David Dayen’s piece on the Eighth Circuit’s decision to vacate the Federal Trade Commission’s (much-needed) click-to-cancel rule hits many of the right notes about how administrative law has become increasingly hostile to agency action. But it’s not the Administrative Procedure Act (APA) specifically that the FTC ran into here: it’s the peculiar procedural requirements of the Magnuson-Moss Act, which only applies to the FTC. And, really, the FTC’s own unforced error.
The click-to-cancel rule the FTC was seeking to implement is a basic consumer protection measure: if a company makes it easy to sign up for a subscription with a few clicks, it should be just as easy to cancel. The rule would have updated the FTC’s existing “negative option” billing regulations – originally written in 1973 for mail-order book clubs – to cover modern subscription practices across all media and industries. Under the new rule, businesses would have been required to provide “a simple mechanism” for cancellation that’s “at least as easy to use as the mechanism the consumer used to consent” to the subscription initially. It’s hard to argue with the basic fairness of that approach: Consumers shouldn’t have to navigate phone trees, mail certified letters, or show up in person to cancel a gym membership they signed up for online. These contrived requirements are used to lock in customers and deter competition from rivals. Public Knowledge has long supported the FTC’s authority to write rules that promote competition and protect consumers.
The FTC initially estimated that its click-to-cancel rule would have an annual economic impact of less than $100 million, which would have exempted it from the Magnuson-Moss Act’s requirement to conduct a “preliminary regulatory analysis.” But when Administrative Law Judge (ALJ) Carol Fox Foelak disagreed and found the rule’s impact would exceed that threshold, the FTC had a choice: conduct the required analysis or argue it wasn’t necessary. (The FTC is not formally bound by the ALJ’s fact-finding, but it can’t just ignore it: The agency would have to explain why it disagreed.)
The FTC chose poorly. Instead of doing the analysis, it argued that the regulatory analysis requirement didn’t apply when triggered at a “late stage” of rulemaking. But this wasn’t a factual question where the agency would get deference – it was a legal question that courts decide on their own, especially after Loper Bright (the U.S. Supreme Court case that overruled the longstanding Chevron doctrine, where agencies got deference from courts on some questions of law).
If the FTC had simply done the analysis, it would have been hard to challenge. The Magnuson-Moss Act specifically says that “the contents and adequacy of any regulatory analysis… shall not be subject to any judicial review,” except where the Commission has “failed entirely to prepare a regulatory analysis.” The FTC walked right into the one exception to this broad protection.
Even after Loper Bright, agencies still receive deference on factual determinations where they have interpretive authority. As the Supreme Court noted in that decision, “agencies have no special competence in resolving statutory ambiguities,” but they do retain the authority to make factual findings and policy judgments. Beyond the specific provisions of the Magnuson-Moss Act, a properly conducted regulatory analysis would have involved exactly these kinds of factual findings about economic impacts and policy trade-offs.
The extra procedural hurdles in Magnuson-Moss were designed to constrain the FTC. Congress was worried about an agency that could write rules affecting the entire economy, unlike sector-specific agencies like the Federal Communications Commission or Environmental Protection Agency. They are probably unnecessary and counterproductive: We already have the Administrative Procedure Act setting the rules for how federal agencies can propose and issue regulations. It’s sufficient! And the broader attacks on FTC authority we’ve seen in cases like the non-compete ban challenge are even more concerning. Courts are increasingly questioning whether the FTC has substantive rulemaking authority at all, not just whether it’s following the right procedures. Those wholesale challenges to agency authority are a real threat to effective regulation.
Dayen is absolutely right that administrative law has become increasingly hostile to agency action. The elimination of Chevron deference, combined with decisions like Corner Post (extending the statute of limitations for APA challenges), creates an environment where agencies face both stricter substantive review and expanded opportunities for challenge. It’s a perfect storm for regulatory paralysis. And as for the FTC, current leadership voted against the click-to-cancel rule, and is instead having the FTC wade into the culture wars and second-guess medical professionals, so I wouldn’t expect much help.
But, the problem isn’t that agencies have to explain themselves; it’s that courts have made the bar for adequate explanation impossibly high and have created procedural traps that can doom even well-intentioned rules. The basic idea underlying administrative law – that agencies should act based on a factual record and explain their decisions with reference to that record – is a good one. Notice-and-comment rulemaking is the best way we’ve come up with to do this. It would be impossible for Congress to operate that way, but for agencies with delegated power that aren’t directly elected, transparency and reasoned decision-making are appropriate constraints. And while it definitely sucks that this rule was struck down, it is good to have tools to constrain agencies… if only courts would actually apply the same rules to President Trump’s agencies that they apply when Democrats are in power.