With the Chevron doctrine now overturned, many government agencies need to reassess their regulations, especially those that push the envelope. Congress also has an oversight duty to probe and know what regulations should be rescinded.
A July 9 hearing of the U.S. House of Representatives Energy and Commerce Subcommittee on Innovation, Data, and Commerce with the five commissioners of the Federal Trade Commission (FTC) is instructive on these matters.
In the past three years, few, if any, government agencies have been more aggressive than the FTC in promulgating audacious, burdensome regulations that are far afield from the text of underlying statutes or the agency’s mission.
The June 28 U.S. Supreme Court decision in Loper Bright, which overturned Chevron and strengthened courts’ power to review and reject federal agencies regulations, should have humbled and tempered the FTC. But there are no signs that is happening, or that it will, barring strong Congressional intervention.
Subcommittee Chair Congressman Gus Bilirakis (R-FL) began questioning FTC Chair Lina Khan about the Supreme Court ruling asking, “Can you explain how this will now frame your work going forward.”
Though the FTC had lost an important court case related to Chevron six days earlier, Chair Khan omitted that in her response.
Instead, she said recent rulings would have to be studied and pivoted into other areas. She went on to sound like a conservative U.S. Supreme Court justice saying, “A core pillar of my approach to the FTC is making sure that we are being faithful to the text of the laws that Congress has written.”
Commissioner Rebecca Kelly Slaughter then sought to minimize the impact of Loper Bright on the FTC by saying that most of the agency’s actions are determined under other statutes than the Administrative Procedure Act (APA), the statute pertaining to Loper Bright. Yet, those statutes, like the Magnuson Moss Act, are more stringent than APA, i.e., if you violate an APA provision you likely will be in trouble on the other statutes.
At issue, the FTC has put forward a 570-page rule to ban all noncompete agreements and end 30 million voluntary contracts between employers and employees. While many noncompete agreements are onerous and unfair to working Americans, those involving highly skilled employees whose work is integral to an emerging company’s success are essential for the company to prosper and even stay in business.
On July 3, Judge Ada Brown of the U.S. District Court for the Northern District of Texas granted a preliminary injunction against the FTC’s noncompete rule saying, “the deference that Chevron requires of courts reviewing agency action cannot be squared with APA (Administrative Procedure Act).”
The FTC is supposed to protect consumers and ensure mergers are not harmful. It has gone well beyond its core mission. If any government agency can conceivably regulate noncompete agreements, it is the U.S. Department of Labor.
FTC Commissioner Melissa Holyoak offered a strong dissent on April 23 opposing the noncompete rule. She pointed out the basics, “Article I of the Constitution vests “[a]ll legislative Powers” in Congress” and presciently observed, “I am particularly disappointed that the Commission dedicated the Commission’s limited resources to a broad rulemaking that exceeds congressional authorization and will likely not survive legal challenges.”
The leadership of the Subcommittee on Innovation, Data, and Commerce should inquire of Commissioners Khan and Slaughter why they felt the U.S. District Court ruling on noncompete agreements did not merit mention. The public would also be well served for Congress to ask the FTC to respond to the following within 30 days.
- What regulations issued over the past three years are most likely to be overturned considering the Loper Bright decision?
- What steps is the FTC taking so that vast amounts of staff and commissioners’ time will not be spent in the future on rules likely to be thrown out by the courts, like the noncompete decision?
If the FTC fails to provide substantive responses, the U.S. Government Accountability Office should be called on to investigate. And with Chevron overturned, Congressional committees need to be more probing and executive agencies transparent about the decision’s impact.
