Jun 13, 2022 - Technology

Conservative bench's new war on federal regulatory agencies

Hand holding gavel about to hit a stop sign block.
Illustration: Allie Carl/Axios

The conservative bar, with the help of a newly sympathetic judiciary, is closer than ever to fulfilling its dream of defanging federal regulators — just as the Biden administration is set to flex its powers.

Why it matters: The administration's plans to limit monopolies and rein in Big Tech will run head-on into judges eager to curb the authority of the Federal Trade Commission and every other independent agency.

What's happening: Cases against federal agencies are starting to pile up, including a recent ruling by the Fifth Circuit Court of Appela limiting how the Securities & Exchange Commission can use its internal administrative court.

Flashback: When regulatory agencies were created in the early 20th century, there was tremendous controversy over the increase in federal authority over wide swaths of the economy, with most conservative Republicans adamantly opposed.

  • More than a century later, they finally have the votes on the Supreme Court to do something about it.
  • "There are a lot of people on the right who are very, very angry about what they believe to be a runaway state, in which these politically unaccountable bureaucrats are running the show," George Washington University law professor Richard Pierce told Axios. "They are looking for ways of stopping agencies."

What they're saying: "Within the conservative legal movement, there has been an element that has been focused on the administrative state and it has certainly gained strength," Jonathan Adler, a Case Western Reserve University law professor, told Axios.

  • "There is a court majority that appears to be at least somewhat sympathetic to those concerns, and lower court judges who are more willing to push the envelope on those sorts of questions."

Zoom out: Agencies have become where much of the policy work of an administration is carried out as Congress remains deadlocked.

  • Former President Obama called it using his phone and pen — writing executive actions in areas where Congress was stuck.
  • But with courts hemming in what agencies can do, that will change.
  • "The courts are increasingly saying that’s a job for Congress," Adler said.

Zoom in: This trend spells trouble for the Federal Trade Commission's goal of taking on Big Tech.

  • The FTC can bring complaints against companies in federal court or within its own internal court, where it has the advantage of a judge with agency expertise.
  • The FTC may be tempted to bring cases using its administrative court if it tries out novel legal theories against Big Tech companies, but given the broader legal atmosphere, that could backfire.
  • "The welcoming attitude of some federal courts to these kinds of arguments suggests that a storm is forming above the federal independent regulatory agencies, including the FTC," William Kovacic, a George Washington University law professor and former FTC chairman. "And it’s going to rain hard."

What to watch: The  Supreme Court has agreed to hear a case brought by a company that's trying to challenge the constitutionality of the FTC administrative court's power.

  • "The Supreme Court is going to quite likely say things that aren’t favorable to the FTC," Kovacic said.
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