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Speaker 1: This is Bloomberg Law with June Grossel from Bloomberg Radio.

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Speaker 2: The Trump administration has been mounting an unprecedented campaign to

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Speaker 2: reign in independent agencies and increase executive authority. To that end,

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Speaker 2: President Trump has fired more than a dozen leaders of

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Speaker 2: independent agencies without cause. What stands out in the long

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Speaker 2: list is Trump firing the two Democratic members of the

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Speaker 2: Federal Trade Commission. Rebecca Kelly. Slaughter is fighting her dismissal

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Speaker 2: in court, arguing that it was illegal.

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Speaker 3: Only one time in history has a president attempted to

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Speaker 3: remove an FTC commissioner over a policy disagreement. It was

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Speaker 3: ninety years ago President Roosevelt tried to remove Commissioner Humphrey,

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Speaker 3: and in the face of the clear language of the statute,

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Speaker 3: the Supreme Court said that was illegal, that the statute

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Speaker 3: is constitutional, and that FTC commissioner and other commissioners of

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Speaker 3: multi member bipartisan agencies cannot be simply removed because the

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Speaker 3: president doesn't agree with them.

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Speaker 2: But the Justice Department has said it's going to ask

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Speaker 2: the Supreme Court to reverse that ninety year old president

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Speaker 2: called Humphrey's executor. Legal experts say they'll be broad ramifications

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Speaker 2: if the President can fire FTC commissioners at will, and

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Speaker 2: the agency is no longer independent. My guest is William Kavasik,

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Speaker 2: former FDC chair and a professor at the George Mason

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Speaker 2: University School of Law. Bill tell us about the president

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Speaker 2: firing Slaughter.

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Speaker 1: Yeah, the President decided that he has the authority to

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Speaker 1: simply fire members of the FTC without any cause, and

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Speaker 1: this contradicts a nineteen thirty five Supreme Court decision called

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Speaker 1: Humphrey's Executor that said that FTC commissioners can be removed

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Speaker 1: only for good cause. The President clearly wanted to remove

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Speaker 1: the two Democrats from the FTC, Rebecca Kelly Slaughter and

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Speaker 1: Alvaro Beadoya, and he simply dismissed them. So he decided

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Speaker 1: not just for the FTC, but I think as part

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Speaker 1: of a program for government generally, decided to assert executive

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Speaker 1: authority to control more directly who can serve on these

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Speaker 1: regulatory agencies.

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Speaker 2: Slaughter won her first battle in court. A federal judge

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Speaker 2: reinstated her last month, although that reinstatement has been put

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Speaker 2: on hold pending an appeals court decision. Explain the judge's

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Speaker 2: reasons for reinstating her.

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Speaker 1: Now. She concluded that the president's authority is defined by

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Speaker 1: the nineteen thirty five Supreme Court decision, and the nineteen

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Speaker 1: thirty five Supreme Court decision said that the president can

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Speaker 1: remove Federal Trade Commissioners only for good cost, that the

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Speaker 1: limitation on removal was established in the FTC Statute adopted

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Speaker 1: in nineteen fourteen, and that the Supreme Court's interpretation of

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Speaker 1: that statute limited the circumstances in which the present and

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Speaker 1: it could remove FPC commissioners. Judge Ali Khan and the

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Speaker 1: District Court opinion concluded that those authorities are controlling, that

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Speaker 1: the statute itself makes clear the conditions enrich removal can

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Speaker 1: take place, and the Supreme Court upheld the limitation on

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Speaker 1: executive power, and she said the President contradicted that approach,

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Speaker 1: and until the Supreme Court says otherwise about it's nineteen

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Speaker 1: thirty five decision, that decision is binding on me and commissioners,

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Speaker 1: Slaughter is entitled to be reinstated.

