On November 17, the Federal Trade Commission (FTC) issued a press release confirming that Republican Commissioner Melissa Holyoak was leaving the FTC to serve as Interim U.S. Attorney for the District of Utah. For dedicated FTC watchers, the news wasn’t a surprise. And, ultimately, it shouldn’t be cause for much concern, because even though the FTC Act contemplates a full-strength bipartisan Commission with five members, the FTC’s been down to two before, and has adapted its rules to confirm that a two-member Commission’s decisions will hold. Still, it’s worth taking a minute to review the legal landscape.

Two Commissioners are a quorum

The FTC Act configured the Commission as a five-Commissioner body, with no more than three members of the same political party. Generations of Commissioners from both parties have extolled the cross-aisle discussion and collaboration that this structure fosters, explaining that dissent and civil debate typically lead to stronger legal reasoning and more effective law enforcement efforts. 

That said, there’s nothing in the FTC Act that says the Commission can only operate at full, bipartisan strength. Indeed, the Act specifically says that a “vacancy in the Commission shall not impair the right of the remaining Commissioners to exercise all the powers of the Commission.” And, in 2005, the FTC revised its rules of practice to provide that a majority of the Commissioners in office and not recused from participating in a matter is a quorum for the purposes of that matter.

In practice, that means that the two remaining Commissioners – or even one Commissioner if the other is recused – constitute a quorum that can make lawful, binding decisions on business pending before the agency.

This is not unprecedented; there have been other times in the recent past when the Commission was a party of two. First, there was a long run in 2017-2018 when the FTC operated with two Commissioners, one Republican and one Democrat, and managed to get a lot done in the process. And, earlier this year, after the President fired Democratic Commissioners Alvaro Bedoya and Rebecca Kelly Slaughter and before now-Commissioner Mark Meador was confirmed, the Commission operated with two Republicans. So, we’re in familiar territory.

But, what if they disagree?

As long as the two Commissioners are seeing eye-to-eye, we’re looking at business as usual. But that could change if they disagree. If a matter goes up for a vote before the Commission and the two remaining Commissioners split, that’s the end of it; the action won’t proceed.

That said, the two remaining Commissioners are fairly aligned, so we probably won’t see this happen in practice. And, even if the Commissioners disagree behind the scenes, we probably won’t see it play out, because if there’s a whiff that there could be a tie on a matter, rather than airing the disagreement publicly, the Commission and staff usually get to “yes” behind the scenes.

And if there’s no quorum?

But, you may ask, what would happen if both Commissioners had to recuse themselves from a particular matter, for conflicts or other reasons? Well, the Commission developed a protocol to cover exactly that situation during that long stretch of two Commissioners in 2017-2018.

Specifically, the FTC rules now provide that, in very rare situations where all Commissioners are recused from a matter and the parties to the matter would not be adversely affected, the agency’s general counsel can act on the FTC’s behalf.

But what about if Commissioner Slaughter is reinstated?

Of course, behind the scenes here is Commissioner Rebecca Kelly Slaughter’s continuing legal challenge to her dismissal from the agency, which she argues was illegal under the 1935 Supreme Court decision in Humphrey’s Executor v. United States.

The Supreme Court recently granted the President’s application for a stay of the lower court’s order for Commissioner Slaughter to be reinstated while it considers whether to overrule Humphrey’s Executor, so it seems pretty unlikely that she'll get her job back. But, on the off chance the Supreme Court decides to uphold Humphrey's Executor, votes that occurred during this period of two Commissioners would still hold because Commissioner Slaughter's co-Democratic Commissioner, Alvaro Bedoya, resigned his position before Commissioner Holyoak left. Thus, reinstating only Commissioner Slaughter would have little effect because her single “no” vote could not have overcome any action by the two Republican Commissioners voting against her.

So what does this all mean?

The bottom line here is, from a legal perspective, Commissioner Holyoak’s departure more or less amounts to what’s technically referred to as “a big nothingburger.” In all likelihood, we’ll continue to see the FTC humming along with business as usual. Cases will be voted out, settlements will be approved, and investigations will proceed. There’s likely to be no meaningful difference in Commission operations under two Republicans versus the three (we’ve heard rumblings another Republican appointee might be in the wings anyway).

So, don’t let your compliance slip. And call us if you need help.