Speaker 1: Hello, and welcome to the Votes and Verdicts podcast, hosted
Speaker 1: by the Litigation and Policy team at Bloomberg Intelligence, the
Speaker 1: investment research platform of Bloomberg LP on the Bloomberg Terminal.
Speaker 1: Bloomberg Intelligence is five hundred analysts and strategists working across
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Speaker 1: business policy and law, and today we'll be looking at
Speaker 1: the litigation and policy catalysts that we're watching this week
Speaker 1: and that we think will impact companies across a number
Speaker 1: of different sectors. My name is Elliot Stein. I'm an
Speaker 1: analyst with Bloomberg and te Elligence covering litigation in the
Speaker 1: financials sector, and I'll be your host for today in
Speaker 1: March twenty seventh, twenty twenty five, and I'm delighted today
Speaker 1: to be joined by a number of my colleagues on
Speaker 1: the Litigation and Policy team. And as always, you can
Speaker 1: find all of our research on the Bloomberg terminal at
Speaker 1: big and more specifically on our dashboard BI laws go
Speaker 1: all right, so let's get started. Nathan Dean, let's bring
Speaker 1: you in. Nathan Covers a financials policy out of Washington,
Speaker 1: d C. He's our go to guy in DC. We
Speaker 1: had confirmation hearings today for Paul Atkins, President Trump's nominee
Speaker 1: to be SEC chair. I think you watched that whole
Speaker 1: thing because you were sending me ibs and some messages
Speaker 1: while it was going on, giving me sort of a
Speaker 1: running commentary. Any takeaways.
Speaker 2: Former Commissioner Paul Adkins is a Doctor Pepper fan because
Speaker 2: he had a big, gigant taking it. I would have
Speaker 2: thought it would have been Diekoke, but he had a
Speaker 2: big Doctor Pepper or right there on the dial as
Speaker 2: he was testifying. So, but you know former Commissioner Paul Atkins,
Speaker 2: he is now the head of Potomac Advisors. You know,
Speaker 2: he's like the godfather when it comes to SEC rules
Speaker 2: and rulemakings for the conservative Republican side of Washington. I mean,
Speaker 2: he he knows the SEC inside and out, and so
Speaker 2: I don't think he's going to have any issues whatsoever
Speaker 2: getting confirmed. And today's hearing did really dive all that
Speaker 2: deep into the weeds. They never do. I mean one
Speaker 2: of the bigger complaints was that from the democratic side
Speaker 2: is they had four individuals in this hearing and they
Speaker 2: only had one hearing. Amongst the four of them.
Speaker 1: I mean four point homin news were being asked questions.
Speaker 2: Yeah, so they had four nominees and Commissioner Atkins was
Speaker 2: just one of them. They also had the the next
Speaker 2: gentleman to be the Comptour of the currency for example.
Speaker 2: So there was a lot of discussion that could have
Speaker 2: gone into They didn't have much time. But you know,
Speaker 2: I say, there were really three key things that he said,
Speaker 2: and the first one was regulatory clarity. And this is
Speaker 2: really good for the cryptocurrency industry specifically like robin Hood
Speaker 2: and coinbase, because you know, the SEC has over the
Speaker 2: last few years and their eyes operated is in terms
Speaker 2: of gotcha violations, lots of enforcement actions. If you've read
Speaker 2: any Avelliates pieces over the last year, you know the
Speaker 2: SEC has been busy. But I will say that you know,
Speaker 2: the regulatory clarity is something that Commissioner Akins wants to
Speaker 2: move forward with and that's going to bode well for
Speaker 2: the crypto industry. With the note that this is only
Speaker 2: securities related anything else is outside of the SEC's jurisdiction
Speaker 2: and needs Congress has approval. Second is capital formation. He
Speaker 2: talked a little bit in terms of private funds. Think
Speaker 2: of changing things like the accredited investor definition to make
Speaker 2: it easier for individuals to investigate in private funds. You know,
Speaker 2: I think that's going to be a big issue for
Speaker 2: twenty twenty five. And then the third is market structure.
Speaker 2: You know, when Commissioner Afkins was around in the early
Speaker 2: two thousands, you know, he was one of the individuals
Speaker 2: that voted on rank NMS. This is the regulation that
Speaker 2: created the equity market structure that we know today, and
Speaker 2: he had a lot of issues with it. Now, I
Speaker 2: don't think he's going to jump in here and say, right,
Speaker 2: we're going to make these changes right away. But you know,
Speaker 2: in response to Senator Kim's question about the consolidated audit trail,
Speaker 2: I think it's certainly something that he's going to be
Speaker 2: looking at. I would just put those changes potentially in
Speaker 2: like the latter half of twenty twenty six, maybe even
Speaker 2: twenty twenty seven. So there's a lot here to talk about.
