March 28, 2025 • 33 mins
Updates on hearings to confirm Paul Atkins as SEC chair and what it means for companies like Coinbase, Robinhood, CBOE, Nasdaq and Virtu are among key catalysts that BI litigation and policy analysts are watching this week. The team also discussed the legality of auto tariffs announced by President Donald Trump on March 26 and reciprocal tariffs expected on April 2. The firing of FTC commissioners Alvaro Bedoya and Rebecca Kelly Slaughter is unlikely to materially affect the outcome of cases against Meta, Amazon.com, UnitedHealth, Cigna, CVS and other companies, but lawsuits challenging their termination could provide insights into Trump’s ability to fire Fed Chair Jerome Powell. A US Supreme Court March 26 hearing signaled the high court will probably reject a constitutional challenge to the FCC’s $8 billion universal-service subsidy program, from which AT&T, Charter and Verizon have received funds.
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Episode Transcript
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Speaker 1 (00:15):
Hello, and welcome to the Votes and Verdicts podcast, hosted
by the Litigation and Policy team at Bloomberg Intelligence, the
investment research platform of Bloomberg LP on the Bloomberg Terminal.
Bloomberg Intelligence is five hundred analysts and strategists working across
the globe and focused on all major markets. Our coverage
includes over two thousand equities and credits, and we have
(00:36):
outlooks on more than ninety industries and one hundred market industries,
currencies and commodities. This podcast series examines the intersection of
business policy and law, and today we'll be looking at
the litigation and policy catalysts that we're watching this week
and that we think will impact companies across a number
of different sectors. My name is Elliot Stein. I'm an
(00:58):
analyst with Bloomberg and te Elligence covering litigation in the
financials sector, and I'll be your host for today in
March twenty seventh, twenty twenty five, and I'm delighted today
to be joined by a number of my colleagues on
the Litigation and Policy team. And as always, you can
find all of our research on the Bloomberg terminal at
big and more specifically on our dashboard BI laws go
(01:24):
all right, so let's get started. Nathan Dean, let's bring
you in. Nathan Covers a financials policy out of Washington,
d C. He's our go to guy in DC. We
had confirmation hearings today for Paul Atkins, President Trump's nominee
to be SEC chair. I think you watched that whole
thing because you were sending me ibs and some messages
(01:47):
while it was going on, giving me sort of a
running commentary. Any takeaways.
Speaker 2 (01:51):
Former Commissioner Paul Adkins is a Doctor Pepper fan because
he had a big, gigant taking it. I would have
thought it would have been Diekoke, but he had a
big Doctor Pepper or right there on the dial as
he was testifying. So, but you know former Commissioner Paul Atkins,
he is now the head of Potomac Advisors. You know,
he's like the godfather when it comes to SEC rules
(02:13):
and rulemakings for the conservative Republican side of Washington. I mean,
he he knows the SEC inside and out, and so
I don't think he's going to have any issues whatsoever
getting confirmed. And today's hearing did really dive all that
deep into the weeds. They never do. I mean one
of the bigger complaints was that from the democratic side
(02:33):
is they had four individuals in this hearing and they
only had one hearing. Amongst the four of them.
Speaker 1 (02:39):
I mean four point homin news were being asked questions.
Speaker 2 (02:43):
Yeah, so they had four nominees and Commissioner Atkins was
just one of them. They also had the the next
gentleman to be the Comptour of the currency for example.
So there was a lot of discussion that could have
gone into They didn't have much time. But you know,
I say, there were really three key things that he said,
and the first one was regulatory clarity. And this is
really good for the cryptocurrency industry specifically like robin Hood
(03:05):
and coinbase, because you know, the SEC has over the
last few years and their eyes operated is in terms
of gotcha violations, lots of enforcement actions. If you've read
any Avelliates pieces over the last year, you know the
SEC has been busy. But I will say that you know,
the regulatory clarity is something that Commissioner Akins wants to
move forward with and that's going to bode well for
the crypto industry. With the note that this is only
(03:27):
securities related anything else is outside of the SEC's jurisdiction
and needs Congress has approval. Second is capital formation. He
talked a little bit in terms of private funds. Think
of changing things like the accredited investor definition to make
it easier for individuals to investigate in private funds. You know,
I think that's going to be a big issue for
twenty twenty five. And then the third is market structure.
