Policy Alert: Firing Democratic FTC Commissioners

Action: On March 18, the President fired Rebecca Slaughter and Alvaro Bedoya, the two Democratic Commissioners on the five-member Federal Trade Commission (FTC). With one vacancy following the resignation of former Chair Lina Khan, only two Republicans remain as Commissioners at the agency responsible for enforcing antitrust and consumer protection laws and regulating major technology companies.

Key Insights

• Both Commissioners said their firings are illegal, citing to the statute which permits removal of FTC Commissioners only for “inefficiency, neglect of duty, or malfeasance.” Bedoya said he would sue for his position; Slaughter wrote that “[t]he law protects the independence of the Commission because the law serves the American people [.]” Congress established the FTC in 1913 in its current structure, with Commissioners appointed by the President and confirmed by the Senate, but not subordinate to the Executive Branch.
• The 1935 Supreme Court decision in Humphrey’s Executor limits the President’s ability to remove members of multi-member commissions such as the FTC. The Administration has already said it will ask the Supreme Court to overturn the decision. This forces the issue and will likely require the Court to consider it this Term.
• The President had earlier fired members of other independent agencies holding terms that had not expired, even though laws establishing those agencies also permit removal only for malfeasance or cause. This has led to litigation, with both fired National Labor Relations Board chair Gwynne Wilcox restored to office after Judge Beryl Howell called the firing “flat wrong.”
• In contrast, current FTC Chair Andrew Ferguson said “the President is vested with all the executive power in our government. I have no doubts about his constitutional authority to remove Commissioners [.]”— authority based in the President’s recent Executive Order bringing all independent regulatory agencies under the control of the President.
• But the “constitutional authority” is precisely what will be tested in Bedoya’s case, which will either reaffirm Humphrey’s Executor and reinstate him or overturn it as the Administration wants.
• The firings received some criticism on the issues of the Commission’s independence and enforcement powers. Senator Amy Klobuchar (D-MN), who works closely on technology issues, said that “oftentimes the political system cannot deal with [difficult cases]—because of lobbying and they’re not brave” and therefore it is “really important that you have a bipartisan FTC to be able to carry through on these cases.” Former Republican FTC Chair William Kovacic stated that the firings appear to “send a signal to all of the so-called independent regulatory agencies to say, ‘We mean to exercise complete control.’”
• FTC investigations can proceed during the period in which the Commission does not have three Commissioners, but it will be difficult for the FTC to take formal action on matters before it, such as settling cases. Important matters currently under consideration include a case against Amazon and an investigation into Microsoft’s relationship with OpenAI, which the new Administration has recently expanded.