Speaker 2: But overall, I think if you're one of the companies
Speaker 2: that you're going to be regulated by the SEC. I
Speaker 2: think you're going to find somebody with the chair who
Speaker 2: is certainly going to take more into account the company
Speaker 2: or business views towards regulations than what we've seen over
Speaker 2: the last four years.
Speaker 1: Absolutely, And I mean you mentioned drag an Ms. I'm
Speaker 1: actually curios. Yeah, I assume he didn't say too much
Speaker 1: about it. You know, I'm watching a lawsuit by CBOE
Speaker 1: and NASDAC challenging against the SEC, challenging the rag Ms
Speaker 1: amendments from late last year that reduced you know, access
Speaker 1: feed caps and tick sizes, And I thought it was
Speaker 1: interesting because you know, the SEC is you know, revisiting
Speaker 1: a lot of the rules that are promulgated on the
Speaker 1: President Biden, but the rag Ms rule they're still defending
Speaker 1: in court. So I'm as you're really curious to see,
Speaker 1: you know, how that plays out and once he comes in,
Speaker 1: whether they start revisiting that and taking a different view.
Speaker 2: Yeah, you know, regulation, national market system. You know, it's
Speaker 2: been around for a while, and so that's the one
Speaker 2: major difference between he saw effect that you see between
Speaker 2: the Biden and the Trump administrations because you know, generally
Speaker 2: speaking that what we're seeing coming from the Trump administration
Speaker 2: at the moment is reversals of things that have been
Speaker 2: finalized within the last two to three four years. But
Speaker 2: the core structure of Reagan MS has been around for
Speaker 2: almost fifteen years now, and so you know, there's a
Speaker 2: lot more clarity, there's a lot more comfort level with
Speaker 2: some of those rules. So I'm not thinking he's going
Speaker 2: to be bringing a sledgehammer to it, but I think
Speaker 2: incrementally you could see a scalpel maybe a little bit
Speaker 2: of tweaks and amendments over the next few years.
Speaker 1: The other thing that sort of cracked me up a
Speaker 1: few weeks ago was that so Atkins was an expert
Speaker 1: retained by Virtue, the market maker, and it's in a
Speaker 1: lawsuit that the sec brought against Vertuo last year, and
Speaker 1: I sort of cracked up. It was some time in
Speaker 1: January or February where Virtue had to write the court
Speaker 1: and ask for more time to complete discovery because they
Speaker 1: needed to get a new expert because their previous expert
Speaker 1: was Paul Atkins, who obviously will have to be recused
Speaker 1: in the litigation going forward.
Speaker 2: And we also learned that he was a roommate with
Speaker 2: Senator Haggerty at the Vanderbilt Law School.
Speaker 1: So right, yeah, I always love those random roommate connections.
Speaker 1: So just one other thing I'm watching with the SEC
Speaker 1: is that tomorrow or maybe today, but by tomorrow, the
Speaker 1: SEC has to update the Eighth Circuit Court of Appeals
Speaker 1: on where it stands with the SEC Climate Disclosure Rule,
Speaker 1: which is in litigation. It's been fully briefed in the
Speaker 1: Eighth Circuit and they're just waiting for or arguments to
Speaker 1: be scheduled. But the SEC wrote the court back in
Speaker 1: February saying, hey, don't don't schedule anything yet because we're
Speaker 1: still trying to figure out what we're doing with this rule.
Speaker 1: So I'm looking for that update today or tomorrow. All right, Cool?
Speaker 1: Anything else from the hearing, Nathan, No, I think that's
Speaker 1: about it for today. All right, Cool? All right, Holly,
Speaker 1: let's bring you in. Holly from has become our resident
Speaker 1: tariffs Maven, especially on the legal side of things. So Holly,
Speaker 1: obviously a lot of news yesterday with the auto tariffs
Speaker 1: next week. You know we're anticipating in reciprocal tariffs on
Speaker 1: Liberation Day April. Second, you've written a lot about the
Speaker 1: different statutes that are involved the different processes and what
Speaker 1: you know, what potential legal challenges might look like. Any
Speaker 1: thoughts on what's happening with all these tariffs.
Speaker 3: Well, sure, heir so Trump yesterday, just just yesterday, said
Speaker 3: that he was going to impose a twenty five percent
Speaker 3: tariff on autos and the basis, the purported basis for
Speaker 3: that was that it the imports foreign import's threatened or
Speaker 3: threatened to a pair national security.