(03:49):
You know, when Commissioner Afkins was around in the early
two thousands, you know, he was one of the individuals
that voted on rank NMS. This is the regulation that
created the equity market structure that we know today, and
he had a lot of issues with it. Now, I
don't think he's going to jump in here and say, right,
we're going to make these changes right away. But you know,
in response to Senator Kim's question about the consolidated audit trail,
(04:11):
I think it's certainly something that he's going to be
looking at. I would just put those changes potentially in
like the latter half of twenty twenty six, maybe even
twenty twenty seven. So there's a lot here to talk about.
But overall, I think if you're one of the companies
that you're going to be regulated by the SEC. I
think you're going to find somebody with the chair who
is certainly going to take more into account the company
(04:32):
or business views towards regulations than what we've seen over
the last four years.
Speaker 1 (04:37):
Absolutely, And I mean you mentioned drag an Ms. I'm
actually curios. Yeah, I assume he didn't say too much
about it. You know, I'm watching a lawsuit by CBOE
and NASDAC challenging against the SEC, challenging the rag Ms
amendments from late last year that reduced you know, access
feed caps and tick sizes, And I thought it was
interesting because you know, the SEC is you know, revisiting
(05:02):
a lot of the rules that are promulgated on the
President Biden, but the rag Ms rule they're still defending
in court. So I'm as you're really curious to see,
you know, how that plays out and once he comes in,
whether they start revisiting that and taking a different view.
Speaker 2 (05:16):
Yeah, you know, regulation, national market system. You know, it's
been around for a while, and so that's the one
major difference between he saw effect that you see between
the Biden and the Trump administrations because you know, generally
speaking that what we're seeing coming from the Trump administration
at the moment is reversals of things that have been
finalized within the last two to three four years. But
(05:38):
the core structure of Reagan MS has been around for
almost fifteen years now, and so you know, there's a
lot more clarity, there's a lot more comfort level with
some of those rules. So I'm not thinking he's going
to be bringing a sledgehammer to it, but I think
incrementally you could see a scalpel maybe a little bit
of tweaks and amendments over the next few years.
Speaker 1 (05:57):
The other thing that sort of cracked me up a
few weeks ago was that so Atkins was an expert
retained by Virtue, the market maker, and it's in a
lawsuit that the sec brought against Vertuo last year, and
I sort of cracked up. It was some time in
January or February where Virtue had to write the court
and ask for more time to complete discovery because they
(06:21):
needed to get a new expert because their previous expert
was Paul Atkins, who obviously will have to be recused
in the litigation going forward.
Speaker 2 (06:28):
And we also learned that he was a roommate with
Senator Haggerty at the Vanderbilt Law School.
Speaker 1 (06:32):
So right, yeah, I always love those random roommate connections.
So just one other thing I'm watching with the SEC
is that tomorrow or maybe today, but by tomorrow, the
SEC has to update the Eighth Circuit Court of Appeals
on where it stands with the SEC Climate Disclosure Rule,
which is in litigation. It's been fully briefed in the
(06:53):
Eighth Circuit and they're just waiting for or arguments to
be scheduled. But the SEC wrote the court back in
February saying, hey, don't don't schedule anything yet because we're
still trying to figure out what we're doing with this rule.
So I'm looking for that update today or tomorrow. All right, Cool?
Anything else from the hearing, Nathan, No, I think that's
about it for today. All right, Cool? All right, Holly,
(07:15):
let's bring you in. Holly from has become our resident
tariffs Maven, especially on the legal side of things. So Holly,
obviously a lot of news yesterday with the auto tariffs
next week. You know we're anticipating in reciprocal tariffs on
Liberation Day April. Second, you've written a lot about the
(07:39):
different statutes that are involved the different processes and what
you know, what potential legal challenges might look like. Any
thoughts on what's happening with all these tariffs.
Speaker 3 (07:50):
Well, sure, heir so Trump yesterday, just just yesterday, said
that he was going to impose a twenty five percent
tariff on autos and the basis, the purported basis for
that was that it the imports foreign import's threatened or
threatened to a pair national security.
Speaker 4 (08:13):
I think what's interesting about his use of that statue,
which is Section two thirty two of the Trade Expansion Act,
is that that requires an investigation. Unlike some other statutes
that he could use, that one requires an investigation by
his Commerce department. So what he did was he relied
on a seven year old investigation that was done when
(08:36):
he was president in twenty nineteen, and in the executive
order that he signed yesterday saying that he's going to
implement this tariff on April second, he said, you know,
my Commerce department says that nothing has changed, and it's
not clear whether that's sufficient under the law. I could
envision a scenario where a challengers will say circumstances changed
(09:02):
and they need a new investigation. So that's something that
I think you know is a potential interesting argument. And
then with respect to reciprocal tariffs, generally, the president can
use what you said was he's going to impose on
Liberation Day on April second. The president can use different statutes,
and two of the statutes we think he may invoke
(09:25):
are section three thirty eight of the Trade Act of
nineteen thirty That's an interesting one because it's never been
used before to impose tariffs and a trading partner. But
that statute allows the president to impose tariffs if he
finds that a country is discriminating against US commerce, are
(09:45):
burdening US commerce. And what's what's I guess appealing could
be appealing to him about that statute is that also
doesn't require an agency investigation.
