Speaker 1: Welcome to the Bloomberg Law Podcast. I'm June Grosso. Every
Speaker 1: day we bring you insight and analysis into the most
Speaker 1: important legal news of the day. You can find more
Speaker 1: episodes of the Bloomberg Law Podcast on Apple Podcasts, SoundCloud
Speaker 1: and on Bloomberg dot com slash podcasts. Is President Trump
Speaker 1: escalating his long running feud with Amazon and its founder
Speaker 1: Jeff Bezos, who also owns a Washington Post. Trump continued
Speaker 1: his Twitter war this morning. Over the weekend, he tweeted
Speaker 1: that Amazon must pay real costs and taxes now and
Speaker 1: that this post office scam must stop. Amazon has said
Speaker 1: the Postal Service, which has financial problems stretching back for years,
Speaker 1: makes money on its deliveries, joining me as Robert Hocketed,
Speaker 1: professor at Cornell Law School, Bob, the full details of
Speaker 1: the agreement between Amazon and the US Postal Service are
Speaker 1: not known because the postal service makes confidential deals with retailers.
Speaker 1: So what do we know about it? We don't know
Speaker 1: a great ill, June. I mean, we know a couple
Speaker 1: of things. Right. Apparently post Office does indeed come out
Speaker 1: ahead out of the deal with Amazon, which is to
Speaker 1: say it's in the black, right It the costs that
Speaker 1: it incurs in shipping Amazon things are less than the
Speaker 1: revenue that it generates. We also know that the Post
Speaker 1: Office offers similar deals for all package shipments. It's not
Speaker 1: Amazon specific, and that, of course leads me to think
Speaker 1: that this isn't really about Amazon at all. This is
Speaker 1: probably more about the Washingtington Post and Jeff Bezos. Let's
Speaker 1: talk about taxes, which it's apt month to talk about.
Speaker 1: Jax is Amazon page fifties seven million dollars in taxes
Speaker 1: last year. It collects them everywhere that has a state
Speaker 1: sales tax. In most states, it doesn't collect taxes on
Speaker 1: the products that third party vendors sell through the site.
Speaker 1: Is it acting completely legally? It is acting quite legally.
Speaker 1: There's nothing that's scammy about it unless there's a scam
Speaker 1: in the tax code, And of course I would be
Speaker 1: prepared to countenance that um and I wish that the
Speaker 1: President were prepared to countenance that there's a huge scam
Speaker 1: in the tax code as well. But he seems to
Speaker 1: have put or to have acted quite actively to put
Speaker 1: some of additional scams into the tax code this past December,
Speaker 1: and there's a Supreme Court case pending a ruling in
Speaker 1: that case involving online retailers collecting sales taxes. Could that
Speaker 1: have an impact on Amazon's collection of taxes? Well, in
Speaker 1: theory it could. It really just depends on what, you know,
Speaker 1: what how the court goes about interpreting the tax code
Speaker 1: itself here, and that's of course a notoriously convoluted code.
Speaker 1: It's difficult for people to interpret, and the tax lawyers
Speaker 1: and judges with expertise and tax law are often thought
Speaker 1: of as being eccentric precisely because they're able to sort
Speaker 1: of know the facts of their hands, uh, these very
Speaker 1: convoluted rules, and then of course the regulations that are
Speaker 1: promulgated under them. So there might be some effect, but
Speaker 1: bess far right. As far as we know right now,
Speaker 1: the dominant understanding of the tax tode and what it
Speaker 1: requires is such as to show that Amazon is indeed
Speaker 1: in compliance with tax law. Hence, if there's a scam
Speaker 1: going on, that is in the law itself, not an
Speaker 1: Amazon's use of that law. It's also ironic, I have
Speaker 1: to say, right, because people have often noted that Trump
Speaker 1: himself has declared bankruptcy multiple times and taken advantage of
Speaker 1: that and his retort is always well, the bankruptcy Code
Speaker 1: allows that. So I have simply taken advantage of the
Speaker 1: law and what it allows me, and Amazon can rejoin
Speaker 1: with the same reply to Trump on this one. Let's
Speaker 1: let's discuss what Trump could do about Amazon if he
Speaker 1: decided to take the fight beyond the tweets. Could he
Speaker 1: push for regulatory investigations of Amazon, either for antitrust, privacy,
Speaker 1: or other reasons. He could I mean, in theory, he
Speaker 1: could direct the Justice Department to conduct some sort of
Speaker 1: an inquiry or some sort of an inquest. The problem
Speaker 1: is that if this is simply based on his whim
Speaker 1: or on his sort of personal animus toward Bazos or
Speaker 1: the post Um, He's going to get himself in trouble
Speaker 1: because of course this will look like delicious prosecution on
Speaker 1: the part of the Justice Department. Uh, and then will
Speaker 1: of course reinforce growing perceptions that this man is treating
Speaker 1: the White House and the President see as a kind
Speaker 1: of personal play thing to sort of carry out his
Speaker 1: various personal vendettas and to align his personal offers. Well,
Speaker 1: we know that there's a case going on right now
Speaker 1: where the Justice Department is suing and it's an unorthodox
Speaker 1: kind of suit for an antitrust suit attacking the A.