Speaker 4: I think what's interesting about his use of that statue,
Speaker 4: which is Section two thirty two of the Trade Expansion Act,
Speaker 4: is that that requires an investigation. Unlike some other statutes
Speaker 4: that he could use, that one requires an investigation by
Speaker 4: his Commerce department. So what he did was he relied
Speaker 4: on a seven year old investigation that was done when
Speaker 4: he was president in twenty nineteen, and in the executive
Speaker 4: order that he signed yesterday saying that he's going to
Speaker 4: implement this tariff on April second, he said, you know,
Speaker 4: my Commerce department says that nothing has changed, and it's
Speaker 4: not clear whether that's sufficient under the law. I could
Speaker 4: envision a scenario where a challengers will say circumstances changed
Speaker 4: and they need a new investigation. So that's something that
Speaker 4: I think you know is a potential interesting argument. And
Speaker 4: then with respect to reciprocal tariffs, generally, the president can
Speaker 4: use what you said was he's going to impose on
Speaker 4: Liberation Day on April second. The president can use different statutes,
Speaker 4: and two of the statutes we think he may invoke
Speaker 4: are section three thirty eight of the Trade Act of
Speaker 4: nineteen thirty That's an interesting one because it's never been
Speaker 4: used before to impose tariffs and a trading partner. But
Speaker 4: that statute allows the president to impose tariffs if he
Speaker 4: finds that a country is discriminating against US commerce, are
Speaker 4: burdening US commerce. And what's what's I guess appealing could
Speaker 4: be appealing to him about that statute is that also
Speaker 4: doesn't require an agency investigation.
Speaker 5: He could do it by proclamation.
Speaker 3: So another section set three oho one, which is very
Speaker 3: very similar in the justification for tariffs, like burdening US commerce,
Speaker 3: is also requires an investigation, so that one could take
Speaker 3: some time. So there was an interesting article in the
Speaker 3: Financial Times on I think Monday that said the president
Speaker 3: may use section three thirty eight, which which requires no investigation,
Speaker 3: and then back up his that tarriff with an investigation.
Speaker 5: That he puts out later.
Speaker 1: Very interesting. So so wait, so he would impose the
Speaker 1: three thirty eight terrorsts based on an investigation, but why
Speaker 1: would then why would he then need the three oho
Speaker 1: one section terrorifs.
Speaker 3: In addition, it's sort of a dual cover. So three
Speaker 3: thirty eight requires no investigation. He could do it bright
Speaker 3: proclamation and he could do it immediately, and then the
Speaker 3: three oh one, which requires an investigation, he could say
Speaker 3: to his US Trade rep. And I think he has
Speaker 3: already look into all these countries. Are they burning US commerce?
Speaker 3: Are they discriminating against US commerce? And then if they
Speaker 3: have a full investigation, that's where it gives him cover
Speaker 3: to say, yes, our US Trade Rep investigated this and
Speaker 3: he found indeed that I was right, they're discriminating against
Speaker 3: US commerce.
Speaker 1: Interesting, so sort of like a suspenders approach exactly. Wow,
Speaker 1: really interesting. Have you heard any rumblings though, of anyone
Speaker 1: threatening to sue, because I haven't really seen anything. So
Speaker 1: I wonder if you know how realistic it is that
Speaker 1: we might see litigation around this stuff.
Speaker 5: I think it's realistic that we'll see litigation.
Speaker 3: But it's funny that you mentioned that, because I did
Speaker 3: look the other day and I saw nothing, so you know,
Speaker 3: these these would go to the US Court of International Trade,
Speaker 3: and so far I haven't seen any cases filed. And
Speaker 3: the one that we would have seen is the one
Speaker 3: that was imposed on Mexico, Canada and China, because that's
Speaker 3: already happened, or perhaps steel which are already into a feft.
Speaker 1: And who do you think would too, like companies or
Speaker 1: trade groups on behalf of some of these other countries.
Speaker 5: We could be trade groups on behalf the industries or companies.
Speaker 3: Last time, in twenty eighteen, when Trump and posted tariffs
Speaker 3: on China under section three oh one, the companies, through
Speaker 3: the whole bunch of companies sued. So dozens of companies
Speaker 3: sued US Court of International Trade.
Speaker 5: If if.
