The Federal Trade Commission (FTC) recently modified its rules for conducting in-house administrative proceedings.  Administrative law judges (ALJs) will now issue recommended decisions that are automatically reviewed, rather than initial decisions that can be appealed.

Previously, ALJs issued initial decisions that would become final orders unless a party or agency intervened and sought review.  Under the modified rules, ALJs issue recommended decisions that are automatically reviewed.  After an ALJ issues a recommendation, the parties will have an opportunity to lodge “exceptions” to the decision through an opening brief.  The FTC then has an opportunity to hold oral argument before issuing a final order. If no party files an exception to the recommendation, the FTC will place the case on its own docket for review with an order setting out the issues it will consider.  During the evaluation process, the FTC may affirm or reject the recommended decision, in full or in part.  The FTC may also adopt different findings of fact or conclusions of law.

The FTC also removed the ability of ALJs to decide motions for summary decision, which are similar to motions for summary judgment.  However, the FTC also noted that no motions for summary judgment have been submitted since they were first allowed in 2009.

The FTC claims that because the rule changes solely impact its procedures and practice, public notice and comment are not required.

The revisions come amid increased scrutiny from lawmakers and courts as the FTC seeks to pursue an aggressive agenda under Chair Lina Khan.  The House Committee on Oversight and Accountability recently announced an investigation into claims that the FTC is abusing its power and disregarding the law.  Courts are also questioning the constitutionality of FTC administrative proceedings in general.  Among other challenges, litigation has actualized in which FTC targets contend that because the FTC acts as both prosecutor and adjudicator in its administrative proceedings, such proceedings violate due process and equal protection rights under the U.S. Constitution. See Axon Enter. v. FTC, 143 S. Ct. 890 (2023).  Indications from the U.S. Supreme Court suggest there is potential merit to the challenges to FTC proceedings.  For instance, Justice Clarence Thomas indicated in Axon that he has grave doubts about the constitutional propriety of how FTC administrative agency decisions are reviewed.