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Speaker 2: It seems like Humphrey's executor is in jeopardy at the

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Speaker 2: Supreme Court. In July, the Court allowed the Trump administration

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Speaker 2: to remove three democratic members of the Consumer Product's Safety

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Speaker 2: Commission that were fired by Trump and then reinstated by

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Speaker 2: a federal judge. And it may the Court rule that

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Speaker 2: the democratic members of the NLRB and Merit Systems Protection

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Speaker 2: Board couldn't return to their jobs because the government was

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Speaker 2: likely to be able to show that the agency's exercised

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Speaker 2: considerable independent power. So does it seem like the Supreme

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Speaker 2: Court is ready to overturn Humphrey's Executor.

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Speaker 1: As you say, June, The Court's given a number of

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Speaker 1: hints that it is ready to revisit Humphrey's executor and

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Speaker 1: to overturn it. The Court has cautioned that every burn

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Speaker 1: in the road that we're not making a final decision

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Speaker 1: on the merit, that that fuller evaluation of the merit

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Speaker 1: of Humphrey and its vitality today remains to take place.

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Speaker 1: So they've said we're not deciding now, but the way

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Speaker 1: in which they've written the decisions that you referred to,

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Speaker 1: even these preliminary rulings where they're not offering a final

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Speaker 1: view about the legitimacy of the challenges at issue, have

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Speaker 1: given hints that at least three members of the Court

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Speaker 1: think that Humphreys must be overturned, maybe two more members

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Speaker 1: of the Court are wavering in their support of Humphreys.

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Speaker 1: I suppose if you were making a wager now about

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Speaker 1: whether Humphrey's will live through the end of twenty twenty six,

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Speaker 1: I suppose the way to bet would be to say no,

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Speaker 1: that it won't. I don't think the possibilities for Humphrey's

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Speaker 1: executors to survive have been extinguished. There's still possibilities that

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Speaker 1: the Court might reflect on the basis for the creation

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Speaker 1: of the limit on removal, might think more completely about

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Speaker 1: existing controls that the President already has over administrative agency discretion,

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Speaker 1: to realize that the choice here is not between having

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Speaker 1: no control and absolute control over appointments and removal. The

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Speaker 1: president already has a number of tools at the president's

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Speaker 1: disposal to influence the way in which the Federal Trade

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Speaker 1: Commission and similar agencies operate. The real issue here is

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Speaker 1: whether that control must be absolute, and the Court might

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Speaker 1: reflect on that in a more elaborate way and come

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Speaker 1: to a different conclusion. But that's a long way of

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Speaker 1: saying that Humphrey's Executor appears to be in peril, and

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Speaker 1: that when the Court does come at some point, perhaps

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Speaker 1: in twenty twenty six, to confront the continuing vitalent of

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Speaker 1: Hunfrees executive, it will probably say that we've decided to

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Speaker 1: change our minds.

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Speaker 2: Bill. Is the FDC right now a fully independent agency?

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Speaker 1: When you look at the design, organization and operation of

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Speaker 1: the agency, I think we discover that the English word

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Speaker 1: independence is badly ill suited to describe the Commission's place

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Speaker 1: in the political landscape. You know, first, the President gets

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Speaker 1: to designate the chair from among existing members of the Commission,

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Speaker 1: and that only takes signing a letter that says you're

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Speaker 1: the chair. That comes with a lot of power, because

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Speaker 1: since nineteen forty nine nineteen fifty, the chair of the

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Speaker 1: so called independent agencies has been the chief operating officer

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Speaker 1: and the chief executive of these agencies and exercises extraordinary

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Speaker 1: authority as part of that reshuffling of government power that

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Speaker 1: took place in the Government Reorganization Act of nineteen forty

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Speaker 1: nine and a reorganization plan that put in place for

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Speaker 1: the FTC in nineteen fifty. So that already gives the

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Speaker 1: president a lot of power. Of course, the White House

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Speaker 1: submits the budget on behalf of the United States to

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Speaker 1: the Congress. The FDC does not do that. Directly, so

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Speaker 1: the FTC's budget requests have to be filtered through the

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Speaker 1: white The White House controls whether FTC officials can go overseas.

