Prospect of FTC Privacy Rulemaking Draws Partisan Divide

The prospect of an FTC privacy rulemaking is facing a partisan divide in the agency and on Capitol Hill. House Commerce Committee ranking member Cathy McMorris Rodgers, R-Wash., and House Consumer Protection Subcommittee ranking member Gus Bilirakis, R-Fla., told us the agency shouldn’t issue a rule because it’s a legislative issue Congress needs to fix.

President Joe Biden’s executive order earlier this month encouraged the FTC to address data abuse with new rules (see 2107090006). At Wednesday’s House Consumer Protection Subcommittee hearing, FTC Commissioner Rebecca Kelly Slaughter again said the agency should act on a Magnuson-Moss rulemaking on privacy, saying it could clarify the congressional debate. A Mag-Moss proceeding is “absolutely burdensome,” but it’s “worth it” for the FTC to try, she said.

Commissioner Christine Wilson, who previously said she’s open to such a rulemaking (see 2102120046), backed off that position at the hearing. Wilson noted procedural changes by the majority at the first two public hearings under Chair Lina Khan, saying “I’m much less receptive” to a privacy rulemaking now.

McMorris Rodgers and Bilirakis accused Khan of attempting to consolidate power within her office. The new chair is “fundamentally changing” the agency, McMorris Rodgers told us: “It’s frightening how quickly she’s moved to consolidate power and decision-making in the office of the chair and dismissing other voices, excluding other voices from offering input.”

Khan told the subcommittee she’s “thrilled” about the public meetings. The agency is “early in the process” and always open to considering ways to improve, she added. Wilson and Commissioner Noah Phillips also accused the majority of consolidating power and ignoring input from other commissioners. Khan defended the meetings and a recent rescission of policy on unfair methods of competition (see 2107010081), saying omnibus resolutions have been routinely used for consumer protection investigations. The majority is simply trying to create symmetry on the competition side, she said. Empowering staff ensures the agency can move forward at full speed, she added: Commissioners can always get staff analysis and assessment when requested.

Bilirakis asked Khan to work with her colleagues in a “collegial manner,” citing reports “about individuals inside the FTC being silenced and your other commissioners being shut out of the process.” Committee Republicans established a whistleblower email for agency staff, he said: ecgop.whistlerblower@mail.house.gov.

The agency should proceed with a privacy rulemaking, Rep. Kathy Castor, D-Fla., told us: “The FTC needs to use all tools in their toolbox to protect consumers, protect privacy, and the Congress has to also get their act together.” House Communications Subcommittee ranking member Bob Latta, R-Ohio, said, “It’s our responsibility to get it done, and we need to get it done. It’s got to be us.” Rep. Suzan DelBene, D-Wash., said she would “love to see Congress act. That’s the long-term, best solution.”

Khan’s first two public meetings increased transparency and public input, said House Consumer Protection Subcommittee Chair Jan Schakowsky, D-Ill. She highlighted bills considered at Wednesday’s legislative hearing before the subcommittee. Her Online Consumer Protection Act (HR-3067) with Castor would “hold platforms accountable for failures to live up to promises to consumers in terms of service.” She supported their 21st Century FTC Act (HR-4447) and FTC Autonomy Act (HR-4488), which would provide Administrative Procedure Act rulemaking authority, first-offense civil penalty authority and independent litigation authority. She also highlighted the Protecting Consumers in Commerce Act (HR-4475), which would give the agency authority over common carriers.

Phillips cited Republican proposals that would help address the procedural issues he and Wilson raised about Khan’s first two public meetings: the FTC Reports Act (HR-2672) from Bilirakis and the FTC Transparency Act (HR-4564) from Rep. Brett Guthrie, R-Ky. In the past few weeks, the FTC repeatedly changed policy direction without giving the public any real notice or right to be heard, without serious consideration from the public, he said. Guthrie’s bill would require new FTC policies to be shared 30 days in advance before a decision, he noted. Longstanding norms have been “jettisoned” with the recent meetings, said Wilson, calling it an abrupt departure from regular order.

Congress needs to fix Communications Decency Act Section 230, Commissioner Rohit Chopra told the subcommittee. Platforms hide behind Section 230 in almost every case connected to platform-related conduct, and the immunity is abused, he said. House Commerce Committee Republicans released Wednesday 32 discussion drafts aimed at holding Big Tech accountable (see 2107280069). Chopra appeared in person with Khan. The other three members appeared virtually. Khan didn’t take media questions after the hearing.