Speaker 3: If a country were to sue, say, say because that
Speaker 3: violates a trade agreement, I think they'd have to sue
Speaker 3: the World Trade Organization. But the dispute, the dispute resolution
Speaker 3: process there is different because you know, the president has
Speaker 3: been very critical of the WTO, He's been very critical
Speaker 3: of the dispute resolution process there. And I think also
Speaker 3: there's you know, there may be an indication that he's
Speaker 3: not going to abide by what they what they rule,
Speaker 3: whereas if a court in the US rules a certain way,
Speaker 3: I think he you know, he would have to buy
Speaker 3: it theoretically.
Speaker 1: Yeah. So the other trade related note you put out
Speaker 1: this week, it was also really interesting. You wrote this
Speaker 1: with a transport channalyst, Lee Clascow, on these fees that
Speaker 1: the US government wants to impose on Chinese built or
Speaker 1: Chinese operated vessels that are using US ports. You know,
Speaker 1: the headline that lero was US fees on Chinese ships
Speaker 1: a self and inflicted supply chain shock, which is, you know,
Speaker 1: really interesting. But anything you wanted to say about that
Speaker 1: sort of in terms of, you know, the process and
Speaker 1: the legality around that.
Speaker 5: Sure.
Speaker 3: So, yeah, the US Trade Rep has proposed imposing fees
Speaker 3: of five hundred thousand to one point five million dollars
Speaker 3: per port call for Chinese built ships or Chinese operated
Speaker 3: ships calling on US ports. Interestingly, the investigation was initiated
Speaker 3: under Biden, that was April of last year, and the
Speaker 3: Trade Rep found d that that China was dominating the
Speaker 3: shipping industry unfairly so, and he's recommending that these fees
Speaker 3: be imposed under Section three oh one, which again allows
Speaker 3: the President to impose tariffs if a country is burdening
Speaker 3: US commerce or is unfairly restricting commerce. So I think
Speaker 3: it's you know, pretty clear in the statute that these
Speaker 3: that that the President can impose these fees, and the
Speaker 3: statute was amended to allow uh fees to be imposed
Speaker 3: on shipping in the event that a government is subsidizing shipping,
Speaker 3: which is considered unfair and that and that's what it
Speaker 3: is alleged here. I haven't seen the Trade Rep make
Speaker 3: that finding yet that you know, China's subsidizing their shipping industry.
Speaker 3: But that's what the petitioners who filed the petition to
Speaker 3: get to have the Trade Rep initiated investigation alleged.
Speaker 1: And so that's why you're waiting for a next the
Speaker 1: US Trade Rep to come out with that finalized determination basically.
Speaker 3: Exactly, so he the Trade Rep, has a year to
Speaker 3: make that determination, but he could ask for an extension
Speaker 3: for six months. So if he makes the determination within
Speaker 3: a year, that would put us at April, and then
Speaker 3: the determination has to be implemented within thirty days of
Speaker 3: the action has to be implemented within thirty days of
Speaker 3: the determination, so that would put us at May potentially,
Speaker 3: where you see these these imposed, but if they ask
Speaker 3: for an extension, the outside date for implementation these fees
Speaker 3: would be November.
Speaker 1: Got it? All right? Great stuff? All right, thanks Holly,
Speaker 1: all right, justin TERESI, let's bring you in. You follow
Speaker 1: a lot of cases that the FTC has brought Yeah,
Speaker 1: so many? Yeah, right, Well, certainly in the last administration,
Speaker 1: we'll see, well and maybe in this administration too, but
Speaker 1: you following cases against Meta Amazon, the pharmacy benefit managers.
Speaker 1: But what I want to talk about is, well, last
Speaker 1: week President Trump fired two FTC commissioners, the two that
Speaker 1: were appointed by Democrats, you know, sort of consistent with
Speaker 1: what he's been doing with other other agencies, including the
Speaker 1: National Labor Relations Board and the Merit Systems Protection Board,
Speaker 1: you know, sort of taking an aggressive approach in terms
Speaker 1: of how much control the president has over what used
Speaker 1: to be considered independent agencies but might no longer be.
Speaker 1: Just before we started recording this, uh, those two FTC commissioners,
Speaker 1: Slaughter and Badoya, sued the Trump administration, so we'll be
Speaker 1: following those as well. They are challenging their terminations. But
Speaker 1: why don't you come in tell us you know what
Speaker 1: you think it means for these FTC cases that you're watching.
