Business Groups Mount Legal Challenges Against Biden Administration's Regulatory Push

In a move that sparked immediate backlash, the Federal Trade Commission (FTC) recently finalized a rule banning noncompete clauses, leading to swift legal action from the U.S. Chamber of Commerce and other business groups. These groups argue that the FTC has overstepped its authority by imposing the ban, setting the stage for a familiar battle between the Biden administration and industry lobbying groups.

This is part of a pattern where the Biden administration has introduced new regulations addressing various areas such as independent contractors, credit card late fees and climate disclosure requirements, only to face immediate legal challenges from business advocacy organizations.

Increasing Legal Warfare

The U.S. Chamber of Commerce has announced its intention to file at least 22 lawsuits against the Biden administration before the end of President Joe Biden's current term, a significant increase from previous administrations. The American Bankers Association has also ramped up its legal challenges, signing on to four lawsuits against banking regulators since September 2022 after a decade of abstaining from such actions.

Challenges to Regulatory Authorities

Industry lobbying groups argue that the agencies responsible for these regulations are exceeding their regulatory authority, prompting them to resort to litigation as a means of pushing back against what they perceive as overreach. The Chamber, in particular, has expressed concerns about the volume and economic impact of the regulations, signaling a shift from disputing specific regulations to challenging the overall regulatory direction.

Metrics from George Mason University indicate a notable increase in total private-sector regulations under the Biden administration compared to the previous administration. While the volume of regulations remained relatively stable during the Trump era, the nature of the regulations under the current administration is drawing attention for being expansive in their interpretation of authorizing statutes, according to experts.

The specific targets of these lawsuits have been diverse, spanning a dozen agencies under the Biden administration, with the primary argument centering on the assertion that agencies are attempting to establish rules in areas that should be addressed by Congress.

Impact of Regulations

The Biden administration contends that its regulations aim to protect consumers and generate cost savings. Estimates provided by the administration suggest that the FTC's noncompete ban will result in a wage increase of at least $400 billion over the next decade. Additionally, the administration predicts that the Consumer Financial Protection Bureau's reduction of credit card late fees will save 45 million Americans $220 per year, while the Environmental Protection Agency's air-quality rule is projected to produce up to $46 billion in net health benefits in 2032.

Critics of the regulations argue that the Biden administration has not consistently followed the rulemaking process, particularly by neglecting the incorporation of viewpoints from stakeholders in the final regulation. This has led to industry voices viewing litigation as the only viable recourse to address regulations that they believe fall beyond the agencies' regulatory purview.

Furthermore, the ever-changing regulatory landscape depending on the administration in power introduces uncertainties for businesses, potentially impacting their investments and production capabilities.