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Speaker 1: The Executive Branch gives permission to FDC officials to travel

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Speaker 1: abroad for government purposes, So if they don't want the

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Speaker 1: FTC roaming the global landscape speaking on its own, they

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Speaker 1: can stop that right away. The Department of Justice intervenes

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Speaker 1: in a number of instances in the cases of the

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Speaker 1: FTC to oppose the FTC. This is a short list

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Speaker 1: of ways in which the FTC is not independent, and

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Speaker 1: in a broader sense, when we look at Congress, the Congress,

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Speaker 1: of course controls the FTC's budget, and every year the

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Speaker 1: FTC has to go ask for money, I would say

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Speaker 1: that an agency that every year has to ask Congress

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Speaker 1: for an allowance is not very independent, no more independent

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Speaker 1: than a college student is going to their parents at

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Speaker 1: the beginning every school year and saying, top up my allowance.

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Speaker 1: That independence is severely constrained, and maybe a better way

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Speaker 1: to describe the FTC's relationship to the political process is

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Speaker 1: semi autonomous with respect to some functions like adjudication, But

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Speaker 1: independence is a badly inaccurate way to describe its place

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Speaker 1: in the political ecology.

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Speaker 2: Let's talk about what would happen the changes if the

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Speaker 2: FDC loses the independence it now has. It's been said

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Speaker 2: that one casualty would be the in house adjudication system.

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Speaker 1: I think that's right too, and I think the administrative

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Speaker 1: in house adjudication system ultimately topples. For this reason, I

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Speaker 1: think crucial to the legitimacy of any judicial dispute resolution

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Speaker 1: tribunal is some degree of autonomy. This is where the

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Speaker 1: autonomy is most important for legitimacy. Once times a parent

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Speaker 1: that the president can simply fire Federal Trade commissioners because

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Speaker 1: he doesn't like their work, doesn't like their philosophy, I

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Speaker 1: think that system unravels. You can't have courts where the

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Speaker 1: judges are aware that a decision or a specific approach

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Speaker 1: taken in a given case could cause their dismissal, and

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Speaker 1: the FTC commissioners serve as adjudicators when the FTC uses

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Speaker 1: that internal mechanism. So, I think a domino that falls

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Speaker 1: if Humphrey's executor is overturned is the perceived legitimacy and

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Speaker 1: functioning of the administrative adjudication system That disappears.

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Speaker 2: And even now we're seeing motions to dismiss FTC cases,

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Speaker 2: eleging that the FTC structure is unconstitutional because of this

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Speaker 2: weight over Humphreys, I.

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Speaker 1: Think the deeper threat to the FTC's effectiveness is that

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Speaker 1: when it goes to court, it has always had the

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Speaker 1: capacity to tell the court the positions we are taking

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Speaker 1: are the result of our best professional judgment, and as

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Speaker 1: an expert body, we are asking for respect for our

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Speaker 1: judgments because they're based on our accumulated experience, our research

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Speaker 1: in the field of competition and consumer protection, and the

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Speaker 1: expertise that individual members of the Commission bring to the

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Speaker 1: analysis of specific cases. When you put all of those together,

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Speaker 1: you have a key element of professional judgment that might

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Speaker 1: not be always correct, but it deserves respect because it

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Speaker 1: is more likely to be correct than the judgment of

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Speaker 1: individual federal judges, the parties, and the cases. That is

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Speaker 1: that that judgment is worthy of respect. It doesn't mean

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Speaker 1: that the FDC is always going to prevail in court.

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Speaker 1: The moment that courts perceive that you are using your

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Speaker 1: authority not because of your best professional judgment, but because

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Speaker 1: you are simply an extension of the political process and

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Speaker 1: you are serving the specific interests or whims and the

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Speaker 1: chief executive, that element of professional judgment and respect disappear.

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Speaker 1: They're gone. So I think a consequence ipumphrase dies is

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Speaker 1: that the Commission loses the ability to scand before the

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Speaker 1: courts and say you can trust us. And in so

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Speaker 1: many ways, that's what government agencies ask court is trust

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Speaker 1: us because we are the professionals. We're using professional judgment,

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Speaker 1: and that's why you can have confidence in the judgments

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Speaker 1: we're making. You take protection against removal except for a

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Speaker 1: good cause away the basis for asserting that respect disappears,

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Speaker 1: and I think it means that, simply stated, you have

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Speaker 1: a harder time winning your cases when you go to court.

