A unanimous 1935 Supreme Court ruling affirmed the FTC as an “independent” agency with commissioners of both parties only able to be removed for cause. (No commissioner has ever been removed from the agency for cause.) Since March, the agency has operated with commissioners of only one party as Democrats Rebecca Kelly Slaughter and Alvaro Bedoya sued.
On July 17, a federal judge called the purported removal “unlawful under the Federal Trade Commission Act.” A spokesperson for the Department of Justice didn’t respond to a request for comment, but later that day, the department appealed the case to the US Court of Appeals for the District of Columbia Circuit. On July 18, Slaughter was listed among the current commissioners on the agency’s website.
FTCWatch spoke to former commissioners and agency bureau directors from the Republican and Democratic parties, as well as one commissioner who served 14 years as a political Independent. None of the former officials advocated for a commission consisting of one party.
The day before the dismissals, Chairman Andrew Ferguson placed himself among the voices extolling the advantages of a bipartisan agency. Now his name appears next to the president’s as a defendant in the case.
Largely absent from the conversation has been Congress (currently Republican-controlled in both chambers), which, in the words of a former FTC bureau director, once “decided that this agency, which has incredibly broad authority over our economy, shouldn’t be in the hand of one political party.”
“This is just so short-sighted by the administration,” said David Vladeck, director of the FTC’s Bureau of Consumer Protection from 2009 to 2012 during the first part of the Obama administration.
“The Republicans will not always be in power,” said Vladeck, currently a professor at Georgetown Law School, “and I just fear for the agency.”
Humphrey’s Executor and the FTC Act
The Federal Trade Commission was created to provide government authority to unelected experts, a key goal of the Progressive Era of the late 19th and early 20th centuries that transcended parties.
When Congress passed the FTC Act in 1914, it modeled the agency’s structure after the Interstate Commerce Commission, which was established by Congress in 1887 and became the first US independent regulatory agency. The ICC was set up to regulate the burgeoning railroad industry.
Both agencies were set up under law to have five commissioners, no more than three of whom can be from the same party.
The FTC Act says that commissioners can only be removed for cause — inefficiency, neglect of duty, or malfeasance in office. That law was challenged when Democratic President Franklin D. Roosevelt fired Republican FTC Commissioner William Humphrey for policy disagreements.
Humphrey sued, and a unanimous Supreme Court ruled in his favor in Humphrey’s Executor v. United States in 1935 (See FTCWatch, Dec. 17, 2024).
Trump challenged that precedent when he fired Slaughter and Bedoya. Former agency Chair Lina Khan called the firings “clearly illegal.” Slaughter and Bedoya sued to get their jobs back, but Bedoya has since resigned from the FTC, saying he could “no longer afford to go without any source of income.”
On July 17, the federal district court judge said Slaughter remains a “rightful member” of the FTC while Bedoya’s claims were dismissed, called “moot” due to his resignation in June.
The relations between the Democrats and Republicans have varied over the years. During the Clinton administration, Chairman Robert Pitofsky worked closely with Republican Commissioner Thomas Leary — they both had detailed knowledge of antitrust and Pitofsky felt the agency would do better in court and with Congress if its votes were 5-0.
Richard Parker, who served as deputy director and director of the Bureau of Competition then, quipped that he’d been tempted to file a workers’ compensation claim against the FTC because he wore out his soles talking to Republican commissioners to ensure they weren’t surprised by anything.
However, when Republican Commissioner Christine Wilson resigned in 2023, she criticized then-Chair Khan for her “abuse of power” and disregard for the rule of law and due process. Wilson also said Khan didn’t always keep Republican members of the FTC adequately informed on key matters (See FTCWatch, Feb. 28, 2023).
Ferguson: ‘I think that that adds value’
Ferguson, who also worked with Khan, said in April in response to an FTCWatch question that Republican commissioners weren’t able to halt actions when the Democrats controlled the commission. But speaking publicly the day before the Democrats were removed, Ferguson voiced a positive view of the role of minority commissioners.
“There’s also, I think, some benefits in certain circumstances to having multi-member agencies with people from both parties,” said Ferguson, during a March 17 Bloomberg podcast. “I mean, look, if you have an agency that is exceeding the law, abusing the companies that it purports to regulate, it’s helpful for markets, for courts, for litigants, for government transparency, to have people in the other party pointing this out and saying it in dissents.”
“I wrote 400-plus pages of dissents during my time as a minority commissioner. I think that that adds value,” he said.
Mary Azcuenaga, who served on the commission from 1984 to 1998 and is one of a handful of political Independents to serve on the FTC, said when she was there “approximately 98 percent of the commission decisions were unanimous.”
