Trump Dismisses Democratic FTC Commissioners

On Tuesday March 18, President Donald Trump fired the two Democratic members of the Federal Trade Commission (FTC), Rebecca Kelly Slaughter and Alvaro Bedoya, noting that their “continued service on the F.T.C. is inconsistent with [the Trump] administration’s priorities.”

The FTC is made up of five commissioners, with no more than three being members of the same political party. Typically, three commissioners come from the President’s party, and two from the opposing party. This norm, however, can now be added to the long list of norms challenged under the current administration.

What Happens Next

Slaughter and Bedoya plan to challenge the firings. Note that these dismissals follow earlier firings of members of the National Labor Relations Board and the Equal Employment Opportunity Commission. In a recent challenge to one of these firings, a federal district court ruled that the ouster was illegal. The decision is being appealed. 

As context, under Humphrey’s Executor v. United States, a 1935 Supreme Court case brought by an FTC commissioner who was fired by President Roosevelt over policy differences, the President’s power to remove officials from independent regulatory agencies is limited by Congress, and thus they can only be removed for reasons specified by law. Specifically, the court noted that FTC commissioners are not executive officers but serve in a “quasi-legislative” and “quasi-judicial” role, and therefore cannot be removed at the President’s discretion.

The Trump Administration is virtually certain to take the position that Humphrey’s Executor does not apply and that the dismissals are permissible under the unitary executive theory – a legal theory under which presidents can remove any executive branch official, including heads of independent agencies, even if such action is restricted by Congress. In a brief statement, FTC Chair Ferguson noted that he has “no doubts about [President Trump’s] constitutional authority to remove Commissioners, which is necessary to ensure democratic accountability for our government.”

Implications for Advertisers

While these legal arguments play out in court, the practical implications of a narrowed, Republican-controlled FTC will play out for businesses. The current Republican members, Chair Andrew Ferguson and Melissa Holyoak remain. Trump has nominated a third Republican, Mark Meador, and he is awaiting Senate confirmation.

What we expect:

• Increased White House Influence: The Trump Administration is likely to exert more control over the FTC’s priorities and actions. At the Consumer Brands CPG Legal Forum, which we recently attended, Commissioner Holyoak expressly stated that the Commission would work closely with the Trump Administration. This may mean a focus on Made in USA claims and censorship-related issues, and a deemphasis on DEI (diversity, equity and inclusion) and ESG (environmental, social and governance) issues.
• Reduced Guidance: The FTC may provide less guidance to the industry. Trump’s “10-out 1-in” executive order (mandating elimination of 10 regulations for every new one) certainly helped halt FTC rulemaking activities, but this latest move may halt the development of guidance documents, staff opinions, and the like. For example, in discussing the Green Guides, Commissioner Holyoak indicated that revised guidance is not in the near future (as the current FTC needs to evaluate environmental marketing priorities) and emphasized that guidance does not have the force of law, and does not substitute for how a claim may actually be perceived by consumers.
• Credibility Concerns: The FTC, designed to be a bipartisan agency, will fundamentally have to reevaluate how it operates. For example, without a bipartisan set-up, courts may consider the FTC less credible and give less consideration to agency views in cases that may be politically motivated. This will be exacerbated by Loper Bright, which ended deference to federal agencies’ interpretations of ambiguous statutes under Chevron.
• Lack of Dissents: While minority commissioners do not have decision-making power, they issue dissents that often help shape judges’ rulings on cases involving the FTC and cultivate legal reasoning and arguments that future iterations of the FTC may adopt. Without the benefit of dissenting opinions, it may be more difficult to predict where the FTC will go if there is a change in administration, or how federal courts may address unsettled legal questions.

This action is certain to cause a ripple effect throughout the government and across industries. It is possible that the FTC may see a rise in staff departures and slow down or halt ongoing investigations – including those that the Republican Commissioners are invested in. For example, an FTC attorney recently requested a delay in the Commission’s lawsuit against Amazon concerning allegedly deceptive subscription marketing, due to budgetary and staffing shortfalls. While Chair Ferguson later stated that “the attorney was wrong [and] we will commit the resources necessary for this case,” the FTC may not be able to continue to do so in the future. It is also possible that state regulators may be further empowered to actively pursue consumer protection priorities and fill in perceived gaps in enforcement. Businesses are likely to face greater compliance challenges if legal standards and relative risk vary at the state level.

The Bottom Line

• The Trump Administration’s firing of the democratic FTC Commissioners is a major test of executive power.
• Businesses should prepare for an evolving regulatory environment as the legality of these firings is tested in court.