Speaker 1: T and T Time Warner deal, and that was after
Speaker 1: Trump's criticism of the deal and CNN, which is owned
Speaker 1: by Time Warner. But the judge is not allowing that in.
Speaker 1: So it's already shown that it can take an orthodox step.
Speaker 1: So might it do that here? I mean it could happen, right,
Speaker 1: it could. But again, what's sort of go on here
Speaker 1: is you know, I'm down with if I can put
Speaker 1: it in that kind of skipster way, I'm I'm down
Speaker 1: with getting serious about anti trust law again. And it
Speaker 1: would be wonderfully being a good news if it looked
Speaker 1: like Trump himself. We're interested in this in a kind
Speaker 1: of an across the board way, in the kind of
Speaker 1: a general principled way. But if you're just sort of
Speaker 1: selectively targeting people who happened to be your personal enemies
Speaker 1: for antitrust investigations or tax violation investigations and so quick,
Speaker 1: all while your own companies and multiple other companies are
Speaker 1: doing exactly what Amazon has been doing, and exactly what
Speaker 1: Time Warner has been doing, and exactly what all of
Speaker 1: these other large firms that are currently being investigated are doing.
Speaker 1: Then it begins to make it begins to make it
Speaker 1: look like this is not a case of the rule
Speaker 1: of law. This is a case of again somebody who's
Speaker 1: governing by women and on the basis of personal animus.
Speaker 1: So let's let's turn to what again, what he could do?
Speaker 1: What the president could do. Brad Parscal, who's managing Trump's
Speaker 1: presidential campaign, said in a tweet last Thursday, once the
Speaker 1: market figures out that a single USPS rule change will
Speaker 1: crush Amazon's bottom line, we will see who raises the
Speaker 1: post Office rates. Well, that's determined by the Postal, the
Speaker 1: Post Office board itself. The president could have some influence
Speaker 1: on that, right. I mean, it's not an altogether sort
Speaker 1: of untethered agency. It is. It's a federal instrumentality. Um.
Speaker 1: And that's another thing I kind of wanted to point
Speaker 1: out earlier is I thought, well, if your concern is
Speaker 1: that the Post Office is in charging Amazon enough, perhaps
Speaker 1: there should be an inquiry into why the Post Office
Speaker 1: is charging it so little, and indeed why it's charging
Speaker 1: all it's so little for all package deliveries. My understanding
Speaker 1: is that it charges about half to Amazon and other
Speaker 1: package delivers what UPS, FedEx and other such shipping agencies do.
Speaker 1: What if it were to raise the rates up to
Speaker 1: three quarters of what those other firms do, that it
Speaker 1: would seem to me would keep the post office in
Speaker 1: the black and still make it a better value for
Speaker 1: the shippers uh than fed X or UPS or any
Speaker 1: other competing private delivery service. Another thing is the stock market.
