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FTC - AEI Blog Post Article

Article – Is FTC Seeking More Rules & Less Public Input?

A report published by the American Enterprise Institute (AEI) delved into efforts by the Federal Trade Commission (FTC) to speed up decision-making processes through the establishment of rulemaking frameworks with less public input and more political control. AEI recently held a panel discussion with former FTC leaders to discuss the findings of the report and the direction of the current commission. According to the blog post article from AEI providing a partial transcript of the panel discussion:

“Mark Jamison: Tim, give us an overview of why we should be concerned about FTC rulemakings amidst other concerns like crime, inflation, and a war in Europe. Your report indicates this is quite pressing.

Timothy J. Muris: A problem with the FTC as the source of these transformative rules is: The FTC is not a specialist agency. The FTC is a generalist agency. It’s charged with prohibiting unfair methods of competition and unfair or deceptive acts and practices over wide parts of the economy. The commission, as we envisioned it—and as it was for the last 40 years up to the new leadership—saw itself mostly as enforcing principles and rules of the road. The rules are so basic that people don’t even think of them as rules. They’re rules like no fraud, you ought to enforce your contracts, and rules about truth in advertising.

The new FTC leadership has a different view—namely, that the FTC ought to write actual, prescriptive, industry-wide, transformative rules. These are things that would change how industries work, because they’re fundamentally hostile to the current market, and would create burdens that are passed on to consumers.

If you want to transform an industry, you ought to know a lot about the said industry. And so to do that, the FTC needs to start from scratch. We’ll see that this is a hard process. They failed when they tried it before, and they almost crushed the agency in the process.

What specifically has the FTC changed regarding rulemaking procedures?

J. Howard Beales III: They made a variety of changes, the thrust of which is less public input and more political control in the rulemaking process. The only justification they offered is the need to do things faster—not a word about writing better rules, building better records, or making better decisions. It’s all about how fast they can get things done. One change they made is to require less explanation of what they’re up to. They just have to generally state the reasons for their actions under the new rules, not with particularity. An explanation of what’s going on is the key to effective public participation, and there will be less of that.

Secondly, they effectively gutted the role of the presiding officer who oversees the hearings and the preparation of the rulemaking record. I’d also like to highlight the fact that rulemakings always ended with a final staff report that comprehensively summarized the rulemaking record. Even when you disagreed with the staff report, which I did somewhat frequently, you could see what was in the record, know what evidence was there, and clearly see whether the evidence supported what they were doing or not. And the staff made final recommendations as to what the rules should look like—which was often very different from what had been originally proposed. Presiding officers relied on the staff reports; reviewing courts relied on the staff reports. But this commission abolished staff reports, because apparently nobody needs to know what the staff is recommending.

Also, with staff reports, there was another round of public comments on the staff’s final recommendations before the commission made its decision about the rule. That’s gone too. So again, there is less public input and more political control of the rulemaking process.”

To read AEI’s complete blog post article, click here.

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