Speaker 6: Yeah, yeah, definitely, you're right fresh off the press here,
Speaker 6: it looks like Commissioners Slaughter and Badoia are going to
Speaker 6: challenge their firings. I think no surprise there. I think
Speaker 6: everybody's kind of expected is going to happen. You know,
Speaker 6: I know you've been tracking the read through on this
Speaker 6: to Humphrey's executor and perhaps you know, might happen to
Speaker 6: Drome Paul over with the FED. But yeah, you know,
Speaker 6: in terms of actual day to day business and existing cases,
Speaker 6: new investigations at the FTC, the impact from this really
Speaker 6: there's really not too not much of one at all,
Speaker 6: And I think the reason being that with the new
Speaker 6: administration coming in with the expiring term of former chair
Speaker 6: Lena Khan, the setup was going to be a three
Speaker 6: to two split at the FTC already anyway was led
Speaker 6: by Republican Chair Andrew Ferguson, so that control of the
Speaker 6: agenda was already the Republicans to have with that firm
Speaker 6: majority there in place, So anything that could have happened
Speaker 6: in terms of voting to initiate a new lawsuit or
Speaker 6: a new investigation, voting to block a deal, all of
Speaker 6: that already had that Republican majority in place, or would
Speaker 6: be in place with the confirmation of Mark Mader, who's
Speaker 6: right now up first, and of confirmation as the third
Speaker 6: a third Republican FTC commissioner. So in terms of the
Speaker 6: read through to the cases investigations, not that much of
Speaker 6: a difference from what would have been the case anyway,
Speaker 6: you know, had the two Democratic commissioners state, maybe less tossents,
Speaker 6: maybe less transparency, but in terms of actual business kind
Speaker 6: of the same stuff over at the FTC.
Speaker 1: What's the status of the confirmation of the heavy pnounces
Speaker 1: as they made or yeah, yeah.
Speaker 6: So he's been reported out of committee, he's on the
Speaker 6: floor calendar well, so could be really any day now.
Speaker 6: Not not sure what the particular delay on his nomination
Speaker 6: might be in the Senate, but I think overwhelmingly we're
Speaker 6: expecting that to be approved. I think there's been you know,
Speaker 6: very support from both parties on his nomination. Obviously, the
Speaker 6: firings probably shake things up a little bit among the
Speaker 6: Senate Democrats, but you know, I think we're expecting that
Speaker 6: to move forward. But you know, looking at the kind
Speaker 6: of the cases the FTC has right now against Meta
Speaker 6: and Amazon, cher Ferguson's been really out there supporter of
Speaker 6: those efforts against big tech and in interviews he's done recently,
Speaker 6: So we don't really think there's going to be much
Speaker 6: of a difference with the way that those proceed And
Speaker 6: there's also been some speculation that because Commissioners Buduya and Slaughter,
Speaker 6: the two were fired, were the only two who voted
Speaker 6: to approve that the case against PBMs the Pharmacy Benefit Managers,
Speaker 6: that that kind of leaves the case in limbos somehow
Speaker 6: because Jerff Ferguson and Commissioner Holyoke, the other Republican had
Speaker 6: recused themselves from the case when it was filed back
Speaker 6: at September. That's not our reading of the rules though
Speaker 6: that case is already deep into discovery. There's not really
Speaker 6: a need for the Commission to take action and anything
Speaker 6: right this moment. And once major's in the rule is
Speaker 6: the rules that CCFTC are is that a quorum is
Speaker 6: constituted by a majority of whatever commissioners aren't recused from
Speaker 6: the matter. So in this case, you know that that's one.
Speaker 1: Of one.
Speaker 2: So there you go.
Speaker 1: Wait, so, but what do they need the quorum for
Speaker 1: at this point? I mean at this point, it would
Speaker 1: just be to like.
Speaker 6: Right, if there was any lawsuit exactly exactly, if there
Speaker 6: were any move to a mend or withdraw the lawsuit
Speaker 6: or you know, perhaps agree to a settlement coming in
Speaker 6: from a different lawsuit or something like that, that's what
Speaker 6: they need a majority for. But again, you know, but
Speaker 6: that suit's proceeding, it's deep in discovery. You know, the
Speaker 6: FTC is looking to move the date of the internal
Speaker 6: trial they have for that lawsuit a little bit later
Speaker 6: into January of next year. So what is it currently
Speaker 6: scheduled for schedule for August? They're looking for January. The
Speaker 6: PBMs are saying, hey, wait, you guys chose to bring
Speaker 6: this case in the in the tribunal.
Speaker 1: You did.
Speaker 6: You've got to live with the timeline now. But you know,
Speaker 6: reality is being what they are with discovery. I think
Speaker 6: it's probably slated to happen at least don until fourth quarter.