Speaker 1: Amazon is down um more than four today and plunged
Speaker 1: uh last week, so after an Axios report that the
Speaker 1: President was quote obsessed with regulating the company. So this
Speaker 1: is also taking you know, hitting his his stock market
Speaker 1: bread rights. It is uh, it does do that, But
Speaker 1: on the other hand, it also of course diminishes the
Speaker 1: size of Jeff bezos portfolio, right, And my understanding is
Speaker 1: that Mr Bezos has lost something like four to ten
Speaker 1: billion dollars in recent days from his portfolio thanks to
Speaker 1: his Amazon holding was taking a hit. And my guess
Speaker 1: was it would be that Trump maybe derives more pleasure
Speaker 1: from knowing that Mr bezos Is portfolio is dropping, then
Speaker 1: he takes pain that he finds pain in the suffering
Speaker 1: that the tex Stalks as a whole are enduring as
Speaker 1: a result of these uh strange and obsessive tweets. So
Speaker 1: let's just go bottom line here, Bob, that seconds left.
Speaker 1: What what in your view will come of this? Will
Speaker 1: just it just be another round of tweets and that's it.
Speaker 1: Will anything really come of this? I think some I
Speaker 1: think there will be more fall out in the sense
Speaker 1: that there will be more gickering back and forth between
Speaker 1: Trump and Bezos or Trump and Amazon um and maybe,
Speaker 1: you know, Bezos will say something nice about Trump, or
Speaker 1: will Cow tow in some way and then it'll all
Speaker 1: go away, or Mr Bezos will sort of stand up
Speaker 1: for his company and for himself, and this could end
Speaker 1: up into you know, this could sert culminate in protracted litigation.
Speaker 1: He's taking on a pretty powerful enemy this time, so
Speaker 1: many forty times richer than he is. So I'm quite
Speaker 1: interested to see how that plays out. Will we will
Speaker 1: talk more about that as it goes along, if if
Speaker 1: there's any more to these, any more tweets coming. That's
Speaker 1: Bob Hocket. He's a professor at Cornell Law School. The
Speaker 1: Environmental Protection Agency already has concluded that Obama era fuel
Speaker 1: economy standards aimed at slashing greenhouse gas emissions are too
Speaker 1: aggressive and need to be revised. Agency officials brief California
Speaker 1: regulators on their conclusion last week as they put the
Speaker 1: final touches on a document justifying the decision to roll
Speaker 1: back automobile gas mileage and pollution standards. According to people
Speaker 1: familiar with the discussions, e p A Administrator Scott Prude
Speaker 1: is expected to formally announce the move tomorrow during an
Speaker 1: event at a Virginia car dealership. My guest is Charles Warren,
Speaker 1: head of the environmental law practice at Kramer levinef Talas
Speaker 1: and Frankel. Chuck tell us about the changes the Trump
Speaker 1: administration is going to propose to the Obama rules. Well,
Speaker 1: the Obama rule June is in effect really requires by
Speaker 1: that you have fuel economy getting fifty four point five
Speaker 1: miles per gallon, which is for cars and light trucks,
Speaker 1: and that's, you know, roughly double what it was at
Speaker 1: the beginning of the Obama administration. And there they're supposed
Speaker 1: to be a mid course correction look at it which
Speaker 1: was done started to be done in and the Obama
Speaker 1: administration then basically said we're not going to do anything. Now.
Speaker 1: The Trump administration for the years twenty they now want
Speaker 1: to roll those back and not even not even to
Speaker 1: not not even anywhere near fifty four, and you know,
Speaker 1: it may be closer to what it is in which
Speaker 1: is like thirty eight or even below that. And so
Speaker 1: they're trying to really turn the clock back quite a
Speaker 1: bit on this and it's going to have obviously many repercussions,
Speaker 1: particularly with the California waiver in place. Right. Let's talk
Speaker 1: about the California waiver because that allows California to set
Speaker 1: its own pollution and gas mileage standards and other states
Speaker 1: follow that, and the state a G has already said
Speaker 1: that the state is going to resist any changes. So
Speaker 1: can we expect a long legal battle here? Yes? Here,
Speaker 1: here's the problem for the automakers actually, and that's why
Speaker 1: they're getting a little more than they bargained for with
Speaker 1: this aggressive attempt to roll back the Obama fuel economy standards.
Speaker 1: California has a waiver that's been in the Clean Air
Speaker 1: X since seventy two, and the waivers have been granted
Speaker 1: and they're allowed to set their own standards, as you indicated,
Speaker 1: and other states can follow the California standards if they
Speaker 1: follow them exactly. And they're about twelve states that follow that,
Speaker 1: and those states if you look at them, you know,
Speaker 1: they're like New York, Pennsylvania, bunch of other pretty big states. Uh.
