If Trump’s FTC firings stand, he may not be in a hurry to replace the Democrats

[Simone Del Rosario]

Can a government commission make decisions with only two of its five seats filled?

That’s the position the Federal Trade Commission is in today after the president fired the two Democrats on the commission.

Those two commissioners are Rebecca Kelly Slaughter and Alvaro Bedoya. They say President Trump’s dismissal of them is illegal because of a 90-year-old Supreme Court precedent that says FTC commissioners cannot be fired for political reasons.

The White House is saying they think the Supreme Court got it wrong back in 1935, and argue the president does have the authority.

The rules state that no more than three commissioners can be from the same party.

In a typical scenario, under Trump, that would mean three Republicans and two Democrats.

With the two Democrats fired, the commission is left with just two Republicans total. Trump’s pick for a third, Mark Meador, still needs Senate Confirmation.

Can the FTC get anything done with only 40% of its commission?

The Federal Trade Commission Act says…

“A vacancy in the Commission shall not impair the right of the remaining Commissioners to exercise all the powers of the Commission.”

The commission must have a quorum to conduct business. In a perfect world, that would be at least 3 out of 5.

FTC rules and regulations say,

“A quorum * * * shall consist of three members; provided, however, that if the number of Commissioners in office is less than three, a quorum shall consist of the number of members in office.”

And now, let me throw one last wrench into this.

[Alvaro Bedoya]

Because I don’t think I’ve been fired, I think I’m still a commissioner.

[Simone Del Rosario]

That’s Alvaro Bedoya on MSNBC, claiming he is still a commissioner.

So if the FTC makes decisions thinking two is a quorum, and it’s later ruled that Bedoya and Slaughter are still commissioners, what happens to whatever the FTC did in their absence?

There is one person we really wanted to help us sort this out, that’s former FTC Chair and Commissioner William Kovacic.

Bill. The way we laid it out, it does sound like two is technically a quorum. Do you agree with that?

[William Kovacic]
It’s a it’s a it’s a matter of interpretation, that is, there’s a bit of interpretation of larger administrative law jurisprudence here. But the FTC view, which was solidified about 10 years ago, is that two can be a quorum. There was a period of time when there were only two members on the board. There were three vacancies, three retirements, and there were only two. There was the acting chair, Maureen Olhausen, and one Commissioner, Terrell McSweeney. And the opinion of the general counsel’s office at the time was that two can serve as a quorum. When you only have two, they can be a quorum, and that even if one was recused, you could still have legitimate decision making with a single individual voting. So the Commission’s interpretation clarified a decade ago, has been that two is enough, even one can be enough.

[Simone Del Rosario]
Okay, so now we have this situation, is the commission safe to move forward and make decisions on their own? Or considering that slaughter and bedoy are saying they are still commissioners, if they go forward with actions, could they end up being in hot water later on?

[William Kovacic]
My My intuition is that is that there is, there is a bit of a risk here, that is, if, if, if the argument were made that the decision making process is illegitimate because valid members of the Commission improperly were excluded from participating in their functions. And as a practical matter, what this means is that even though Bedoya and slaughter say, I’m we’re still on the board, they won’t be allowed to vote. That is, the chair’s office will not allow them to vote. So they they won’t be able to cast votes on matters before the agency. It’s the voting that is the mechanism for governance. But what if they say we should have been voting, even if our votes would not have constituted a majority, should we have been allowed to vote. That’s an argument that wouldn’t be a silly argument at all. My guess is that a court would focus on whether their votes would have mattered now that puts aside the question about whether having the debate itself is important, and I think it is, but assuming that the new nominee, Mark Meador arrives in a couple of weeks, perhaps, yeah, they’ll have three members, right? My guess is is a matter of caution. They wouldn’t do anything that is earth shattering until he arrives. When he shows up, you’ve got three votes. And the magic number on a board of five is three. So they can say, even if the other two were here, their votes wouldn’t have mattered, because we had a functioning majority. My guess is that a court later on would be unwilling to upset everything that the agency did while slaughter and Bedoya were not present in the voting process, but were asserting that they should have been sustained as members of the commission, it would a court would look at that and say, Are we going to topple all of the decisions that were made? And there are a lot of votes that take place, some of the mundane and merely, uh, administrative technicalities, others involving cases rules, my guess is that the court would be unwilling to simply say none of it’s valid. You’ve got to do it all over again.