Speaker 1: And we know why and Ferguson were recused. I think
Speaker 1: we don't. And that's the thing.
Speaker 6: I mean, you know, it could be a personal reason,
Speaker 6: it could be an actual conflict, but we're also you know,
Speaker 6: we can't just assume that whatever caused them to recuse
Speaker 6: themselves in September is still the case today. They could
Speaker 6: very well have removed whatever issue was in place to
Speaker 6: stop them from voting to approve the suit in September
Speaker 6: if they if they had, you know, if they wanted to.
Speaker 6: And I'll say too, they've both been supportive of action
Speaker 6: against health insurance and PBMs in the past two in
Speaker 6: their own right, So it's not as if they had
Speaker 6: this perhaps you know, moral obligation to the actual you know,
Speaker 6: the actual crux of that lawsuit when it was rolling
Speaker 6: out last fall.
Speaker 1: Either And do you think Trump just keeps the FTC
Speaker 1: with three commissioners or do you think you'll appoint to
Speaker 1: fourth and fifth? You know, that's that's a great question.
Speaker 6: I mean at this point, you know, you know what
Speaker 6: I'm thinking about more from this perspective of the FTC
Speaker 6: and what it means for the FDC from this standpoint is,
Speaker 6: you know, we're seeing legislation on Capitol Hill right now
Speaker 6: where folks are saying, hey, wait a minute, this anti
Speaker 6: trust function at the FTC, it's duplicative and it should
Speaker 6: be rolled into DOJ. And we've seen Chaerf Ferguson out
Speaker 6: there really pounded the pavement talking about all these strengths
Speaker 6: and reasons why you know, the FDC has this relevant
Speaker 6: place and anti trust. But you know, if we're removing
Speaker 6: this independence of the FTC and we're not going to
Speaker 6: fully staff the commissioners, and really if the FDC is
Speaker 6: just proceeding as you know, a tool of the executive anyway,
Speaker 6: to me that that really makes the case even more
Speaker 6: that the actual anti trust enforcement powers at the FDC
Speaker 6: are in fact duplicative of those in place at the
Speaker 6: at the DOJ. I think it makes that whole Doughe
Speaker 6: consolidation argument a bit stronger for those looking to to
Speaker 6: actually meld things together and take two enforcement powers and
Speaker 6: roll them into one.
Speaker 1: Oh, that would be interesting. Yeah, you know, I think
Speaker 1: it's so interesting because you know, I, like you said,
Speaker 1: I've been following these other cases involving term, you know,
Speaker 1: firing of commissioners at independent and so called independent agencies,
Speaker 1: and you know, I read about I'm really curious about
Speaker 1: what it means for Jerome Powell at the FED. And
Speaker 1: I think it's so interesting that both Slaughter and but
Speaker 1: Doya have said, Look, you know, if if it's legal
Speaker 1: to fire us, the president can fire Jerome Powell. And
Speaker 1: you know, my my reaction to that is careful, careful
Speaker 1: what you say, because you know, I I don't think
Speaker 1: they're going to win their cases against uh Persian Trump.
Speaker 1: You know, it might be a closer call with Jerome Powell,
Speaker 1: just because even the current Justice Department has conceded that
Speaker 1: the Fed's monetary policy responsibilities are independent of the president.
Speaker 1: But but do take a firm position that the Fed's
Speaker 1: regulatory responsibilities fall under the president's you know, jurisdiction, under
Speaker 1: the executive authority. So you know, I'm not optimistic that
Speaker 1: any of these people will be able to win their
Speaker 1: lawsuits if they get fired.
Speaker 6: So yeah, I think you're right. I have to say too,
Speaker 6: I'm curious, you know, I think it's definitely true. I
Speaker 6: think this is probably your point of view as well,
Speaker 6: that there's a Supreme Court in place that certainly has
Speaker 6: been perhaps itching to overturn Humphreys or interested in the
Speaker 6: idea of overturning Humphreys executor for a long time.
Speaker 1: But you know, I think, you know, is there a
Speaker 1: little bit.
Speaker 6: More hesitancy or perhaps a carve out in some way
Speaker 6: because the stakes are higher. I think for overturning Humphries
Speaker 6: now than they would have been even a year ago,
Speaker 6: or I were talking about big stuff that maybe wasn't
Speaker 6: you know, at the central you know, underpinning of trying
Speaker 6: to overturn that the ruling even just a year agon
Speaker 6: hour confronted was a really crazy kind of thing.
