Overview
On February 12, 2025, acting Solicitor General Sarah Harris notified Senator Dick Durbin (D-IL), the ranking member of the Judiciary Committee that oversees the Federal Trade Commission (FTC), that the Department of Justice (DOJ) “has determined that the statutory tenure protections for members of the [FTC] . . . are unconstitutional.” A copy of the DOJ’s notice is available here. Based on this determination, the DOJ signaled its intention to ask the Supreme Court to overturn a 90-year-old precedent preventing the president from firing FTC commissioners at will.
The FTC’s Structure and Humphrey’s Executor
The FTC is led by five commissioners appointed by the president and subject to Senate confirmation. By statute, no more than three FTC commissioners can be members of the same political party. The president may remove any FTC commissioner, but only “for inefficiency, neglect of duty, or malfeasance in office.” 15 U.S.C. § 41.
The Supreme Court’s 1935 decision in Humphrey’s Executor v. United States, 295 US 602 (1935) upheld this restriction on the president’s ability to remove FTC commissioners. This case involved President Franklin Roosevelt’s effort to forcibly remove Commissioner William Humphrey from the FTC because, as FDR told Humphries, “I do not feel that your mind and my mind go along together on either the policies or the administering of the Federal Trade Commission.” The Supreme Court sided with Humphrey’s estate, holding that Congress could create expert agencies led by a group of principal officers who can only be removed by the president for good cause.
Chipping Away at the Administrative State
Humphrey’s Executor remains valid for now, but there has been an overwhelming trend in administrative law lately to restrain regulatory agencies’ power. Recent Supreme Court decisions have, for example, overturned Chevron deference to agencies’ interpretations of ambiguous laws, expanded the timeline for bringing challenges under the Administrative Procedure Act (we discussed the Loper Bright Enterprises v. Raimondo, 603 US 369 (2024) and Corner Post, Inc. v. Bd. of Governors of Fed. Reserve Sys., 603 US 799 (2024) decisions here), and rejected the FTC’s authority to seek equitable monetary relief in federal court under Section 13(b) of the FTC Act (we discussed AMG Cap. Mgmt., LLC v. FTC, 593 US 67 (2021) here).
Targets of regulatory enforcement agencies, like the Consumer Financial Protection Bureau (CFPB) and the Securities Exchange Commission (SEC), have successfully challenged the constitutionality of those agencies’ structures. In Selia Law LLC v. CFPB, 591 US 197 (2020), the Supreme Court held that the CFPB’s structure—a single director who, like the FTC’s commissioners, could not be removed by the president except for inefficiency, neglect, or malfeasance—violated the separation of powers. As a result, the CFPB’s director is now removable by the president at will. In SEC v. Jarkesy, 603 U.S. 109 (2024), the Supreme Court ruled that the Seventh Amendment precludes the SEC from forcing defendants to adjudicate cases in-house (i.e., before an SEC administrative law judge (ALJ)) when it seeks civil penalties for alleged securities fraud. Instead, the SEC must seek civil penalties in such cases before a jury in federal court.
The FTC’s structure has also been subject to numerous constitutional challenges in recent years, typically from parties in antitrust cases subject to administrative litigation before an FTC ALJ rather than an Article III judge in federal court. However, the FTC’s consumer protection lawsuit against H&R Block revealed current agency leadership agrees with some of these challenges.
In In re H&R Block, Inc., No. 9427 (FTC 2024), the FTC alleged that the tax preparation company’s marketing and business practices were unfair and deceptive in violation of Section 5 of the FTC Act. The Commission sued H&R Block in its in-house administrative court and assigned the case to an FTC ALJ, rather than in federal court. Early in the case, the company argued that FTC ALJs – who cannot be removed from their positions by the Commission except for good cause established by the Merit Systems Protection Board –are protected by unconstitutional removal protections and should be disqualified. The Commission denied that motion, but then-Commissioner and now-Chairman Andrew Ferguson issued a separate statement describing the administrative state as “gargantuan and increasingly removed from the American people” and concluded that “tenure protections for FTC ALJs unconstitutionally interfere with” the president’s executive power.
Now What?
There are currently four FTC commissioners: two Republicans (Chairman Ferguson and Melissa Holyoak), and two Democrats (Rebecca Slaughter and Alvaro Bedoya). President Trump nominated Mark Meador to fill the third Republican seat on the Commission, but that nomination has not yet emerged from committee. The FTC can continue most of its business with a 2-2 tie, (and, in fact, has at times operated with as few as two commissioners). Still, the chairman requires a majority vote to rescind trade regulation rules, dismiss lawsuits, or file complaints. In the meantime, Chairman Ferguson still can wield significant influence through speeches, separate statements accompanying Commission actions, announcements regarding agency policy, and—as he has been—by appointing senior leadership.
The combination of both the DOJ’s determination that tenure protections for FTC commissioners are unconstitutional and Chairman Ferguson’s similar conclusion regarding the FTC’s ALJs, may embolden targets of FTC enforcement to challenge their validity. For those facing in-house administrative lawsuits, arguments challenging the FTC’s constitutionality will likely find a receptive ear from within the Commission itself. Indeed, FTC staff may have to approach future investigations with the assumption that, if the investigation fails to settle, it will have to proceed in federal court before a neutral judge, rather than in its “home court.”
For defendants in litigation against the FTC (or against the DOJ on the FTC’s behalf) in federal court, the repercussions of the DOJ’s position could be less significant and caution militates against relying on a broad unconstitutionality holding. Even if the Supreme Court were to eventually accept the DOJ’s invitation to overturn Humphrey’s Executor, it might simply sever the offending tenure protection language from 15 U.S.C. § 41, allowing the president to remove FTC commissioners at will. While this may result in the removal of more left-leaning commissioners – resulting in more business-friendly decisions during the current administration – it might also produce a more aggressive agency under a future Democratic administration. Time will tell.