Speaker 1: They account for about thirty five cent of the cars
Speaker 1: made in the United States. So if nothing else happens
Speaker 1: and they roll back the federal standards and the California
Speaker 1: standards stay in place, then the auto industry is going
Speaker 1: to be faced with making two different kinds of cars,
Speaker 1: which they hate. They're not gonna want to do that,
Speaker 1: and so what it means they're gonna have to follow
Speaker 1: the California standards as as a practical matter, They're not
Speaker 1: gonna want to have a car marketed below the California standards.
Speaker 1: So the what what will happen if it plays out,
Speaker 1: is that the administration might try and challenge the California
Speaker 1: waiver which is in place until and there will be
Speaker 1: a titanic battle on that and Chuck, how long would
Speaker 1: it take for the e p A to propose new rules,
Speaker 1: have hearings, and do all the different things that need
Speaker 1: that are needed for a change. Yeah, they have you know,
Speaker 1: they they're going to say that the standards to twenty
Speaker 1: five are not appropriate, but then they do have to
Speaker 1: go through a whole rulemaking process and have a common period,
Speaker 1: and that will be challenged and this could be any
Speaker 1: a number of months, quite a few months before that
Speaker 1: would happen. And meanwhile, you know, you you have lead
Speaker 1: times for the auto industry and uh, they'll they'll be
Speaker 1: faced at some point with a deadline where they have
Speaker 1: to then say, Okay, we have to start manufacturing cars
Speaker 1: and we're gonna have to contin in you, you know,
Speaker 1: with the California standards. That's and that's my sim So
Speaker 1: it's gonna be it's gonna be messy, very messy, exactly.
Speaker 1: And I think the the industry asked for some relief,
Speaker 1: but I don't think they wanted to go as far
Speaker 1: as the Trump administration is taking it. They just wanted
Speaker 1: the way you calculate the standards to be a little
Speaker 1: more leeway so that when they had some of these
Speaker 1: SUVs and other things, they would be easier to meet
Speaker 1: those standards. But they really didn't want a wholesale roll
Speaker 1: back to the kind of levels that the administration is
Speaker 1: talking about because I think it makes them look bad
Speaker 1: because a lot of these companies have said, we're on
Speaker 1: board on fuel economy, we want to know, push electric cars, etcetera.
Speaker 1: And so I think it puts them in a difficult positions.
Speaker 1: It's speaking about difficult positions the e p A chief,
Speaker 1: Scott Prue, it has come under more criticism. There were
Speaker 1: disclosures about his use of first class flights to travel
Speaker 1: around the world, trips to Italy, and now there are
Speaker 1: disclosures about this lee sing of a Washington apartment in
Speaker 1: a very unusual terms from a lobbyist. Do you think
Speaker 1: he can survive this latest disclosure? Well, these are the
Speaker 1: kinds of disclosures that usually have resulted in people losing
Speaker 1: their jobs because the public takes a dim view of
Speaker 1: people in high office sort of abusing their position to
Speaker 1: make these kinds of special deals and that other people
Speaker 1: can't get um. But Scott Pruett has been someone who's
Speaker 1: been very in sync with THEE what the Trump administration
Speaker 1: wants to happen. And it's possible that he could survive
Speaker 1: because he's doing everything that the Trump administration wants him
Speaker 1: to do and is pushing very aggressively to do that.
Speaker 1: So I think it's a question of maybe if enough
Speaker 1: stuff keeps piling up that hill have gone too far.
Speaker 1: But so far he seems to be surviving. I've heard
Speaker 1: something incredible. I mean that he traveled with third the
Speaker 1: thirty in his protection detail, thirty people, and um, there's
Speaker 1: there's been a lot coming out, so but we will
Speaker 1: keep apprized of what's going on. And thank you so
Speaker 1: much Chuck for being on the show. That's Chuck Kramer.
Speaker 1: He's the head of the environmental law practice at Kramer eleven.
Speaker 1: Thanks for listening to the Bloomberg Law Podcast. You can
Speaker 1: subscribe and listen to the show on Apple podcast, SoundCloud,
Speaker 1: and on Bloomberg dot com slash podcast. I'm June Brosso.
Speaker 1: This is Bloomberg