Nielson Paper Asks What Happens If the FTC Becomes a Serious Rulemaker?

Aaron L. Nielson of Brigham Young has written What Happens If the FTC Becomes a Serious Rulemaker? forthcoming in FTC's Rᴜʟᴇᴍᴀᴋɪɴɢ Aᴜᴛʜᴏʀɪᴛʏ (Concurrences 2022). Here's the abstract:

The Federal Trade Commission (FTC) is no one’s idea of a serious rulemaker. To the contrary, the FTC is in many respects a law enforcement agency that operates through litigation and consent decrees. There are understandable reasons for this absence of FTC rulemaking. Not only has Congress imposed heightened procedural obligations on the FTC’s ability to promulgate consumer protection rules, but it is far from clear that the FTC even has statutory authority to promulgate substantive rules relating to unfair methods of competition (UMC). Yet things may be changing. It appears that the FTC is preparing to begin using rulemaking more aggressively, including for substantive UMC regulations. The FTC’s ability to use rulemaking this way will undoubtedly prompt sharp and important legal challenges.

This short essay, however, considers the question of the FTC rulemaking’s authority from a different angle: What if the FTC has broad rulemaking authority? And what if the FTC begins to use that authority for controversial policies? Traditionally, the FTC operates in a case-by-case fashion that generally attempts to apply familiar principles to the facts of individual matters. Should the FTC begin making broader policy choices through rulemaking, however, it should be prepared for at least three unintended consequences: (i) more ossification, complete with judicial challenges and perhaps even White House oversight; (ii) more zigzagging policy as new FTC leadership, in response to changes in presidential control, moves to undo what the agency has done; and (iii) to more often be the target of what has been called “administrative law as blood sport,” by which political actors make it more difficult for the agency to function, for example by delaying the confirmation process. The upshot would be an agency that could in theory (and sometimes no doubt in fact) regulate more broadly than the FTC does now, but also one with a different character. In short, the more the FTC becomes a serious rulemaker, the more it will change as an institution.

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