When Meta sued the Federal Trade Commission last week — the social networking giant’s latest effort to block new restrictions on its monetization of user data — it used an increasingly common argument against government regulators: The complaint alleged that the structure of the F.T.C. was unconstitutional and that its in-house trials were invalid.
The lawsuit is the latest in a growing campaign to weaken regulators that could upend enforcement at a suite of agencies — including the F.T.C., the Securities and Exchange Commission and the Internal Revenue Service.
Such arguments would have been unthinkable not long ago. As Justice Elena Kagan put it while hearing a case making similar claims, “Nobody has had the, you know, chutzpah.”
Companies are testing new dynamics and limits. “Today this is a very serious complaint about issues the Supreme Court is wrestling with, but 10 years ago it would have been seen as gobbledygook jurisprudence,” Jon Leibowitz, a former F.T.C. chair, said of the Meta filing. The conservative majority on the Supreme Court since 2020 has restricted administrative power and considered challenges to agency proceedings long taken for granted as valid. The justices have also made it easier to mount challenges to the agencies’ structure and authority. Meta relied on those changes to bring its case against the F.T.C.
In a letter to Meta on Friday, nine House Democrats called the case “frivolous” and said the company wanted to “destroy America’s bedrock consumer protection agency.”
Meta is one of several businesses making challenges. On the same day that Meta filed its suit, the Supreme Court heard arguments in a case that asks whether in-house trials at the S.E.C. are legal. Industry groups like the U.S. Chamber of Commerce and executives like Elon Musk and Mark Cuban weighed in, filing amicus briefs urging the court to find against the S.E.C. The biotech company Illumina, which is tussling with the F.T.C. over its merger with the multi-cancer test maker Grail, has challenged the agency’s constitutionality in a federal appeals court.
The cases raise various complaints about how agencies are set up and operate. Challengers say, among other arguments, that there’s no consistent criteria for deciding which cases agencies try in house or in federal court, that the in-house tribunals violate a defendant’s right to a jury trial and that agencies act as prosecutors and judges. “There is a constitutional limit to what Congress can ‘admini-strize,’” Jay Clayton, S.E.C. chair during the Trump administration, told DealBook. He believes administrative courts are not always an appropriate venue. “For me, trying insider-trading cases — the same or very close to classic wire fraud — in S.E.C. courts with S.E.C.-appointed judges and no right to a jury is a step too far.” (The S.E.C. declined to comment.)
Where the justices draw the line will be apparent by the term’s end in June, the deadline for deciding the S.E.C. case. But even if they find for the S.E.C., companies like Meta are lining up with more cases to undermine agencies. If the companies convince courts that in-house tribunals are invalid, enforcers across the government will have far less power and control over proceedings and will be forced to prosecute many more matters in federal courts, adding a significant burden on the justice system. Such a ruling may also lead to changes in how agencies are set up, perhaps eliminating the need for a slate of bipartisan commissioners — a potential outcome that prompted at least one former enforcer to predict that companies may yet regret their campaign to dismantle agencies. — Ephrat Livni