TL;DR.  Reporting today on some scintillating procedural developments in the FTC's Amended Negative Option Rule saga at the end of 2024 that are of absolutely no consequence whatsoever to those with normal day jobs, but are GOLD to us admin law junkies.  And as many readers of this alert have asked to be updated on all developments, here we are!  Even if you choose to skip reading this entire alert, if you have not yet conducted a top to bottom review of your subscription flow, including your cancel path and all product/service claims, now's the time to do so since the Amended Rule's Prohibition on Misrepresentations goes into effect on January 14, and violations are subject to hefty civil penalties.

 

On December 5, 2024, the Government Accountability Office (GAO), as mandated by the Congressional Review Act (CRA), submitted a report to Congress assessing the FTC's compliance with its administrative procedural requirements in developing the Amended Final Negative Option Rule.  This Report said literally nothing, like nothing nothing, like nada, nunca, except one small observation where the FTC tripped up.  The GAO reports that although the Rule was published in the Federal Register on November 15, the FTC didn't transmit the Rule to Congress until November 20.  This is relevant because a major rule (i.e., one affecting the US economy over $100 MM) can not go into effect earlier than 60 days following Congress receiving the rule from the FTC, and with the Rule's stated effective date of January 14, 2025, the Report astutely notes the effective date is less than 60 days from when Congress received it!  The Horror, The Horror!  What this technicality means from a practical pov, we can't say, but the GAO has spoken, and other than this little dandy, they didn't say much of anything else.  But also remember that Congress has the ability under the CRA to set aside a major rule, in whole or part, so now that the new Congress has been sworn in, it is possible that House Speaker Mike Johnson and Ted Cruz, who is the ranking member of the Senate Committee on Commerce, Science, and Transportation which oversees the FTC, could have some thoughts on the matter.  Stay tuned!

 

Meanwhile, also on December 5, but 815 miles away in St Louis, MO, the Petitioners challenging the legality of the Rule filed a motion at the 8th Circuit (where the four separate petitioner challenges have been consolidated) seeking to stay the Rule's effective date until the court has ruled on the merits. The FTC filed its response to Petitioner's motion on December 20 and Petitioners filed their reply brief on January 2.  No news yet from the 8th Cir. on the stay.

 

On January 3, Petitioners and the FTC filed a Joint Proposed Briefing Schedule requiring Petitioners to file their Opening Brief by February 14, the FTC to file its Opening Brief by April 15, and Petitioners to file its Reply Brief by May 15.  These dates are oddly coincidental with the full effective date of the Amended Final Rule, which is May 14. Hmmmm.  So, unless the 8th Circuit issues the stay, the Amended Rule will go into effect on January 14 for Misrepresentations and May 14 for all other provisions.