Slaughter Defends FTC’s Decision to Redact Khan Recusal Details

Senate Commerce Committee ranking member Ted Cruz, R-Texas, repeatedly criticized Khan’s leadership and lack of transparency during Wednesday’s confirmation hearing for Slaughter and two Republican nominees (see 2307030039 and 2309140029). Khan has a “consistent pattern of violating ethical norms, exceeding her statutory authority, behaving in a blatantly partisan manner and then aggressively trying to cover it up,” Cruz told us after the hearing.

During the hearing, Cruz focused on the agency’s decision to redact a dissenting opinion from then-Commissioner Christine Wilson. Wilson took issue with Khan’s refusal to recuse herself from proceedings on Meta’s buy of Within Unlimited, despite an FTC ethics official’s recommendation that she do so (see 2307130059). Slaughter told Cruz the communications cited in Wilson’s opinion couldn’t be shared because of an agency rule implemented during the Reagan administration by then-Republican Chairman Jim Miller. The rule prohibited the sharing of staff communications about FTC deliberations. Slaughter conceded no statutory language requires the protection of information but said the rule has been applied to commissioners from both parties, including former Democratic Commissioner Rohit Chopra.

“The rules are there to protect something really important, which is candid advice from our staff,” said Slaughter: Staff should feel free to provide advice without being “caught in between public debate and debates between commissioners.”

Cruz shared public documents from 1999 and 2007 in which the FTC described recommendations from a designated agency ethics official. When the “allegation is the chair is behaving unethically, I think the commission has an obligation to make those allegations public,” said Cruz. “And it explains a lot why staff believes integrity has gone down so severely in the last two years.”

During the hearing, Cruz cited employee surveys by the Office of Personnel Management. The most recent results show less than half of FTC employees agree agency leaders “maintain high standards of honesty and integrity," he said: That's a nearly 40% dropoff since the start of Khan’s tenure. The FTC declined to comment.

Khan hasn’t appeared for an oversight hearing before the committee during her tenure. Cruz told us after the hearing that Cantwell needs to schedule one soon.

Republican nominees Melissa Holyoak and Andrew Ferguson told the committee the FTC should table its privacy rulemaking until Congress gives the agency clear legislative authority through a federal data privacy law. Khan would have to initiate such an action, and she will retain her Democratic majority even if Holyoak and Ferguson are confirmed. Khan told Congress previously she would suspend the rulemaking if Congress passed a federal privacy law (see 2304180077). Sen. Marsha Blackburn, R-Tenn., said she believes the FTC doesn’t have the authority to do the privacy rulemaking. Slaughter disagreed.

Passing a comprehensive privacy law to buttress FTC enforcement and restoring the agency’s consumer redress authority are committee priorities (see 2205030056), said Senate Commerce Committee Chair Maria Cantwell, D-Wash. She asked the nominees if they support restoring FTC Act Section 13(b) authority, which a unanimous U.S. Supreme Court eliminated. All three nominees agreed they support restoring some form of consumer redress authority.

At least two Democrats expressed interest in moving forward with the Republican nominees’ confirmations. Ferguson’s opening remarks championing “free enterprise” had “somewhat of a political slant,” but in private meetings, he seemed to have respect for “both sides of the argument,” Senate Consumer Protection Subcommittee Chair John Hickenlooper, D-Colo., told us. The nominees sounded like they want to “come on board in a nonpartisan way.”

“We need fully functioning bodies to be able to carry out work on behalf of consumers, and that’s how this works,” said Sen. Ben Ray Lujan, D-N.M. “I’m certainly hopeful that as decisions are made, as votes are cast, we’ll be able to see confirmations and get these entities filled.”

Holyoak and Ferguson were introduced and supported by Senate Minority Leader Mitch McConnell, R-Ky., and Senate Antitrust Subcommittee ranking member Mike Lee, R-Utah. Ferguson, McConnell’s former chief counsel, is a “zealous advocate” who will address crucial questions about free enterprise, said McConnell. Holyoak is an “exceptionally talented lawyer who’s committed to constitutionally limited government,” said Lee.

U.S. free enterprise is perhaps “America’s greatest contribution to the world,” Ferguson said in his opening remarks. Society benefits if enforcers protect it against “monopolies and fraud” through “rigorous enforcement,” he said.

Holyoak highlighted the need to protect children online. Supervising their online activity is “particularly challenging,” especially when children seem to understand the technology better than their parents, she said, calling it one of many important issues before the FTC.