The Federal Trade Commission Needs To Stay in its Lane
Recent actions by the FTC show that its officers should review the Constitution.
In the immediate aftermath of the Civil War, Supreme Court Justice David Davis unequivocally dismissed the idea of an "emergency" Constitution:
The Constitution of the United States is a law for rulers and people, equally in war and in peace, and covers with the shield of its protection all classes of men, at all times, and under all circumstances. No doctrine, involving more pernicious consequences, was ever invented by the wit of man than that any of its provisions can be suspended during any of the great exigencies of government.
Davis was writing the majority opinion in Ex parte Milligan, a case where the Court freed a man sentenced to death during the war for alleged acts of disloyalty. Justice Davis could have simply concluded that Milligian should have been tried before a civilian court instead of a military commission. Instead he opted to reinforce an essential part of our constitutional order: a government with finite and fixed powers.
Recent actions by the Federal Trade Commission (FTC) have challenged that understanding. Chair Lina Khan has framed several regulatory issues in the dramatic terms of someone facing an emergency that cannot wait for congressional action. When her agency tackled the topic of noncompete agreements, the headline of Khan's op-ed announcing the proposal proclaimed that these agreements "kill innovation," and she implied that the vibrancy of the U.S. economy turned on the FTC taking an aggressive regulatory posture. This perspective may explain why the FTC turned a "housekeeping statute" into a broad grant of rulemaking authority and relied on that authority to ban noncompete agreements.
Regardless of the merits of that policy, our Constitution protects means, not ends. Judge Ada Brown of the U.S. District Court for the Northern District of Texas—the first judge to review the ban's legality—reached a similar conclusion: "After reviewing the text, structure, and history of the [FTC] Act, the Court concludes the FTC lacks the authority to create substantive rules through this method."
The noncompete ban came at the cost of adhering to the Constitution's intended pathway for legislating on questions with nationwide ramifications. A bipartisan bill addressing many of the same issues was sitting before Congress at the time the FTC issued its rule. A majority of the FTC's commissioners nevertheless ignored Congress's legislative authority and persisted with their own rule—promulgated in a less transparent, less representative fashion than a bill that works its way through the legislative process.
This was not an isolated event. The commission plans to propose a rule on commercial surveillance in the near future. Few Americans would disagree with the FTC's conclusion that "new rules are needed to protect people's privacy and information in the commercial surveillance economy." But that doesn't mean those Americans want rules to come from an unrepresentative, largely unaccountable agency while Congress actively considers legislation addressing similar issues. Yet that is what Khan wants: Declaring that we may be living in the "most surveilled environment in the history of humanity," she again spoke with the broad, sweeping language that eases the use of extraordinary administrative authority.
A recent blog post from the FTC's Office of Technology indicates the Commission may squeeze Congress even further. The post analyzes the pros and cons of open-source artificial intelligence models. Though such analysis may seem innocuous, it may muddle the regulatory waters for researchers and bind the government to positions that Congress should sort out on its own. This regulatory confusion diminishes congressional authority and hinders the law's clarity, predictability, and stability. But again Kahn spoke the language of emergency, arguing that failing to make her preferred choice would come at "extraordinary cost to our privacy and security."
The FTC does not have any emergency powers. Congressional inaction does not increase the FTC's jurisdiction. Judicial opposition does not excuse the FTC's experimentation with novel theories of enforcement. Even economic upheaval doesn't change anything about when and how the FTC may fulfill its finite mandate. Justice Davis's call to respect the finite and fixed powers set forth by the Constitution should be spread around the Hill and the halls of the administrative state—especially the FTC.
