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Top House, Senate GOP hit FTC for ‘destroying records’ related to congressional probe

August 17, 2023 | | Print Article

Top Republicans in the House and Senate are demanding the Federal Trade Commission (FTC) explain why it “improperly destroyed records” related to a congressional probe into a proposed rule that would ban non-compete clauses.

In a letter to FTC Chair Lina Khan dated for Thursday and provided ahead of its release to Fox News Digital, Sen. Ted Cruz (R-Texas) accused the FTC of “unprecedented actions.”

“By deleting documents, the FTC likely violated federal law. It also impeded Congressional oversight of the FTC’s recent, unprecedented actions, including its proposed rule banning non-compete clauses,” Cruz, a ranking member on the Senate Commerce, Science, and Transportation Committee, wrote in the letter, which was also signed by Chairman of the House Judiciary Committee Rep. Jim Jordan (R-Ohio) and Chairman of the House Committee on Oversight and Accountability Rep. James Comer (R-Ky.).

“Congress and the public deserve an explanation of why the FTC improperly destroyed records, what records it improperly destroyed, and what steps will be taken to ensure it never happens again,” Cruz stated.

“The letter by Republican legislators comes about a year and a half after the FTC’s in-house watchdog, the Office of Inspector General (OIG), found multiple failure’s [sic] in the FTC’s record-keeping process,” according to Fox News Digital.

As BizPac Review reported in July 2021, President Joe Biden signed an executive order (EO) calling on the FTC to “adopt rules that curtail non-compete agreements” — a move that then-White House Press Secretary Jen Psaki said would affect more than 30 million American workers.


“First, roughly half of private sector businesses require at least some employees to enter non-compete agreements, affecting over 30 million people. This affects construction workers, hotel workers, many blue-collar jobs, not just high-level executives. [The president] believes that if someone offers you a better job, you should be able to take it. It makes sense,” Psaki said at the time. “So, in keeping with his campaign promise, the executive order will call on the FTC to adopt rules that curtail non-compete agreements.”

In January 2023, the FTC made good on Biden’s EO and proposed “a new rule that would ban employers from imposing noncompetes on their workers, a widespread and often exploitative practice that suppresses wages, hampers innovation, and blocks entrepreneurs from starting new businesses.”

“By stopping this practice, the agency estimates that the new proposed rule could increase wages by nearly $300 billion per year and expand career opportunities for about 30 million Americans,” the FTC stated.

Rep. Jordan said in February that the rule “exceeds [the commission’s] delegated authority and imposes a top-down, one-size-fits-all approach that violates basic American principles of federalism and free markets,” according to Fox News Digital.

Jordan had requested documents from the FTC relating to, among other things, “litigation risks due to the rulemaking, economic analysis related to the rulemaking, and communications between the FTC and third parties about the rulemaking,” the outlet explains.

In May, House Judiciary Committee staff learned from the FTC that it had “deleted material likely responsive to the Committee’s requests.”

Included among the deleted records were those of the Consumer Financial Protection Bureau employee in charge of the FTC’s rulemaking.

“The FTC’s deletion of documents responsive to a Congressional inquiry underscores the OIG’s conclusion in 2022 that ‘the FTC has not prioritized records management nor embedded it as a value in the agency’s culture,'” the Republicans told Khan. “Moreover, it suggests that the agency is not committed to complying with the law, and that it may continue to delete records that are relevant to ongoing investigations.”

“This is not how a federal agency should be run,” they stated, adding that “Federal law imposes important recordkeeping requirements on the FTC.”

Fox News Digital explains:

The Federal Records Act (FRA) requires the head of every federal agency to “make and preserve records” about the agency’s “functions, policies, decisions, procedures, and essential transactions.” It further requires agency heads to “establish and maintain” a “records scheduling” process, pursuant to which the agency must identify the records it has, determine how long each type of record is deemed valuable, and when there is no longer a need for them at the agency, request authority to either legally destroy the records or transfer them to the National Archives.

The FRA explains that such recordkeeping is necessary to “furnish the information necessary to protect the legal and financial rights of the Government and of persons directly affected by the agency’s activities,” the lawmakers note.

 

“It turns out the FTC has struggled to comply with the law,” the letter states.

The lawmakers point to a February 2022 memo in which the OIG “alert[ed] FTC leadership” that the agency was failing to adhere to the National Archives and Records Administration (NARA) records scheduling requirements and had failed to set up “automated practices for properly storing and timely disposing of records in a manner across the agency.”

“Particularly noteworthy,” the OIG found, was the fact that “the Bureau of Competition and the Bureau of Consumer Protection do not use a comprehensive case management system for their case files” and FTC management had “no plans” to forgo the use of shared drive folders for the FTC’s cloud platform for storing files.

“To date, the FTC has not adequately addressed concerns about its record retention policy,” the GOP lawmakers wrote.

“The agency has not explained how documents were deleted related to a rulemaking that the FTC should have known would face litigation, FOIA requests, and Congressional oversight,” they continued. “In addition, the FTC has not explained how federal records from senior advisors (sic) at the FTC could be deleted, regardless of whether there were litigation or other holds placed on the documents.”

According to Fox News Digital, “The Republicans requested an exhaustive list of communications from the agency, including what documents the FTC may have deleted in relation to 12 additional congressional oversight probes into the agency.”

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Melissa Fine
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