FTC Votes to ‘Streamline’ Rulemakings, Remove Regulatory ‘Hurdles’

The FTC voted along party lines Thursday to “streamline” agency rulemaking procedures and remove hurdles to issuing compulsory demands in investigations (see 2106300001). The decisions remove policy constraints that hindered enforcement, making commissioners more nimble when investigating companies, Chair Lina Khan said during Thursday’s public meeting. Republicans said they weren’t given enough time to study the proposals that will reduce transparency, public input and commission oversight.

The commission voted 3-2 to streamline its FTC Act Section 18, or Magnuson-Moss, rulemaking procedures. The vote eliminates an agency-imposed requirement for a staff report on the hearing record for proceedings. It also eliminates agency-imposed comment periods, including the presiding officer’s report. The revisions respect the statutory requirements delivered by Congress, Commissioner Rebecca Kelly Slaughter said. Remaining requirements include publishing an advance NPRM for comment, advance submission of the NPRM to congressional oversight bodies, an NPRM for public comment and various other filings, she added. The existing requirements provide for substantially more oversight than the Administrative Procedure Act, under which most federal rulemaking is conducted, she said, and the commission can call for additional comment periods.

Commissioner Christine Wilson questioned whether the changes will result in fair adjudication. She opposed relieving administrative law judges as presiding officers, suggesting the FTC could be politicizing the rulemaking process if the chair appoints the presiding officer instead. The proposal “is not a small adjustment enacted to improve efficiency,” said Wilson. “These changes have the potential to usher a return to aggressive, unbounded rulemaking efforts.” Wilson moved for the commission to publish the proposed changes in the Federal Register to allow for 45 days of public comment. Her motion failed on a 2-3 party-line vote.

The commission shouldn’t vote on rule revisions without taking public comment, said Commissioner Noah Phillips: Streamlining rulemaking procedures makes regulation “easier, not better.” The agency is “about to embark on a raft of regulation not seen since the 1970s.” He offered two motions: to preserve the authority of the chief ALJ to be the “neutral, unbiased arbitrator” and presiding officer in rulemaking proceedings and retain the requirement for certain staff reports in the proceedings. Both motions failed 2-3. Philips offered a third motion to retain language to permit public recommendations by staff and the presiding officer, allowing more public comment. That motion also failed. The underlying motion passed 3-2.

The commission voted to rescind a policy statement issued in 2015 on unfair methods of competition under FTC Act Section 5, which was issued under the Obama administration. The policy statement is at odds with institutional design and constrains enforcement efforts, said Khan. Withdrawing the statement is only the start of efforts to clarify Section 5 and apply it to “today’s markets,” she said. In the coming months, the FTC will consider issuing new guidance and proposed rules further clarifying practices that warrant scrutiny, she added.

Rescinding the bipartisan policy statements appears to be an effort to remove “even modest” constraints guiding the commission by the public policy of promoting the consumer welfare standard, said Wilson. Without the consumer welfare standard, people should expect antitrust enforcement to reflect political motivation, rather than objective, economic analysis, she argued. She again asked for the proposal to be published in the FR and opened for public comment, a motion that failed.

There was no public comment when the 2015 policy statement was adopted or for other policy statements, said Commissioner Rohit Chopra. Rescinding the statement sends a “clear and important signal” that the commission will follow its statutory mandates and be constrained by guardrails Congress intended, said Slaughter. The vote allows the FTC to move past a “period of perceived powerlessness,” said Chopra.

Rescinding the bipartisan policy statement reduces legal clarity and unleashes the potential for significant regulatory power for a handful of unelected officials, said Phillips. He noted the proposal was announced a week ago, allowing the bare minimum notice permitted by law.

The commission voted for a series of resolutions that will allow a single commissioner to sign off on compulsory processes for enforcement investigations and for the commission to target repeat offenders. The resolutions will streamline investigations, allowing the commissioners to be more agile and comprehensive and target specific industries, said Khan.

Wilson said she received the resolutions Friday, giving her less than five business days to review. Some of the resolutions may “have merit,” Wilson said, but she’s concerned that “in the aggregate,” the package removes “significant swaths of commission oversight” from investigations without adequate justification. The package will reduce commission oversight and accountability over the biggest and most expensive investigations, said Phillips: For example, breaking up companies across the economy after consummated transactions from years ago. Congress gave the commission, not single commissioners, compulsory powers, he said. Allowing each commissioner compulsory authority creates more room for overreach, mistakes and cost overruns, regardless of the party in power, he said.

It never made sense that the FTC has broad, sweeping omnibus resolutions for consumer protection authority but not on the competition side, said Slaughter: The resolutions reflect the complicated realities of modern markets. The resolutions will relieve “overworked” prosecutors and investigators, said Chopra.

Public Knowledge welcomed the FTC votes to streamline rulemaking and rescind the 2015 policy statement. CTA CEO Gary Shapiro spoke against rescinding the statement: “This seems to be the first step in moving competition policy away from the consumer welfare standard, which for years has enabled U.S. world-leading innovation by focusing on what is best for consumers rather than legacy businesses using government to protect them from new entrants and innovators.”

The decision “risks undermining competition enforcement, and represents a step backwards for the future of the FTC as an enforcement agency,” said Computer & Communications Industry Association President Matt Schruers. It allows the FTC to “bring cases that would not be actionable under the antitrust laws as well as expand the rationale on which the FTC could make competition rules, as the Chairman and Commissioner Chopra have proposed,” TechFreedom said.