Speaker 5 (09:55):
He could do it by proclamation.
Speaker 3 (09:57):
So another section set three oho one, which is very
very similar in the justification for tariffs, like burdening US commerce,
is also requires an investigation, so that one could take
some time. So there was an interesting article in the
Financial Times on I think Monday that said the president
(10:20):
may use section three thirty eight, which which requires no investigation,
and then back up his that tarriff with an investigation.
Speaker 5 (10:32):
That he puts out later.
Speaker 1 (10:33):
Very interesting. So so wait, so he would impose the
three thirty eight terrorsts based on an investigation, but why
would then why would he then need the three oho
one section terrorifs.
Speaker 3 (10:44):
In addition, it's sort of a dual cover. So three
thirty eight requires no investigation. He could do it bright
proclamation and he could do it immediately, and then the
three oh one, which requires an investigation, he could say
to his US Trade rep. And I think he has
already look into all these countries. Are they burning US commerce?
Are they discriminating against US commerce? And then if they
(11:05):
have a full investigation, that's where it gives him cover
to say, yes, our US Trade Rep investigated this and
he found indeed that I was right, they're discriminating against
US commerce.
Speaker 1 (11:16):
Interesting, so sort of like a suspenders approach exactly. Wow,
really interesting. Have you heard any rumblings though, of anyone
threatening to sue, because I haven't really seen anything. So
I wonder if you know how realistic it is that
we might see litigation around this stuff.
Speaker 5 (11:30):
I think it's realistic that we'll see litigation.
Speaker 3 (11:32):
But it's funny that you mentioned that, because I did
look the other day and I saw nothing, so you know,
these these would go to the US Court of International Trade,
and so far I haven't seen any cases filed. And
the one that we would have seen is the one
that was imposed on Mexico, Canada and China, because that's
(11:52):
already happened, or perhaps steel which are already into a feft.
Speaker 1 (11:56):
And who do you think would too, like companies or
trade groups on behalf of some of these other countries.
Speaker 5 (12:01):
We could be trade groups on behalf the industries or companies.
Speaker 3 (12:05):
Last time, in twenty eighteen, when Trump and posted tariffs
on China under section three oh one, the companies, through
the whole bunch of companies sued. So dozens of companies
sued US Court of International Trade.
Speaker 5 (12:22):
If if.
Speaker 3 (12:25):
If a country were to sue, say, say because that
violates a trade agreement, I think they'd have to sue
the World Trade Organization. But the dispute, the dispute resolution
process there is different because you know, the president has
been very critical of the WTO, He's been very critical
of the dispute resolution process there. And I think also
(12:48):
there's you know, there may be an indication that he's
not going to abide by what they what they rule,
whereas if a court in the US rules a certain way,
I think he you know, he would have to buy
it theoretically.
Speaker 1 (13:01):
Yeah. So the other trade related note you put out
this week, it was also really interesting. You wrote this
with a transport channalyst, Lee Clascow, on these fees that
the US government wants to impose on Chinese built or
Chinese operated vessels that are using US ports. You know,
(13:21):
the headline that lero was US fees on Chinese ships
a self and inflicted supply chain shock, which is, you know,
really interesting. But anything you wanted to say about that
sort of in terms of, you know, the process and
the legality around that.
Speaker 5 (13:35):
Sure.
Speaker 3 (13:35):
So, yeah, the US Trade Rep has proposed imposing fees
of five hundred thousand to one point five million dollars
per port call for Chinese built ships or Chinese operated
ships calling on US ports. Interestingly, the investigation was initiated
under Biden, that was April of last year, and the
(13:57):
Trade Rep found d that that China was dominating the
shipping industry unfairly so, and he's recommending that these fees
be imposed under Section three oh one, which again allows
the President to impose tariffs if a country is burdening
US commerce or is unfairly restricting commerce. So I think
(14:23):
it's you know, pretty clear in the statute that these
that that the President can impose these fees, and the
statute was amended to allow uh fees to be imposed
on shipping in the event that a government is subsidizing shipping,
which is considered unfair and that and that's what it
(14:43):
is alleged here. I haven't seen the Trade Rep make
that finding yet that you know, China's subsidizing their shipping industry.