Speaker 1: So yeah, And I think it was Gorsech and Thomas
Speaker 1: who voted in the Sale of Law case. They in
Speaker 1: their descent they said they would overturn Humphries. But I
Speaker 1: don't even think you need to overrule Humphries for the
Speaker 1: president to win these cases, because the Supreme Court and
Speaker 1: Sale of Law basically, you know, said Humphries was just
Speaker 1: one of two exceptions to the general rule that the
Speaker 1: president can fire anyone in the executive branch. And the
Speaker 1: two exceptions are one for inferior officers, which doesn't apply here,
Speaker 1: and the second is for principal officers, which these folks are,
Speaker 1: but principal officers who don't exercise any executive authority. And
Speaker 1: you know, in these cases you have to see in particular,
Speaker 1: I think is going to be found to exercise executive
Speaker 1: authority because it has enforcement power and it has rule
Speaker 1: making authority, and so you can carve it out from
Speaker 1: the Humphries exception, and you arguably could do the same
Speaker 1: for j Run Powell at the FED, and you could
Speaker 1: say the FED has you know, exercises executive powers because
Speaker 1: it also has rule making authority and enforcement authority. So right,
Speaker 1: I see where all these cases go. They're fun, they're
Speaker 1: fun to watch. It's fun. It's like a front row
Speaker 1: seat to history for better or words. That's right, Yeah, yeah, exactly,
Speaker 1: all right, justin good stuff. Thanks, all right, Matt Schanan. Hell,
Speaker 1: let's bring you in to round out the discussion today.
Speaker 1: You so, Matt is our TMT policy and litigation analyst
Speaker 1: also based in DC. You watched a Supreme Court argument yesterday.
Speaker 1: I assume virtually maybe you went, I know, sometimes you go.
Speaker 1: Did you go?
Speaker 2: Uh no, Actually I was.
Speaker 7: I was there in the courtroom in the in the
Speaker 7: bar seating section right behind the podium, so one of
Speaker 7: the best best seats in Washington. A.
Speaker 1: Yeah, that's always it's always fun, except you have to
Speaker 1: check your phone. That always gives me a little adjutant.
Speaker 7: It's a little bit of a hassle and uh yeah,
Speaker 7: but it's it's so worth it to be you know,
Speaker 7: twenty feet away from the justices there watching watching history
Speaker 7: be made.
Speaker 1: Agree, So tell us about the case. It's a six
Speaker 1: billion dollar FCC program to subsidize tell own in Higstol.
Speaker 7: Even more than that in some years, I think it's
Speaker 7: eight eight eight to nine billion. It can reach and
Speaker 7: and basically, this is a rural broadband program, a rural
Speaker 7: telephone program that the FCC has administered since the nineteen
Speaker 7: ninety six Act, and and and and in part even
Speaker 7: before that, it's had similar programs in place. But but basically,
Speaker 7: a group, an advocacy group brought a legal challenge to
Speaker 7: the program and sued in multiple courts of appeals and
Speaker 7: said that this program, when Congress passed it, Congress was
Speaker 7: was not clear enough in giving direction to the FCC
Speaker 7: and how to administer it. And the claim was, this
Speaker 7: violates the Constitution, the non delegation doctrine for the FCC
Speaker 7: to be given this power basically legislative power by Congress
Speaker 7: UH to to administer this this rural broadband program that
Speaker 7: collect money from telecom carriers then passes it back out.
Speaker 7: And basically the claim was Congress needed to be more
Speaker 7: clear if it wanted this program to go ahead. That
Speaker 7: argument failed in most courts of appeals, three or four
Speaker 7: of them, maybe at least two or three. It succeeded
Speaker 7: on bank in the Fifth Circuit by a very narrow vote,
Speaker 7: and then this case ended up by before the Supreme
Speaker 7: Court because there was a circuit split between the courts
Speaker 7: of appeals. And so that was the argument tomorrow or yesterday,
Speaker 7: whether the law is constitutional, whether this universal service program
Speaker 7: is constitution.
Speaker 1: Just based on the non delegation doctrine. There were no
Speaker 1: other like statutory arguments.
Speaker 7: Or anything exactly. This was pretty focused on the non
Speaker 7: delegation doctriment. There were two components to it, sort of
Speaker 7: the public non delegation doctrine Congress to the FCC. Then
Speaker 7: there was a private non delegation doctrine claim the FCC
Speaker 7: gave too much power to an administrator, a private administrator
Speaker 7: u sac organization that actually does the paperwork in the administration.
Speaker 7: And both pieces of that were challenged. The Fifth Circuit
Speaker 7: kind of combined them and said, put them together, and
Speaker 7: this is this is somehow on constitution. Always strike it down.
