Introduction
Deborah Brantley, a bartender in Florida, earned ten dollars an hour.
At work, she faced persistent sexual harassment and verbal abuse.
After a year in this environment, she accepted a position at a nearby family-owned bar.
Only then did she discover that she had signed a noncompete agreement barring her from working for any competitors within fifty miles for two years.
Deborah nonetheless left to take the new job, assuming that her employer’s threats to enforce the noncompete were an empty scare tactic.
She was wrong. Her former employer sued, seeking thirty thousand dollars in damages.
Deborah’s situation is all too common. Noncompete agreements constrain about thirty million people, or nearly one in five American workers.
These clauses keep workers in jobs they might otherwise leave or force costly choices: moving to a lower-paying field, exiting the workforce, or defending against expensive litigation.
Proponents of noncompete agreements argue they protect trade secrets and encourage investment in employee training.
But these claims are difficult to square with the proliferation of noncompetes for nurses, hairdressers, truck drivers, and fast-food workers.
As Deborah put it, “What trade secrets can a bartender possess?”
On April 23, 2024, the Federal Trade Commission (FTC) finalized a rule banning the overwhelming majority of noncompete clauses.
The final rule capped a multiyear process that drew on open workshops, empirical research, and extensive public comment.
That same day, Ryan LLC, a Texas-based tax services firm, filed suit in the Northern District of Texas challenging, among other things, the FTC’s authority to promulgate the noncompete rule.
The Commission grounded the rule in sections 5 and 6(g) of the FTC Act.
Section 5 declares unfair methods of competition unlawful and empowers the Commission to litigate to prevent them.
Section 6(g) authorizes the Commission to make rules and regulations to carry out the Act.
The FTC argued that, read together, these provisions permit it to promulgate legislative rules that identify and prohibit unfair methods of competition.
Ryan disagreed, arguing that the word “rules” in section 6(g) referred only to procedural rules and the like and did not encompass legislative rules.
The district court sided with the plaintiffs, holding that the FTC lacked statutory authority to issue the noncompete rule.
The Commission appealed to the Fifth Circuit Court of Appeals, but in September 2025, under new Republican leadership, the FTC voted 3-1 to dismiss the appeal and vacate the rule.
Ryan’s challenge to the FTC’s rulemaking authority was one front in a broader campaign to halt, or even reverse, recent developments in federal competition policy. It also signals a new line of attack on the administrative state: the scope of agency authority under general rulemaking grants. The dispute sounds in statutory interpretation, and the basic question is straightforward: When Congress authorizes an agency to make rules, does that term include rules with the force of law?
A number of scholars and judges argue that, at least in the case of the FTC, the answer is no.
This Article evaluates those arguments and rebuts them. It shows that the FTC’s opponents elevate the aims and structure of the 1914 statute over later amendments and judicial interpretation. Section 6(g), read in its proper context—the FTC Act as amended—clearly authorizes the FTC to issue legislative rules.
The Article proceeds in four parts. Part I traces the early development of the FTC, beginning with the political and legal debates that shaped its founding in 1914. It explains how the FTC’s initial reliance on individualized adjudication and interpretive rules failed to provide clear, enforceable standards, prompting the FTC to experiment with other regulatory tools.
Part II situates the FTC’s turn to legislative rulemaking within mid-twentieth-century administrative law. It explains how rulemaking became the preferred policymaking tool of many agencies and traces how the Supreme Court read general rulemaking grants to authorize legislative rules. These developments culminated in National Petroleum Refiners Ass’n v. Federal Trade Commission, in which the D.C. Circuit upheld the FTC’s legislative rulemaking authority under section 6(g).
Part III examines how Congress responded to National Petroleum Refiners in the Magnuson–Moss Warranty—Federal Trade Commission Improvement Act. Rather than overturn the decision, Congress incorporated and ratified its holding by amending the FTC Act to cabin consumer protection rulemaking under a new section, while preserving the Commission’s competition rulemaking authority under section 6(g).
Postenactment practice and the 1980 FTC Improvements Act further confirm that Congress incorporated the National Petroleum Refiners holding into Magnuson–Moss.
Part IV turns to how contemporary courts should construe the FTC’s competition rulemaking authority. It begins by addressing a new wave of skepticism toward that authority, most prominently the argument—advanced by Professors Thomas Merrill and Kathryn Watts—that National Petroleum Refiners rested on a theory of mass amnesia about an unwritten convention limiting legislative rulemaking powers. The Article explains why that theory is implausible as a matter of both history and law: It lacks an adequate textual, judicial, or legislative foundation, and it asks courts to disregard Congress’s explicit preservation of competition rulemaking in the Magnuson–Moss Act. In place of this revisionist account, Part IV urges courts to interpret section 6(g) through the lens of the 1975 amendments, which reworked the FTC Act around rulemaking and incorporated National Petroleum Refiners into the statutory text. This approach aligns with a long line of Supreme Court precedent reading general rulemaking grants to authorize legislative rules. Finally, Part IV shows that overturning National Petroleum Refiners would disrupt settled reliance interests across the administrative state, calling into question thousands of rules issued under analogous provisions by agencies from the EPA to the Office of the Comptroller of the Currency.