But that's what the petitioners who filed the petition to
get to have the Trade Rep initiated investigation alleged.
Speaker 1 (14:59):
And so that's why you're waiting for a next the
US Trade Rep to come out with that finalized determination basically.
Speaker 3 (15:05):
Exactly, so he the Trade Rep, has a year to
make that determination, but he could ask for an extension
for six months. So if he makes the determination within
a year, that would put us at April, and then
the determination has to be implemented within thirty days of
the action has to be implemented within thirty days of
the determination, so that would put us at May potentially,
(15:28):
where you see these these imposed, but if they ask
for an extension, the outside date for implementation these fees
would be November.
Speaker 1 (15:35):
Got it? All right? Great stuff? All right, thanks Holly,
all right, justin TERESI, let's bring you in. You follow
a lot of cases that the FTC has brought Yeah,
so many? Yeah, right, Well, certainly in the last administration,
we'll see, well and maybe in this administration too, but
you following cases against Meta Amazon, the pharmacy benefit managers.
(15:58):
But what I want to talk about is, well, last
week President Trump fired two FTC commissioners, the two that
were appointed by Democrats, you know, sort of consistent with
what he's been doing with other other agencies, including the
National Labor Relations Board and the Merit Systems Protection Board,
(16:20):
you know, sort of taking an aggressive approach in terms
of how much control the president has over what used
to be considered independent agencies but might no longer be.
Just before we started recording this, uh, those two FTC commissioners,
Slaughter and Badoya, sued the Trump administration, so we'll be
(16:40):
following those as well. They are challenging their terminations. But
why don't you come in tell us you know what
you think it means for these FTC cases that you're watching.
Speaker 6 (16:50):
Yeah, yeah, definitely, you're right fresh off the press here,
it looks like Commissioners Slaughter and Badoia are going to
challenge their firings. I think no surprise there. I think
everybody's kind of expected is going to happen. You know,
I know you've been tracking the read through on this
to Humphrey's executor and perhaps you know, might happen to
Drome Paul over with the FED. But yeah, you know,
in terms of actual day to day business and existing cases,
(17:12):
new investigations at the FTC, the impact from this really
there's really not too not much of one at all,
And I think the reason being that with the new
administration coming in with the expiring term of former chair
Lena Khan, the setup was going to be a three
to two split at the FTC already anyway was led
by Republican Chair Andrew Ferguson, so that control of the
(17:34):
agenda was already the Republicans to have with that firm
majority there in place, So anything that could have happened
in terms of voting to initiate a new lawsuit or
a new investigation, voting to block a deal, all of
that already had that Republican majority in place, or would
be in place with the confirmation of Mark Mader, who's
right now up first, and of confirmation as the third
(17:55):
a third Republican FTC commissioner. So in terms of the
read through to the cases investigations, not that much of
a difference from what would have been the case anyway,
you know, had the two Democratic commissioners state, maybe less tossents,
maybe less transparency, but in terms of actual business kind
of the same stuff over at the FTC.
Speaker 1 (18:13):
What's the status of the confirmation of the heavy pnounces
as they made or yeah, yeah.
Speaker 6 (18:19):
So he's been reported out of committee, he's on the
floor calendar well, so could be really any day now.
Not not sure what the particular delay on his nomination
might be in the Senate, but I think overwhelmingly we're
expecting that to be approved. I think there's been you know,
very support from both parties on his nomination. Obviously, the
firings probably shake things up a little bit among the
(18:40):
Senate Democrats, but you know, I think we're expecting that
to move forward. But you know, looking at the kind
of the cases the FTC has right now against Meta
and Amazon, cher Ferguson's been really out there supporter of
those efforts against big tech and in interviews he's done recently,
So we don't really think there's going to be much
of a difference with the way that those proceed And
there's also been some speculation that because Commissioners Buduya and Slaughter,
(19:04):
the two were fired, were the only two who voted
to approve that the case against PBMs the Pharmacy Benefit Managers,
that that kind of leaves the case in limbos somehow
because Jerff Ferguson and Commissioner Holyoke, the other Republican had
recused themselves from the case when it was filed back
at September. That's not our reading of the rules though
that case is already deep into discovery. There's not really
(19:24):
a need for the Commission to take action and anything
right this moment. And once major's in the rule is
the rules that CCFTC are is that a quorum is
constituted by a majority of whatever commissioners aren't recused from
the matter. So in this case, you know that that's one.
Speaker 1 (19:41):
Of one.
Speaker 2 (19:42):
So there you go.
