by db48x | 2025-07-09 03:46:33+00:00
A trivial search will get you the court opinion itself <https://ecf.ca8.uscourts.gov/opndir/25/07/243137P.pdf>, so regardless of how bad the news article is you should not be uninformed.

From the abstract:

…the Commission failed to follow procedural requirements under § 22 of the Federal Trade Commission Act (“FTC Act”), 15 U.S.C. § 57b-3(b)(1)

A more detailed explanation:

The Commission’s formal rulemaking authority is found in § 18 of the FTC Act. Section 18 authorizes the Commission to adopt “rules which define with specificity acts or practices which are unfair or deceptive acts or practices in or affecting commerce” within the meaning of § 5, as well as “requirements prescribed for the purpose of preventing such acts or practices.” 15 U.S.C. § 57a(a)(1)(B) (emphasis added). … Besides the specificity and prevalence requirements, § 18 requires a number of procedural steps, some of which go beyond those required for APA notice-and- comment rulemaking. The FTC must first publish an “advance notice of proposed rulemaking” containing “a brief description of the area of inquiry under consideration, the objectives which the Commission seeks to achieve, and possible regulatory alternatives under consideration.” 15 U.S.C. § 57a(b)(2)(A). Also required is a notice of proposed rulemaking “stating with particularity the text of the rule, including any alternatives, which the Commission proposes to promulgate, and the reason for the proposed rule.” Id. § 57a(b)(1)(A). Interested parties must be afforded the opportunity for “an informal hearing” and to “to submit written data, views, and arguments” on the proposed rule. Id. § 57a(b)(1)(B)-(C), (c). Congress further required the Commission to conduct regulatory analyses of proposed and final rules, or amendments to rules, at two stages of the rulemaking process. First, when the Commission publishes a notice of proposed rulemaking, it also must issue a “preliminary regulatory analysis” containing “a description of any reasonable alternatives to the proposed rule which may accomplish the stated objective of the rule” and for the proposed rule and each alternative, “a preliminary analysis of the projected benefits and any adverse economic effects and any other effects, and of the effectiveness of the proposed rule and each alternative in meeting the stated objectives of the proposed rule.” 15 U.S.C. § 57b-3(b)(1)(B)-(C). Second, the Commission must issue a “final regulatory analysis” when it promulgates a final rule. 15 U.S.C. § 57b-3(b)(2). Similar to the preliminary regulatory analysis, the final regulatory analysis must include a description of alternatives considered by the Commission and an analysis of projected benefits and adverse economic and other effects. The Commission must also provide “an explanation of the reasons for the determination of the Commission that the final rule will attain its objectives” and a “summary of any significant issues raised by the comments submitted . . . in response to the preliminary regulatory analysis.” Id. § 57b-3(b)(2)(B)-(E). Importantly, the preliminary and final regulatory analysis requirements do not apply to “any amendment to a rule” unless the FTC estimates that the amendment “will have an annual effect on the national economy of $100,000,000 or more.” Id. § 57b-3(a)(1)(A).

Notice all of the steps. “advance notice of proposed rulemaking”, “notice of proposed rulemaking”, “preliminary regulatory analysis”, “an informal hearing” plus the ability of concerned parties “to submit written data, views, and arguments” to the FTC, and a “final regulatory analysis”. The court draws our attention to the fact that the FTC never did either of the regulatory analysis steps, and points out that they are required.

The FTC had opted out of doing those analyses on the basis that the new rule would have an annual impact of less than a hundred million dollars. The court however notes that this is quite unlikely:

Based on the FTC’s estimate that 106,000 entities currently offer negative option features and estimated average hourly rates for professionals such as lawyers, website developers, and data scientists whose services would be required by many businesses to comply with the new requirements, the ALJ observed that unless each business used fewer than twenty-three hours of professional services at the lowest end of the spectrum of estimated hourly rates, the Rule’s compliance costs would exceed $100 million. Such an estimate was “clearly unrealistically low inasmuch as there are several new requirements proposed that would require changes in existing practices and/or disclosure forms.”

Thus the FTC erred when it skipped these steps. The remedy is to vacate:

Section 18 of the FTC Act directs that a reviewing court “shall hold unlawful and set aside the rule” if it finds agency action to be “without observance of procedure required by law.” 15 U.S.C. § 57a(e)(3); 5 U.S.C. § 706(2)(D). “The ordinary practice is to vacate unlawful agency action.” United Steel v. Mine Safety & Health Admin., 925 F.3d 1279, 1287 (D.C. Cir. 2019).

This doesn’t mean that the rule is unconstitutional, just that the FTC has to actually do things correctly. The court hasn’t ruled on the law itself because it is moot.