those raised by Commissioners Christine Wilson and Noah Phillips. Collins and Narang don’t expect the streamlining to curtail public comment.

Phillips tweeted he's concerned the agenda items will “reduce clarity in law, limit public understanding of rulemaking, and remove Commission oversight of decisions that impose substantial costs on the agency and businesses alike.” Wilson agreed, tweeting that streamlining the rulemaking procedures would effectively limit public input. The agency didn’t comment.

The Future of Privacy Forum would prefer a comprehensive federal privacy law than an FTC-initiated rulemaking process, said Senior Counsel Stacey Gray: “But in the absence of a new law, Section 18 rulemaking is an important tool that will allow the Commission to seek public input on the requirements of the FTC Act, provide clarity for businesses and consumers, and keep pace with changing technology and business practices.”

“The internet industry looks forward to working with the FTC and Congress on a federal privacy law that provides Americans with a clear and consistent framework of protections and transparency,” said Internet Association Senior Vice President-Global Communications Christina Martin. “To give internet users full protection, Congress needs to take action to replace the current patchwork of differing state privacy laws.” The FTC is “central to ensuring effective privacy enforcement while also protecting American technology innovation and leadership,” she added.

Commissioners will also vote on a resolution that would allow a single commissioner to sign off on compulsory processes for enforcement investigations. That would be another “dramatic change,” said Calkins: It appears Khan wants to enable “cutting-edge investigations” and accelerate them by personally signing off on compulsory process, which is potentially very important. The resolution “seems eminently reasonable in terms of the operation of the Commission and its very hard-working staff,” emailed Hausfeld’s Scott Martin. The commission is “known for being analytical and performing periodic self-critical and open reviews of its procedures, and I'm confident that if a valid concern arises over use of the procedure or less than measured practice -- and I don't foresee that -- it would be fairly reconsidered.” He called the open meeting a “fascinating development.”

Authorizing a single member to issue compulsory process could be a “means to avoid investigations getting bogged down in member-level discussion of whether to issue, and if so, what to request,” emailed Labaton Sucharow’s Jay Himes. “In theory, investigations could move ahead more quickly.” The downside, he added, is that “collegiality can decline, and perhaps the contents of process (information requested) may not get the potential benefit of input from multiple individuals with differing perspectives.”