Speaker 1 (19:43):
Wait, so, but what do they need the quorum for
at this point? I mean at this point, it would
just be to like.
Speaker 6 (19:48):
Right, if there was any lawsuit exactly exactly, if there
were any move to a mend or withdraw the lawsuit
or you know, perhaps agree to a settlement coming in
from a different lawsuit or something like that, that's what
they need a majority for. But again, you know, but
that suit's proceeding, it's deep in discovery. You know, the
FTC is looking to move the date of the internal
trial they have for that lawsuit a little bit later
(20:08):
into January of next year. So what is it currently
scheduled for schedule for August? They're looking for January. The
PBMs are saying, hey, wait, you guys chose to bring
this case in the in the tribunal.
Speaker 1 (20:17):
You did.
Speaker 6 (20:17):
You've got to live with the timeline now. But you know,
reality is being what they are with discovery. I think
it's probably slated to happen at least don until fourth quarter.
Speaker 1 (20:24):
And we know why and Ferguson were recused. I think
we don't. And that's the thing.
Speaker 6 (20:31):
I mean, you know, it could be a personal reason,
it could be an actual conflict, but we're also you know,
we can't just assume that whatever caused them to recuse
themselves in September is still the case today. They could
very well have removed whatever issue was in place to
stop them from voting to approve the suit in September
if they if they had, you know, if they wanted to.
And I'll say too, they've both been supportive of action
(20:52):
against health insurance and PBMs in the past two in
their own right, So it's not as if they had
this perhaps you know, moral obligation to the actual you know,
the actual crux of that lawsuit when it was rolling
out last fall.
Speaker 1 (21:02):
Either And do you think Trump just keeps the FTC
with three commissioners or do you think you'll appoint to
fourth and fifth? You know, that's that's a great question.
Speaker 6 (21:11):
I mean at this point, you know, you know what
I'm thinking about more from this perspective of the FTC
and what it means for the FDC from this standpoint is,
you know, we're seeing legislation on Capitol Hill right now
where folks are saying, hey, wait a minute, this anti
trust function at the FTC, it's duplicative and it should
be rolled into DOJ. And we've seen Chaerf Ferguson out
there really pounded the pavement talking about all these strengths
(21:32):
and reasons why you know, the FDC has this relevant
place and anti trust. But you know, if we're removing
this independence of the FTC and we're not going to
fully staff the commissioners, and really if the FDC is
just proceeding as you know, a tool of the executive anyway,
to me that that really makes the case even more
that the actual anti trust enforcement powers at the FDC
(21:53):
are in fact duplicative of those in place at the
at the DOJ. I think it makes that whole Doughe
consolidation argument a bit stronger for those looking to to
actually meld things together and take two enforcement powers and
roll them into one.
Speaker 1 (22:06):
Oh, that would be interesting. Yeah, you know, I think
it's so interesting because you know, I, like you said,
I've been following these other cases involving term, you know,
firing of commissioners at independent and so called independent agencies,
and you know, I read about I'm really curious about
what it means for Jerome Powell at the FED. And
(22:28):
I think it's so interesting that both Slaughter and but
Doya have said, Look, you know, if if it's legal
to fire us, the president can fire Jerome Powell. And
you know, my my reaction to that is careful, careful
what you say, because you know, I I don't think
they're going to win their cases against uh Persian Trump.
You know, it might be a closer call with Jerome Powell,
(22:49):
just because even the current Justice Department has conceded that
the Fed's monetary policy responsibilities are independent of the president.
But but do take a firm position that the Fed's
regulatory responsibilities fall under the president's you know, jurisdiction, under
the executive authority. So you know, I'm not optimistic that
(23:12):
any of these people will be able to win their
lawsuits if they get fired.
Speaker 6 (23:16):
So yeah, I think you're right. I have to say too,
I'm curious, you know, I think it's definitely true. I
think this is probably your point of view as well,
that there's a Supreme Court in place that certainly has
been perhaps itching to overturn Humphreys or interested in the
idea of overturning Humphreys executor for a long time.
Speaker 1 (23:32):
But you know, I think, you know, is there a
little bit.
Speaker 6 (23:35):
More hesitancy or perhaps a carve out in some way
because the stakes are higher. I think for overturning Humphries
now than they would have been even a year ago,
or I were talking about big stuff that maybe wasn't
you know, at the central you know, underpinning of trying
to overturn that the ruling even just a year agon
hour confronted was a really crazy kind of thing.