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Speaker 2: Coming up next on the Bloomberg Lan Show, I'll continue

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Speaker 2: this conversation with former FTC chair Bill Kvasik. We'll talk

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Speaker 2: about a bill to consolidate anti trust authority solely in

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Speaker 2: the Justice Department. You're listening to Bloomberg. I'm talking to

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Speaker 2: former FTC chair William Kavasik about the Trump administration's campaign

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Speaker 2: to reign in independent agencies and increase executive power.

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Speaker 4: Bill. Is there any argument that you see for a

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Speaker 4: president having the ability to fire commissioners at will.

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Speaker 1: I guess the best argument would be this. I mean,

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Speaker 1: suppose you're an incoming president and the existing configuration of

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Speaker 1: the commission means that there is nobody from your political

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Speaker 1: party on the board. Imagine a commission of five and

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Speaker 1: you have two vacancies, and the vacancies ordinarily would be

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Speaker 1: your party, but nobody's been confirmed. In that insense, you

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Speaker 1: can make an argument that the president ought to be

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Speaker 1: able to put the president's preferred person on the board,

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Speaker 1: although even there they have to go through Senate confirmation.

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Speaker 1: They'd have to go through Senate confirmation. And if you

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Speaker 1: have a vacancy, you can you can appoint somebody to

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Speaker 1: fill that spot. I guess the other argument one could

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Speaker 1: make is that in d need, these agencies exercise significant discretion.

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Speaker 1: They have considerable powers. The FPC has a broad mandate

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Speaker 1: with a number of policymaking tools to implement it, and

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Speaker 1: those are significant economically important. And if I'm the president,

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Speaker 1: I'm saying I have to have the ability to determine

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Speaker 1: how this large machine of government functions and where it's going. Now, again,

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Speaker 1: as I've said before, I think the president already has

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Speaker 1: a lot of tools to influence that and what you

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Speaker 1: have in the status quo embodied in cases like Humphreys

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Speaker 1: is basically a bargain between the legislature and the President

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Speaker 1: over how oversight functions will be allocated. Some of those

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Speaker 1: functions reside in the White House today already, such as

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Speaker 1: the ability to designate the scare among members of the Commission.

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Speaker 1: Others such as congressional oversight control of the budget, reside

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Speaker 1: in the Congress. One way to put it is that

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Speaker 1: it is shared oversight and accountability that engages the Congress,

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Speaker 1: the President, and indeed the Federal Court. So my view,

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Speaker 1: and this is very much based on my experience that

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Speaker 1: the FTC is a member of the Commission for a

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Speaker 1: year is chair that I was always aware of the

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Speaker 1: capacity of the White House to shape what we were

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Speaker 1: doing in key respects. That is, from the place that

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Speaker 1: we occupied on Pennsylvania Avenue. I was always aware of

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Speaker 1: both ends of the avenue, that both of them had

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Speaker 1: a lot to do to shape the environment in which

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Speaker 1: we worked in. And when I looked out the window

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Speaker 1: at the front of the building, they're also sat the

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Speaker 1: Federal Courthouse for the District of Columbia. So I always

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Speaker 1: knew that we were working in an environment when all

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Speaker 1: three could hold us to account, and I was aware

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Speaker 1: of the history that showed that they certainly would.

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Speaker 2: Slaughter has said there are two lines of pushback, one legal,

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Speaker 2: the other political. Quote.

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Speaker 4: The legal fight we're having in the court, but the

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Speaker 4: political fight is in the court of public opinion. Do

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Speaker 4: you think that the public is aware of what's happening

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Speaker 4: with these agencies?

