Holyoak: FTC Should Rely on Statutory Text Given Chevron Reversal

The FTC should rely more heavily on statutory text when writing rules, given the U.S. Supreme Court’s recent reversal of Chevron, FTC Commissioner Melissa Holyoak told us Wednesday (see 2407090044 and 2406280043). Chevron could significantly affect the FTC, given its aggressive rulemaking approach under Chair Lina Khan, legal experts told us in interviews.

The high court in its June 28 decision overruled the Chevron doctrine, which gave agencies like the FTC and the FCC deference when interpreting congressional laws. Experts noted the FTC, in particular, has aggressively passed rules since the Supreme Court gutted its consumer redress authority in AMG Capital Management v. FTC (see 2107270050 and 2104220068).

It's the FTC's obligation to return to relying on specific statutory authority that Congress granted, Holyoak said after an appearance at a Federalist Society event. “Even in areas where we have significant amounts of discretion,” the court was clear that judges must “police the outer bounds of those statutory delegations.”

Holyoak joined Khan and Commissioners Rebecca Kelly Slaughter, Alvaro Bedoya and Andrew Ferguson for a budget hearing Tuesday before the House Innovation Subcommittee. The five agreed the FTC must restore some version of the authority the Supreme Court eliminated in AMG. Ferguson said the high court's ruling striking down the provision was correct, but the agency requires consumer redress authority.

“The FTC has been on an absolute tear with rulemaking,” Venable partner Shahin Rothermel said. “That’s why [the Chevron reversal] is important for the FTC.” It’s almost as if the FTC is being told to go back to the drawing board, she said.

Cato Institute legal fellow Thomas Berry said the Chevron reversal doesn’t “immediately invalidate” rules. But it decreases the odds of an agency winning a case if it writes an ambiguous rule that gets challenged, he said. “A rational government agency that knows its odds of winning have gone down would naturally be more cautious and more careful in the types of rules that it issues,” he said. “Any agency would be prudent to put a lot more thought and a lot more effort into” rules. Berry co-authored Cato’s amicus brief arguing in favor of the Supreme Court overruling Chevron.

How Khan proceeds with future rules depends on her priorities, Berry said. If her intention is to “make a splash” or “push the envelope,” it's likely she will continue pushing for “bold” rules.

Free State Foundation President Randy May told us the FTC can no longer rely on ambiguous interpretations of statutory text. Anything that doesn’t rely on a clear delegation of authority will be difficult to defend in court, he said.

Holyoak said during the event that the agency must “rebuild our trust” with Congress and show lawmakers the FTC will “follow the statute” and enforce what Congress writes. “I don’t want to lose the trust of Congress, and it’s a big concern,” she said. Holyoak noted Congress’ continued negotiations over privacy legislation (see 2406270046), including deliberation over rulemaking and consumer redress authority. She said Congress, not the FTC, must settle difficult privacy policy questions related to federal preemption, a consumer’s right to sue and data minimization standards.