Speaker 1 (23:54):
So yeah, And I think it was Gorsech and Thomas
who voted in the Sale of Law case. They in
their descent they said they would overturn Humphries. But I
don't even think you need to overrule Humphries for the
president to win these cases, because the Supreme Court and
Sale of Law basically, you know, said Humphries was just
(24:15):
one of two exceptions to the general rule that the
president can fire anyone in the executive branch. And the
two exceptions are one for inferior officers, which doesn't apply here,
and the second is for principal officers, which these folks are,
but principal officers who don't exercise any executive authority. And
(24:35):
you know, in these cases you have to see in particular,
I think is going to be found to exercise executive
authority because it has enforcement power and it has rule
making authority, and so you can carve it out from
the Humphries exception, and you arguably could do the same
for j Run Powell at the FED, and you could
say the FED has you know, exercises executive powers because
(24:57):
it also has rule making authority and enforcement authority. So right,
I see where all these cases go. They're fun, they're
fun to watch. It's fun. It's like a front row
seat to history for better or words. That's right, Yeah, yeah, exactly,
all right, justin good stuff. Thanks, all right, Matt Schanan. Hell,
let's bring you in to round out the discussion today.
You so, Matt is our TMT policy and litigation analyst
(25:21):
also based in DC. You watched a Supreme Court argument yesterday.
I assume virtually maybe you went, I know, sometimes you go.
Did you go?
Speaker 2 (25:31):
Uh no, Actually I was.
Speaker 7 (25:33):
I was there in the courtroom in the in the
bar seating section right behind the podium, so one of
the best best seats in Washington. A.
Speaker 1 (25:41):
Yeah, that's always it's always fun, except you have to
check your phone. That always gives me a little adjutant.
Speaker 7 (25:45):
It's a little bit of a hassle and uh yeah,
but it's it's so worth it to be you know,
twenty feet away from the justices there watching watching history
be made.
Speaker 1 (25:54):
Agree, So tell us about the case. It's a six
billion dollar FCC program to subsidize tell own in Higstol.
Speaker 7 (26:01):
Even more than that in some years, I think it's
eight eight eight to nine billion. It can reach and
and basically, this is a rural broadband program, a rural
telephone program that the FCC has administered since the nineteen
ninety six Act, and and and and in part even
before that, it's had similar programs in place. But but basically,
(26:25):
a group, an advocacy group brought a legal challenge to
the program and sued in multiple courts of appeals and
said that this program, when Congress passed it, Congress was
was not clear enough in giving direction to the FCC
and how to administer it. And the claim was, this
(26:45):
violates the Constitution, the non delegation doctrine for the FCC
to be given this power basically legislative power by Congress
UH to to administer this this rural broadband program that
collect money from telecom carriers then passes it back out.
And basically the claim was Congress needed to be more
(27:08):
clear if it wanted this program to go ahead. That
argument failed in most courts of appeals, three or four
of them, maybe at least two or three. It succeeded
on bank in the Fifth Circuit by a very narrow vote,
and then this case ended up by before the Supreme
Court because there was a circuit split between the courts
of appeals. And so that was the argument tomorrow or yesterday,
(27:31):
whether the law is constitutional, whether this universal service program
is constitution.
Speaker 1 (27:36):
Just based on the non delegation doctrine. There were no
other like statutory arguments.
Speaker 7 (27:40):
Or anything exactly. This was pretty focused on the non
delegation doctriment. There were two components to it, sort of
the public non delegation doctrine Congress to the FCC. Then
there was a private non delegation doctrine claim the FCC
gave too much power to an administrator, a private administrator
(28:00):
u sac organization that actually does the paperwork in the administration.
And both pieces of that were challenged. The Fifth Circuit
kind of combined them and said, put them together, and
this is this is somehow on constitution. Always strike it down.
Speaker 1 (28:14):
What was your takeaway, I mean from you know, our
sidebar conversations that we've had it sounds like you think
the rule will survive and that there's not a majority
of justices you know, to vote against it based on
either the non delegation.
Speaker 7 (28:27):
Yeah, that's where I that's where I came came away yesterday.
It's hard to see the challenge the FCC's challengers here
getting to five votes. Justice Gorstch clearly feels strongly that
he wants to give new teeth to the non delegation doctrine,
and he's likely to come out against the FCC. He
might have Justice as Alito and Thomas with him, but
(28:49):
like in so many cases, it's the middle of the
court that we're really watching to determine outcomes. And the
Chief Justice, Justice Barrett and Justice Kavanaugh. I really have
a hard time seeing any of them, and certainly not
to two of them joining Justice Gorsic's side on this.
