FTC deleted documents on controversial rule with ‘severe consequences’ to economy: Rep Jim Jordan

FIRST ON FOX – The Federal Trade Commission (FTC) has deleted key documents related to the agency’s implementation of a new rule that would ban noncompete clauses for workers, according to House Judiciary Committee chairman Rep. Jim Jordan, R-Ohio.

In February, Jordan wrote to FTC Chairwoman Lina Khan, saying that the proposed rule “exceeds its delegated authority and imposes a top-down, one-size-fits-all approach that violates basic American principles of federalism and free markets.”

“This power grab is just the latest example of the Biden FTC straying from the Commission’s mandate in its eagerness to centrally plan the American economy to meet a preferred social agenda. The Committee on the Judiciary is conducting oversight of the FTC’s power grab, and we expect your complete cooperation with our requests,” he said. 

In a May 31 letter reviewed exclusively by Fox News Digital, that to date, the FTC’s document production has included little more than non-substantive calendar invites and material already publicly available, along with a vague promise to “submit additional productions on a rolling basis as [the FTC] locate[s] responsive documents.”

Jordan said that the committee has recently learned “that the FTC has deleted material likely responsive to the Committee’s requests.”

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Jordan said in February that the rule would wipe out roughly 30 million existing non-compete agreements, and while the FTC highlights estimated benefits of the rule, it makes little effort to quantify the costs. 

“Commentators have concluded on numerous occasions that the balance of the costs and benefits of non-compete agreements is inconclusive, but the Biden FTC seems to think it somehow knows best,” Jordan said.

“The rule exceeds its authority as delegated by Congress and would have severe consequences for American workers and the American economy,” he said.

Jordan sought, among other things, documents related to the litigation risks due to the rulemaking, economic analysis related to the rulemaking, and communications between the FTC and third parties about the rulemaking.

In its initial response, the FTC stated that 47 employees, contractors, advisors or consultants worked on or contributed to the rulemaking. The FTC also identified eight individuals who are expected to play or have played a supervisory role related to the rulemaking. 

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One such individual was a Consumer Financial Protection Bureau (CFPB) employee detailed to the Commission who “led the team on a daily basis,” “supervised the drafting of the [proposed rule],” ensured that drafts were circulated among Commission senior leadership, and “oversaw any legal research,” according to Jordan. 

“Only recently, on May 16, 2023—over three months after our first request—did FTC staff explain to the Committee that the FTC has already deleted materials that are likely responsive to the Committee’s request,” Jordan wrote in his May 31 letter. 

“Although FTC staff represented that these deletions occurred prior to the Committee’s February 14 letter, the FTC’s failure to maintain these records materially impedes the Committee’s oversight,” he continued. 

“Based on conversation with FTC staff, the Committee understands that the deleted materials included some of the files of the CFPB employee who you brought on to lead the FTC’s rulemaking, as well as some of the materials of several additional employees,” he added.

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Jordan says that the FTC’s approach to record retention is concerning, and the FTC may have violated federal record-keeping law by deleting these materials.

In February, the FTC Office of Inspector General (OIG) investigation into the agencies record-keeping found that while the FTC recently made significant progress in some areas of records management, such as shifting to all-electronic recordkeeping, the FTC still faces challenges in complying with National Archives and Records Administration records schedule requirements and setting up automated practices for properly storing and timely disposing of records in a uniform manner across the agency. 

“The FTC must assess whether its current personnel and technology are capable of meeting these challenges in advance of fiscal year 2023,” OIG said in a report of its findings.

Jordan requested that the FTC hand over all documents and communications referring or relating to the FTC’s record retention policy; a full and complete explanation as to why any records responsive to the Committee’s Feb. 14, 2023, letter have been deleted, including the identities of FTC employees responsible for the agency’s records management practices; a list of any records or communications that have been deleted that would have been responsive to the Committee’s Feb. 14, 2023, letter, including the FTC custodian(s) of these records; and a description of the steps taken to recover any deleted responsive material, copies of which may be archived in different accounts or agency backup files.

The agency has a deadline 5:00 p.m. on June 14 to respond to the committee’s request.