[Simone Del Rosario]
So if the FTC commissioners that are currently there, you know, twiddle their thumbs until Mark metter comes in, they get that three right there. Now, here’s my next question for you, though, can the President keep it at those three commissioners, his Republican commissioners that he would have serving.

[William Kovacic]
There’s nothing in the FTC act or in the Administrative Procedure Act that says that the President has to be especially active, eager or diligent in filling vacancies. A president might sit back and say, this requires a lot of thought. I’m going to take my time. A rush job will not be appropriate here the FTC function with three commissioners for the better part of a year in the Biden administration and the two Republican vacancies were not full. Were not filled during that time. Now, filling the vacancies requires the engagement of the Congress, especially when there are minority party nominees or slots. It has been the modern custom of the White House to say, you give us some names, we’ll generally defer to your preferences or who of who it is, but you have to give us a name. So it’s possible to say that. The Republicans were dragging their feet. They didn’t act fast enough. But there’s nothing that requires the president to be especially fast about filling the vacancies. And you can imagine a president saying, I’ll get to it. I have so much to do, but I’ll get around to it. And you could have, you could have a three member voting majority, with no dissenters, no others on the board for considerable period of time.

[Simone Del Rosario]
It’s so interesting because when we look at the the layout of what the party affiliations are supposed to look at, they do say no more than three of the controlling party. So Simone,

[William Kovacic]
and there’s a, there’s a there’s a reason. There a couple of reasons for that. One is, I think there was a true belief that having a bipartisan board, even if three came from a single party, that it would be more legitimate because, in a very indirect way, it would be more representative of the entire country, and especially if they took unanimous decisions in tough cases, that would be a strong signal that this commands a broad degree of consent within the within the public. Another assumption is that you create an inherent sort of source of tension by having, by having the political diversity. By design, you’re going to have arguments, but then that gives you greater quality control. It means that issues are going to be identified, they’ll be discussed, even if the minority doesn’t get its way. An important part of the logic of having that diversification is you’re going to have a no holds barred discussion and debate about all the issues that matter and that that’s going to push the majority in the direction of having to justify what they do with the threat of a possible concurring opinion or dissent. You take that discipline away, you have a different decision making process. If you know in your decision making process that I’m going to be called out by a colleague, a smart colleague, who’s going to write a detailed and penetrating dissent. I’ve got to raise the level of my own analysis, and I can’t get away with magic tricks in the way that I might might be able to if there were only three members of my own party voting on the matter in question. So I think it had important symbolic significance, legitimacy significance, but also quality significance. But

[Simone Del Rosario]
do you think that there is any incentive for President Trump to fill those remaining two seats with a minority party?

[William Kovacic]
I think without trying to engage in psychoanalysis and simply looking what he has had to say himself, he does not favor a lot of dissent to his own views, and would prefer not to have that rough and tumble debate go on. So I don’t know that he would give any weight at all to the observations that we’ve just been going through about the value of diversity on the board, political diversity as a source of quality control or even legitimacy. I haven’t seen much that he said that shows that he would care at all. Now

[Simone Del Rosario]
President Trump is the one who put Rebecca Kelly slaughter on the commission during his first term. Now he’s saying, you can go, what do you think has changed since Trump’s first term?