(29:10):
It was a fascinating argument in a lot of respects,
you know, given where the Court has been recently and
cutting back on administrative powers with the undoing of the
Chevron doctrine, uh just just last term and now the
chance to kind of go further and and again cut
away at agency powers and and Paul Clement making the
(29:32):
argument actually in favor of the FCC program, when he
was the one making the argument against agency power in
the Lower Bright series of cases. It just just fascinating
how it all, how it all went. And to see
him going up against Justice gorsic On on the point
was was was just really high level legal advocacy there,
(29:56):
and and and fascinating and and and I thought, he
just you know, I've seen him make very strong arguments
in the past. This was this was you know, one
of his best, I thought, and very convincing that basically
speaking to the conservative justices and saying, look, maybe we
can use the non delegation doctrine to make changes here
in the future, we can reinvigorate it, but this is
(30:18):
not the case to do it. And and I really
think he had a lot of heads nodding and in
agreements with him.
Speaker 1 (30:24):
That's what I was wondering about, Like the you know,
the Roberts and the Barretts and the Kavanaughs, were they
did you get a sense that there's any appetite on
their part to revisit to revive the non delegation doctrine
And it just wasn't this case. But but on the
other hand, they took it.
Speaker 7 (30:39):
Right, right, so they need they had four votes to
take the case when when they when they took it,
they also added a question about mootness, like basically a
way to get out of this, which already signaled, hey,
maybe we don't have four that are real excited about
taking this case. Those three justices, you know, weren't as
clearly on one side or the other as is typical
(31:01):
typically the case. Their questions were more exploratory. And but
and so I think there is openness down the road
if you found the right case. I can imagine Paul
Clement bringing that case. And you know, but and and
and I think there is potential to get to five.
But I don't think it with a program that has
(31:22):
so much history like the FCC program, where the FCC
was effectively drawing from like a common law that it
had established. The justices I think on the whole, where
we're okay and not really worried about the consequences of
if we second guess this one, we're gonna have to
undo a bunch of stuff and we're going to have
(31:44):
a mess on our hands with a whole slew of
statutes getting challenged, and we can go after you know,
statutes in other ways, you know, under the APA, we
don't need to you know, use this non delegation doctrine here.
So I think there there's probably room for it, but
I don't think there's going to be a real big
drive from the justices to use this tool to go
(32:07):
after regulation.
Speaker 1 (32:09):
Got it, And I assume you expect a decision probably
towys En it seems.
Speaker 7 (32:13):
Most likely, unless they make real quick work of it
on some other races. Yeah, it's as possible.
Speaker 1 (32:20):
All right, great, all right, thanks Matt. All right, I
think with that we will wrap up this episode of
Votes and Verdicts. As always, thank you for listening. If
you have any questions about any of the matters we
discussed on this episode, please don't hesitate to reach out
at your convenience with questions. As a reminder, you can
find all of our research on the Bloomberg terminal at
big or on our litigation and policy dashboard at BI
(32:42):
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and have a great day.
Hello, and welcome to the Votes and Verdicts podcast, hosted
by the Litigation and Policy team at Bloomberg Intelligence, the
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Bloomberg Intelligence is five hundred analysts and strategists working across
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(00:36):
outlooks on more than ninety industries and one hundred market industries,
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business policy and law, and today we'll be looking at
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and that we think will impact companies across a number
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(00:58):
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March twenty seventh, twenty twenty five, and I'm delighted today
to be joined by a number of my colleagues on
the Litigation and Policy team. And as always, you can
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big and more specifically on our dashboard BI laws go
(01:24):
all right, so let's get started. Nathan Dean, let's bring
you in. Nathan Covers a financials policy out of Washington,
d C. He's our go to guy in DC. We
had confirmation hearings today for Paul Atkins, President Trump's nominee
to be SEC chair. I think you watched that whole
thing because you were sending me ibs and some messages
(01:47):
while it was going on, giving me sort of a
running commentary. Any takeaways.
Speaker 2 (01:51):
Former Commissioner Paul Adkins is a Doctor Pepper fan because
he had a big, gigant taking it. I would have
thought it would have been Diekoke, but he had a
big Doctor Pepper or right there on the dial as
he was testifying. So, but you know former Commissioner Paul Atkins,
he is now the head of Potomac Advisors. You know,
he's like the godfather when it comes to SEC rules
(02:13):
and rulemakings for the conservative Republican side of Washington. I mean,
he he knows the SEC inside and out, and so
I don't think he's going to have any issues whatsoever
getting confirmed. And today's hearing did really dive all that
deep into the weeds. They never do. I mean one
of the bigger complaints was that from the democratic side
(02:33):
is they had four individuals in this hearing and they
only had one hearing. Amongst the four of them.