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Speaker 1: For the broader public, I have re doubts. I suspect

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Speaker 1: that there are many in the public, for a variety

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Speaker 1: of reasons, who are aware that there's something called the

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Speaker 1: Federal Trade Commission. But if you gave the ordinary American

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Speaker 1: citizen a short quiz, true false questions or multiple choice questions,

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Speaker 1: I don't know how many would answer it in a

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Speaker 1: way that reflected a real understanding of how these agencies

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Speaker 1: function and what they do. So, if we're talking about

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Speaker 1: the US public writ large, I doubt there's a keen

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Speaker 1: awareness of the governance mechanism of the FPC and what

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Speaker 1: removal of commissioners does to that framework. The larger public

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Speaker 1: might be aware of efforts by the President to consolidate

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Speaker 1: power in the White House. They've probably noticed in this

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Speaker 1: barely six months of the second Trump presidency, that the

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Speaker 1: President is doing a number of things to exercise power,

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Speaker 1: imposing tariffs, for example, setting in motion dramatic reductions in

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Speaker 1: force for individual real agencies. And maybe they're aware of

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Speaker 1: the dismissals of heads of different institutions at a high level.

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Speaker 1: They may be aware that the presidents seeking to exert

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Speaker 1: more control over how the government operates. So that awareness

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Speaker 1: I suspect exists, and certainly to the extent of the

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Speaker 1: public she is speaking about, includes the Congress of the

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Speaker 1: United States. I assume that more keenly than the ordinary citizen,

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Speaker 1: they are very aware of the reallocation of power that's

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Speaker 1: taking place in Washington and ought to be concerned about,

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Speaker 1: especially because in the case of the FTC, when Congress

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Speaker 1: created the FTC in nineteen fourteen, their unmistakable view is

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Speaker 1: that the FTC would be accountable through the Congress. First

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Speaker 1: and foremost. Here are debate in the Senate, for example,

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Speaker 1: where members of the Senate asked, as part of the

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Speaker 1: colloquy that takes place in the legislative debates, aren't we

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Speaker 1: giving a lot of fairly open ended power to the

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Speaker 1: federal Trade Commission, shouldn't we specify more carefully what the

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Speaker 1: relevant offenses might be? And the defenders of the FTC

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Speaker 1: Act has ultimately adopted said, you need a flexible, adaptable mandate.

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Speaker 1: That's why we're putting it that way. And if the

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Speaker 1: STC ever misused that mandate, we, the Congress that created it,

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Speaker 1: could abolish it. In the words of one senator, we

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Speaker 1: created it, we could destroy it. So there was no

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Speaker 1: doubt in the minds of Congress that this institution, with

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Speaker 1: its considerable authority, will answer first and foremost to us.

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Speaker 1: So the Congress ought to be keenly aware of the

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Speaker 1: process by which the relevant oversight, responsibility and accountability mechanisms

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Speaker 1: are changing.

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Speaker 2: Can you give us the broader reasons why you think

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Speaker 2: the FTC's independence is critical.

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Speaker 1: The broader, high level reason is that the FTC exercises

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Speaker 1: significant economic policy making functions and as broad regulatory responsibilities.

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Speaker 1: I think in any economy, and certainly in our market economy,

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Speaker 1: the business community, the citizens as a whole have to

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Speaker 1: have confidence that that authority is being used in a

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Speaker 1: principled way, and then when it's used, it reflects truly

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Speaker 1: the exercise of high quality professional judgment from an agency

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Speaker 1: that has special expertise broad experience, and then when it's

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Speaker 1: making those judgments, it's making it on the basis of

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Speaker 1: sound policy analysis. That assumption and confidence vanishes if the

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Speaker 1: head of State can simply designate outcomes or point the

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Speaker 1: agency in a specific direction. I mean, it's the same

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Speaker 1: concern we have about the Federal Reserve Board and monetary policy.

