Back to the Future: How Not to Write a Regulation

A Report for the American Enterprise Institute
May 27, 2022

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Key Points

  • In 1974, Congress sought to establish Federal Trade Commission (FTC) rulemaking procedures that emphasized reasoned decision-making based on evidence, with enhanced opportunities for public participation.
  • The FTC launched a rulemaking binge, proposing 16 rules in one 12-month stretch, seeking to transform entire industries across a wide swath of the economy. Most were eventually rejected, but the reaction put the agency in serious jeopardy. Congress refused to provide funding at one stage and eventually enacted additional restrictions on the commission’s rulemaking authority.
  • The 1970s rules lacked three keys to success: clear theories of illegality, substantive theories of why the practices were occurring and how to fix them, and systematic evidence to evaluate the extent of the problem and the efficacy of the remedies.
  • The new activists at the FTC are again seeking radical transformation of long-standing legal foundations of antitrust and consumer protection, to be implemented through a new wave of rulemaking.
  • The new FTC leadership adopted changes to the procedures for rulemaking, based solely on the desire to adopt rules more quickly—changes inconsistent with statutory requirements, sound public policy, or both. The vote was party line, without public input and without addressing the failings of the 1970s.
  • The changes will result in greater political control of rulemaking and less public participation—contrary to the goals of Congress when it authorized FTC rulemaking.

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