Tag: Administrative Procedure Act
New Cooley Alert: Texas Court Blocks FTC’s Noncompete Ban
In April, the Federal Trade Commission voted, three to two, to prohibit post-employment noncompete agreements with workers (discussed in this April 2024 Cooley Alert). With some exceptions, the prohibition would have banned virtually all post-employment noncompete agreements in the U.S. beginning on September 4, 2024. But, as discussed in this timely new Cooley Alert, Texas Court Blocks FTC’s Noncompete Ban, from our Labor and Employment group, on August 20, 2024, the Northern District of Texas in Ryan LLC v. Federal Trade Commission issued an order blocking the FTC rule banning all post-employment noncompete agreements from taking effect. As a result, the Alert concludes, “for the time being, employers using noncompetes may continue to utilize them, subject to applicable state laws.”
In Corner Post, SCOTUS takes another swipe at the administrative state
This term, SCOTUS delivered two big wallops to the administrative state in the decisions eliminating Chevron deference (Loper Bright Enterprises v. Raimondo and Relentless, Inc. v. Dept of Commerce, see this Pubco post) and the use of administrative enforcement proceedings seeking civil penalties ( SEC v. Jarkesy, see this PubCo post). But that wasn’t all. There were at least a couple of other cases this term that reflected the same kind of skepticism toward the administrative state. They might be worth your attention. One of them, Corner Post, Inc. v. Board of Governors of the Federal Reserve System, discussed below, concerned the statute of limitations under the Administrative Procedure Act. For our purposes, though, the potentially critical repercussion of Corner Post was articulated in the dissent by Justice Ketanji Brown Jackson, who argued that the case effectively decimated the limitations period for facial challenges to agency regulations, setting up the potential for a never-ending series of challenges to long-standing regulations and perhaps even, yes, gaming of the system.
In Ohio v. EPA, SCOTUS reinforces powerful role of judiciary in agency oversight
As has been widely discussed, the administrative state took quite a shellacking this last SCOTUS term. But as I noted earlier, it wasn’t just the elimination of Chevron deference in Loper Bright (see this PubCo post) or administrative enforcement proceedings seeking civil penalties in SEC v. Jarkesy (see this PubCo post). There were at least a couple of other cases this term that contributed to the drubbing. One of them, Corner Post, Inc. v. Board of Governors of the Federal Reserve System, had the effect of extending the statute of limitations under the Administrative Procedure Act (see this PubCo post). Another case, Ohio v. EPA, in which SCOTUS put a temporary hold on the “good neighbor” provision of the Clean Air Act because EPA failed to “reasonably explain” its action, might also be worth your attention. In Ohio, Justice Neil Gorsuch, writing for the majority, concluded that enforcement of EPA’s rule should be stayed because the challengers were likely to prevail on the merits. Why? Because EPA had provided an inadequate explanation for the continued application of the emission control measures in the plan in response to comments. Where have we heard this “failure-to-explain” theory recently? How about Chamber of Commerce of the USA v. SEC, vacating the SEC’s share repurchase rule for, among other things, failure to respond to petitioners’ comments (see this PubCo post) or even National Association of Manufacturers v. SEC, vacating the 2022 rescission of certain proxy advisor rules for arbitrarily and capriciously failing to provide an adequate explanation to justify its change (see this PubCo post). Justice Amy Coney Barrett dissented, joined by Justices Sonia Sotomayor, Elena Kagan and Ketanji Brown Jackson, contending that the majority opinion “risks the ‘sort of unwarranted judicial examination of perceived procedural shortcomings’ that might ‘seriously interfere with that process prescribed by Congress.’” As characterized by Professor Nicholas Bagley of the University of Michigan Law School in Michigan Law, in its “broad strokes,” the dissent asserted that “courts shouldn’t be in the business of fly-specking lengthy notice-and-comment records,” especially with the benefit of hindsight. The question, he continued, “is whether the agency has behaved arbitrarily and capriciously, and that’s a pretty demanding standard.” With this decision, SCOTUS amplifies the increasingly powerful role of the judiciary in overseeing federal agencies, adding to the decisions this term seeking to rein in the administrative state.