Nevertheless, Azcuenaga, interviewed by FTCWatch on July 10, found writing memoranda and opinions and having multiple perspectives on the commission was useful.
“You find out what someone else might say if they write a separate opinion,” she said. “You know you have to deal with anything useful that they may have said, even if you don’t like it, so that leads to greater accountability.”
Former agency Chairman William Kovacic, a Republican who served under Presidents George W. Bush and Barack Obama, put it another way.
“Dissent keeps the agency honest,” said Kovacic, who started as a staffer in the late 1970s.
A downside of bipartisanship
Kovacic said a downside of bipartisanship occurs when differing philosophical perspectives can emerge in an overtly partisan way that harms the agency. And he noted that sometimes dissent is aimed at appealing to outside entities rather than colleagues.
“Attacks on the majority can become personal and this can make the agency more susceptible to challenges from the outside,” according to Kovacic.
When James Miller chaired the FTC during President Ronald Reagan’s first term, his predecessor Michael Pertschuk, who was chairman of the agency under President Jimmy Carter, was still on the commission, and the two fought on a range of issues.
When Pertschuk left the FTC in 1984, after being chair for four years and a commissioner for three years, he wrote a scathing report detailing the alleged damage inflicted on the agency by his successor.
In a 370-page report Pertschuk gave to the House Energy and Commerce Committee, he summarized his conclusions with “They [those running the commission] have suppressed its energy, neglected its tasks, wasted its resources, while wallowing in intellectual self-indulgence … While they have fiddled, consumers have been burned,” according to The Washington Post.
Miller issued a 189-page response, asserting “Mike is a terrific writer, especially when it comes to fiction.” (See FTCWatch, June 20, 2023.)
Miller’s successor in the role of chair, former acting Chairman Terry Calvani, a Republican who served on the commission from 1983 to 1990, also scrapped with Pertschuk, but called collegiality “important” during a July 14 interview with FTCWatch.
“When I was there, my arch opponent, I guess, was Mike Pertschuk,” Calvani said. “We could try to slit each other’s throats during the day and have dinner with our wives in the evening.”
Views from bureau directors, former staff
Chris Mufarrige, the head of the FTC’s Consumer Protection Bureau, appointed to the role in February, told FTCWatch on July 11 that the majority members often vote as a block, so minority members have a tough time influencing the outcome. The former chief of staff to Commissioner Melissa Holyoak noted when Khan was chair, Bedoya and Slaughter rarely voted against things she supported.
Mufarrige’s predecessors at the consumer protection bureau expressed a different view on the value of a bipartisan commission.
“The moderating influence of bipartisanship makes the enforcement actions better,” Vladeck said.
He called relationships with the state attorneys general a “force multiplier” for a small agency.
“When you have both Republicans and Democrats, it makes it easier to deal with state AGs,” said Vladeck, providing the Attorney General’s offices of Indiana and Florida as examples of Republican-led states that a Democratic-led commission collaborated with during his tenure.
Attorney General Pam Bondi led Florida’s AG office during a couple of the years that Vladeck led the consumer protection bureau.
“Why could we do that?” Vladeck asked rhetorically. “ ‘Cause it was bipartisan.”
Lydia Parnes, who spent 28 years at the FTC, including as director of the consumer protection bureau from 2005 to 2009, said she couldn’t think of “negatives of a bipartisan commission.”
“I think in the long run,” she said, “everybody that I have worked for and with would agree that the compromise that comes with a bipartisan commission leaves the agency in a better place.”
Having a bipartisan commission, Parnes said, “imbues the career staff, certainly with a sense of non-partisanship, which I think is important, and I want to underline the non-partisanship.”
“I would hope that the agency can return to what it was,” she said. “The bureau’s client is certainly the commissioners, but it’s also all American consumers, whatever their partisan perspective.”
References:
https://ecf.dcd.uscourts.gov/doc1/045111511559
https://ecf.dcd.uscourts.gov/doc1/045111512131
https://www.ftc.gov/about-ftc/commissioners-staff/commissioners
https://ecf.dcd.uscourts.gov/doc1/045111511544
https://www.youtube.com/watch?v=pLFiWrEmbfs
https://www.washingtonpost.com/archive/business/1984/09/26/pertschuk-exits-ftc-with-guns-blazing/5e9c7df9-e639-41af-8c8c-202fcdb55eca/
https://www.mlex.com/mlex/articles/2320236/antitrust-enforcement-makes-markets-stronger-former-us-ftc-chair-khan-says