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Speaker 1: Notice how the markets lose their minds when it appears

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Speaker 1: as though the Fed might lose that insallation from direct

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Speaker 1: political influence over the monetary system. I can't quite assert

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Speaker 1: that the FTC occupies the same position in the minds

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Speaker 1: of business leaders and others about its role in the economy,

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Speaker 1: but I think it is nonetheless and important pillar of

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Speaker 1: the regulatory mechanism in the US. If you take away

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Speaker 1: some measure of autonomy, especially in the decision to prosecute,

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Speaker 1: the decision to impose sanctions, the decision to do things

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Speaker 1: that in a broad sense hurt, you take away that

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Speaker 1: presumption of good professional judgment and autonomy with respect to

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Speaker 1: those functions. I think it underminds confidence in the regulatory

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Speaker 1: process itself, and at a higher level, for our entire

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Speaker 1: political economy. And our stature in the world. For the

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Speaker 1: last thirty plus years, we have been telling the world

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Speaker 1: that these key economic regulatory functions must have some element

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Speaker 1: of protection with respect to these fundamental decisions about prosecuting cases,

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Speaker 1: initiating rules, that there has to be an accountability regime.

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Speaker 1: But you can't have political leadership telling the agency to

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Speaker 1: punish enemies, reward friends, and otherwise simply be party to

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Speaker 1: a negotiation between top political leadership and individual business interests.

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Speaker 1: So once you do that, confidence in the entire system

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Speaker 1: of governments tends to erode. And if the Humphries executive

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Speaker 1: protections against removal except for good cause disappear, that's a

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Speaker 1: step in the direction of diminishing that confidence and legitimacy

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Speaker 1: for the regulatory process.

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Speaker 2: I want to get.

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Speaker 4: Your input on the bill to consolidate federal antitrust authority

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Speaker 4: solely within the Justice Department's Antitrust Division, so that would

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Speaker 4: lead the FTC as a consumer protection agency. What's your

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Speaker 4: take on that.

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Speaker 1: I think it's a bad time to do that. I

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Speaker 1: think the question of whether you want two federal agencies

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Speaker 1: to occupy in many ways the same policy domain is

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Speaker 1: a very useful and important issue. That's worthy of debate.

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Speaker 1: I would hope that that debate would involve a more

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Speaker 1: nuanced than careful consideration of what the FTC has brought

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Speaker 1: to the mix. I mentioned the FTC because the assumption

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Speaker 1: always is, as you say, all that authority will be

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Speaker 1: given to the Department of Justice. The main reason I

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Speaker 1: think it's a bad tub to do this is that

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Speaker 1: in the area of all things digital and information systems platforms,

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Speaker 1: there is a growing global awareness that the solution to

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Speaker 1: problems observed in that area and the disciplines that have

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Speaker 1: to be brought to bear to come up with good

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Speaker 1: policy foundations include competition law, antitrust, consumer protection law, and

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Speaker 1: privacy data protection law. There is one agency in the

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Speaker 1: world that has all three of those mandates under its

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Speaker 1: umbrella in its portfolio. That's a Federal Trade Commission, which

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Speaker 1: also has distinctive information gathering powers and report writing powers,

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Speaker 1: has a collection of policy making tools that can bring

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Speaker 1: all of these policy domains to bear on specific issues.

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Speaker 1: I think in a time when we are seeing that

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Speaker 1: policy making involving information systems digital AI involve an intersection

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Speaker 1: of these different policy areas, I think that's exactly the

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Speaker 1: wrong time to divest the FPC of its Competition Policy mandate,

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Speaker 1: also because I think the Competition Policy Mandate has brought

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Speaker 1: useful discipline and direction to the consumer protection program. And

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Speaker 1: if you sever the competition mandate from the Consumer Protection mandate,

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Speaker 1: I think the consumer Protection Mandate and the Data Protection

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Speaker 1: Mandate they both suffer.

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Speaker 2: It's always great to have you on Bill, Thanks so much.

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Speaker 2: That's former FTC Chair William Kavasik, a professor at George

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Speaker 2: Mason University School of Law. And that's it for this

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Speaker 2: edition of The Bloomberg Law Show. Remember you can always

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Speaker 2: get the latest legal news on our Bloomberg Law Podcast.

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Speaker 2: You can find them on Apple Podcasts, Spotify, and at

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Speaker 2: www dot Bloomberg dot com, slash podcast Slash Law, and

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Speaker 2: remember to tune into The Bloomberg Law Show every weeknight

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Speaker 2: at ten pm Wall Street Time. I'm Jim Grosso and

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Speaker 2: your listen listening to Bloomberg.

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Speaker 4: Hmm