Mateo Rodriguez  

Associate Editor  

Loyola University Chicago School of Law, JD 2027 

 

The regulatory state has expanded from the time of our founding. After the growth of industry and the expansion of interstate trade, the government understandably sought new ways to address increasingly complex problems. New agencies were created, such as the Environmental Protection Agency, the Food and Drug Administration, and the Federal Trade Commission (EPA, FDA , and FTC) who were charged with regulating different areas of commerce. This outgrowth was necessary to address changes in American markets. Over recent years, however, this expansion has become overly complex and has given too much authority to administrative agencies. In 2022 the state of West Virginia sought to rein in the regulatory powers of administrative agencies in the landmark Supreme Court case West Virginia v. EPA.  

The FTC as an example  

Lina Khan, the FTC chair under President Biden, pursued aggressive antitrust enforcement, much to the chagrin of the corporate world. Khan advocated for a range of anti-competitive enforcement, from pursuing aggressive litigation against companies like Amazon, to actively opposing corporate mergers. She enacted this policy agenda through the powers granted to her agency by congress. The FTC Act was passed in 1914 and created the Federal Trade Commission, giving the agency broad enforcement powers. The two main enforcement mechanisms congress granted the FTC were adjudicatory and rule-making powers. 

Under the adjudicatory enforcement provision, the FTC can bring legal actions against any company they believe are engaging in anti-competitive behavior. The latter enforcement mechanism, and the more controversial of the two, is the rule-making provision under section 6(e) of The Act. The agency has used this provision to declare any action unlawful-if it is found to be an “unfair method of competition” or a “deceptive act or practice.” Additionally, the FTC has used this broad provision to create rules that have led to confusion and uncertainty for businesses. These rules, when published, are treated as law. This latter enforcement power has led many legal scholars to argue the FTC has taken on a legislative role not afforded to them in the constitution. 

Proponents of the FTC argue that the rule-making provision is necessary because congress could not possibly list out every conceivable business practice that may qualify as “unfair methods of competition.” Doing so, they argue, could be overly cumbersome and take up Congress’s time and resources. Supporters also claim that this process gives the FTC the flexibility necessary to deal with evolving issues. For instance, in their view, technologies such as artificial intelligence (AI) are developing rapidly, requiring an administrative body to keep up with these evolving markets. However, giving an administrative agency broad authority to make determinations about what constitutes legal and illegal business practices can cause issues for businesses and raise concerns for democratic law-making. 

For example, in 2024 the FTC announced it would ban non-compete agreements for workers making under $100,000 a year. The FTC claimed this new rule would help workers use their skills to start new businesses. While this may be true, consider that some of the skills possessed by the workers were obtained by the very companies they are seeking to compete against. Imagine, a dog grooming service or a landscaping company. Under the new rule, a business could hire an employee, train them, and see that same employee leave six months later to start a competing business. Remember that the rule was passed without going through the typical legislative process. This means no floor debates, no resolutions, and most importantly, no accountability for those creating the rule. 

The major questions doctrine  

Fortunately, businesses alongside the state of West Virginia sought to rein in the regulatory powers of administrative agencies like the FTC. In West Virginia v. EPA, the Supreme Court developed a legal theory known as the ‘major questions doctrine’. In this case, the EPA sought to use its authority under the Clean Air Act to significantly reduce carbon emissions. By the EPA’s own estimates, their new regulations “would entail billions of dollars in compliance costs, require the retirement of dozens of coal-fired coal plants, and eliminate tens of thousands of new jobs across various sectors.”   

The EPA argued they had the power to do this because under the clean air act, Congress granted them the ability to regulate air pollutants that “endanger public health or welfare.” They asserted that climate change was a threat to public health and welfare, and believed that under the wording of the statute, they could reduce emission standards to the extent they believed necessary.  

The Supreme Court held that Congress could not have intended to grant such sweeping authority to the EPA in such a cryptic fashion. The Court argued that for an administrative agency to have regulatory authority over an issue of major economic or political importance, the claimed authority must be explicitly stated in a statute. This ruling has major implications for the regulatory landscape moving forward.  

Administrative agencies that once wielded broad regulatory power must now be accountable to Congress and the American people. Regulators can no longer claim sweeping authority over areas of commerce that Congress never intended them to govern. Going forward, regulations must be enacted through the proper democratic process, rather than by unelected bureaucrats.