[William Kovacic]
A couple of things were happening. One is that I suspect he was told, Look, you’ve got three slots, three Republicans. This is a slot for a non Republican, likely a Democrat. You’re not going to be able to fill that with another Republican. So it’s a matter of negotiating with the Senate, with the Senate Majority Leader. I mean, slaughter worked for for Schumer, so it’s going to be a negotiation with him. You can, as past presidents have done, have to have fought over who those minority party representatives are going to be on the commission. But you’re not going to be able to get another Republican. So you’re not going to get someone who’s ideal. You’re going to get someone who you think is good enough. And you don’t have a lot of latitude to deal with that. You know, recall that President Trump has said a mistake I made during my first term as president is that I I listened to too many people who said that’s not how it’s done in Washington. Or Mr. President, you’ve got to moderate your views. And I think I’ve heard him say a number of times in public statements. That was a mistake, and I’m going to dig in more. So in the new the second term as President, he might adopt a more aggressive position say, I’m not going to fill these jobs. I’m not going to do it. I know it’s a custom, but I’m not going to do. So there are things that Congress, Congress could do to upset that, but not within the same party. The Republicans in Congress are not going to be saying, hey, you’ve got to fill these slots, and the Democrats don’t have the votes yet. So it’s entirely possible that the President will say, I’ve got a lot to do in this job. I’ve got so many other things to do. Take a number, I’ll get to

[Simone Del Rosario]
it. Yeah, and thinking about that newer philosophy in his second term, brings me back to this original decision in the first place. If you look at the Humphrey executor decision, it’s pretty clearly states that you cannot fire FTC commissioners for political reasons. Now the White House is saying, well, we don’t think that the justices at the time really understood how closely aligned these commissioners are with the executive branch. We think that the President does have the power to do this. My question to you is, do you fall on his side on this. Do you think that it is illegal to fire these commissioners, or do you where do you see this going?

[William Kovacic]
The FTC today is unquestionably different from the FTC in 1935 the FTC today has authority to go directly to federal court, far more broadly than it ever did in the mid 1930s the FTC goes directly to federal court as a prosecutor, routinely in its in its work today. So it’s a it’s a different agency, but even in the old days when it was bringing its cases through its own administrative process, you could say it was prosecuting matters admittedly through an administrative court, but it’s still acting as a prosecutor. The Supreme Court in 1935 didn’t really focus on that so much so. So it’s a fair point of debate to ask whether or not the assumptions that guided the Supreme Court in 1935 hold today. But I think the a couple of points that I would hope the court today would not lose sight of are these concerns about why a degree of autonomy is important, why it might be important to getting consent from courts when you appear before courts, because an argument you make at the FTC when you appear before a court is we want you to respect our judgment. Our judgment is based on vast experience, deep expertise, and we bring all of that to bear on trying to solve difficult problems. Now we may not always get it right, but we are in a better position to make good judgments than you. The generalist judges are and on that basis, we want you to respect our professional judgment. Now to the extent that it begins to appear that your professional judgment is not the basis on which you’re acting, that you’re acting simply at the behest of elected leaders who are saying, possibly reward my friends, punish my enemies that you’re not drawing upon this deep expertise the court does not have the same basis on which to respect what you do. In fact, a court might say, I don’t respect duress at all. I respect good professional judgment. I do not respect a process that simply makes you a puppet of the White House or the Congress could be the Congress as well. So I think part of what’s at stake is your capacity to persuade judges that they ought to respect your professional judgment. If it seems like you’re not relying on that judgment, courts might shrug and say you’re just another advocate before me, there’s nothing special about you, and I think that’s part of what the Supreme Court might have been thinking about. 1935 I know the Supreme Court in recent years, our Supreme Court today has raised questions about whether Humphreys executor is still good law. A couple members of the court have said I think Humphries was wrong and we ought to fix it. But I hope at the same time, there’s a willingness to reflect upon the broader scheme that Congress put in place to increase the legitimacy of regulatory policy making and to gain respect for the judgments of individual regulators when they appear in front of courts. I hope those broader purposes, that larger context is understood when the court goes about deciding what to do in the future.

[Simone Del Rosario]
We’ll leave it there. Bill Kovacic, former FTC chair and Commissioner. Thank you so much for your insight on this. We appreciate it.