Speaker 1: What was your takeaway, I mean from you know, our
Speaker 1: sidebar conversations that we've had it sounds like you think
Speaker 1: the rule will survive and that there's not a majority
Speaker 1: of justices you know, to vote against it based on
Speaker 1: either the non delegation.
Speaker 7: Yeah, that's where I that's where I came came away yesterday.
Speaker 7: It's hard to see the challenge the FCC's challengers here
Speaker 7: getting to five votes. Justice Gorstch clearly feels strongly that
Speaker 7: he wants to give new teeth to the non delegation doctrine,
Speaker 7: and he's likely to come out against the FCC. He
Speaker 7: might have Justice as Alito and Thomas with him, but
Speaker 7: like in so many cases, it's the middle of the
Speaker 7: court that we're really watching to determine outcomes. And the
Speaker 7: Chief Justice, Justice Barrett and Justice Kavanaugh. I really have
Speaker 7: a hard time seeing any of them, and certainly not
Speaker 7: to two of them joining Justice Gorsic's side on this.
Speaker 7: It was a fascinating argument in a lot of respects,
Speaker 7: you know, given where the Court has been recently and
Speaker 7: cutting back on administrative powers with the undoing of the
Speaker 7: Chevron doctrine, uh just just last term and now the
Speaker 7: chance to kind of go further and and again cut
Speaker 7: away at agency powers and and Paul Clement making the
Speaker 7: argument actually in favor of the FCC program, when he
Speaker 7: was the one making the argument against agency power in
Speaker 7: the Lower Bright series of cases. It just just fascinating
Speaker 7: how it all, how it all went. And to see
Speaker 7: him going up against Justice gorsic On on the point
Speaker 7: was was was just really high level legal advocacy there,
Speaker 7: and and and fascinating and and and I thought, he
Speaker 7: just you know, I've seen him make very strong arguments
Speaker 7: in the past. This was this was you know, one
Speaker 7: of his best, I thought, and very convincing that basically
Speaker 7: speaking to the conservative justices and saying, look, maybe we
Speaker 7: can use the non delegation doctrine to make changes here
Speaker 7: in the future, we can reinvigorate it, but this is
Speaker 7: not the case to do it. And and I really
Speaker 7: think he had a lot of heads nodding and in
Speaker 7: agreements with him.
Speaker 1: That's what I was wondering about, Like the you know,
Speaker 1: the Roberts and the Barretts and the Kavanaughs, were they
Speaker 1: did you get a sense that there's any appetite on
Speaker 1: their part to revisit to revive the non delegation doctrine
Speaker 1: And it just wasn't this case. But but on the
Speaker 1: other hand, they took it.
Speaker 7: Right, right, so they need they had four votes to
Speaker 7: take the case when when they when they took it,
Speaker 7: they also added a question about mootness, like basically a
Speaker 7: way to get out of this, which already signaled, hey,
Speaker 7: maybe we don't have four that are real excited about
Speaker 7: taking this case. Those three justices, you know, weren't as
Speaker 7: clearly on one side or the other as is typical
Speaker 7: typically the case. Their questions were more exploratory. And but
Speaker 7: and so I think there is openness down the road
Speaker 7: if you found the right case. I can imagine Paul
Speaker 7: Clement bringing that case. And you know, but and and
Speaker 7: and I think there is potential to get to five.
Speaker 7: But I don't think it with a program that has
Speaker 7: so much history like the FCC program, where the FCC
Speaker 7: was effectively drawing from like a common law that it
Speaker 7: had established. The justices I think on the whole, where
Speaker 7: we're okay and not really worried about the consequences of
Speaker 7: if we second guess this one, we're gonna have to
Speaker 7: undo a bunch of stuff and we're going to have
Speaker 7: a mess on our hands with a whole slew of
Speaker 7: statutes getting challenged, and we can go after you know,
Speaker 7: statutes in other ways, you know, under the APA, we
Speaker 7: don't need to you know, use this non delegation doctrine here.
Speaker 7: So I think there there's probably room for it, but
Speaker 7: I don't think there's going to be a real big
Speaker 7: drive from the justices to use this tool to go
Speaker 7: after regulation.
Speaker 1: Got it, And I assume you expect a decision probably
Speaker 1: towys En it seems.
Speaker 7: Most likely, unless they make real quick work of it
Speaker 7: on some other races. Yeah, it's as possible.
Speaker 1: All right, great, all right, thanks Matt. All right, I
Speaker 1: think with that we will wrap up this episode of
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