Speaker 1 (02:39):
I mean four point homin news were being asked questions.
Speaker 2 (02:43):
Yeah, so they had four nominees and Commissioner Atkins was
just one of them. They also had the the next
gentleman to be the Comptour of the currency for example.
So there was a lot of discussion that could have
gone into They didn't have much time. But you know,
I say, there were really three key things that he said,
and the first one was regulatory clarity. And this is
really good for the cryptocurrency industry specifically like robin Hood
(03:05):
and coinbase, because you know, the SEC has over the
last few years and their eyes operated is in terms
of gotcha violations, lots of enforcement actions. If you've read
any Avelliates pieces over the last year, you know the
SEC has been busy. But I will say that you know,
the regulatory clarity is something that Commissioner Akins wants to
move forward with and that's going to bode well for
the crypto industry. With the note that this is only
(03:27):
securities related anything else is outside of the SEC's jurisdiction
and needs Congress has approval. Second is capital formation. He
talked a little bit in terms of private funds. Think
of changing things like the accredited investor definition to make
it easier for individuals to investigate in private funds. You know,
I think that's going to be a big issue for
twenty twenty five. And then the third is market structure.
(03:49):
You know, when Commissioner Afkins was around in the early
two thousands, you know, he was one of the individuals
that voted on rank NMS. This is the regulation that
created the equity market structure that we know today, and
he had a lot of issues with it. Now, I
don't think he's going to jump in here and say, right,
we're going to make these changes right away. But you know,
in response to Senator Kim's question about the consolidated audit trail,
(04:11):
I think it's certainly something that he's going to be
looking at. I would just put those changes potentially in
like the latter half of twenty twenty six, maybe even
twenty twenty seven. So there's a lot here to talk about.
But overall, I think if you're one of the companies
that you're going to be regulated by the SEC. I
think you're going to find somebody with the chair who
is certainly going to take more into account the company
(04:32):
or business views towards regulations than what we've seen over
the last four years.
Speaker 1 (04:37):
Absolutely, And I mean you mentioned drag an Ms. I'm
actually curios. Yeah, I assume he didn't say too much
about it. You know, I'm watching a lawsuit by CBOE
and NASDAC challenging against the SEC, challenging the rag Ms
amendments from late last year that reduced you know, access
feed caps and tick sizes, And I thought it was
interesting because you know, the SEC is you know, revisiting
(05:02):
a lot of the rules that are promulgated on the
President Biden, but the rag Ms rule they're still defending
in court. So I'm as you're really curious to see,
you know, how that plays out and once he comes in,
whether they start revisiting that and taking a different view.
Speaker 2 (05:16):
Yeah, you know, regulation, national market system. You know, it's
been around for a while, and so that's the one
major difference between he saw effect that you see between
the Biden and the Trump administrations because you know, generally
speaking that what we're seeing coming from the Trump administration
at the moment is reversals of things that have been
finalized within the last two to three four years. But
(05:38):
the core structure of Reagan MS has been around for
almost fifteen years now, and so you know, there's a
lot more clarity, there's a lot more comfort level with
some of those rules. So I'm not thinking he's going
to be bringing a sledgehammer to it, but I think
incrementally you could see a scalpel maybe a little bit
of tweaks and amendments over the next few years.
Speaker 1 (05:57):
The other thing that sort of cracked me up a
few weeks ago was that so Atkins was an expert
retained by Virtue, the market maker, and it's in a
lawsuit that the sec brought against Vertuo last year, and
I sort of cracked up. It was some time in
January or February where Virtue had to write the court
and ask for more time to complete discovery because they
(06:21):
needed to get a new expert because their previous expert
was Paul Atkins, who obviously will have to be recused
in the litigation going forward.
Speaker 2 (06:28):
And we also learned that he was a roommate with
Senator Haggerty at the Vanderbilt Law School.
Speaker 1 (06:32):
So right, yeah, I always love those random roommate connections.
So just one other thing I'm watching with the SEC
is that tomorrow or maybe today, but by tomorrow, the
SEC has to update the Eighth Circuit Court of Appeals
on where it stands with the SEC Climate Disclosure Rule,
which is in litigation. It's been fully briefed in the
(06:53):
Eighth Circuit and they're just waiting for or arguments to
be scheduled. But the SEC wrote the court back in
February saying, hey, don't don't schedule anything yet because we're
still trying to figure out what we're doing with this rule.
So I'm looking for that update today or tomorrow. All right, Cool?
Anything else from the hearing, Nathan, No, I think that's
about it for today. All right, Cool? All right, Holly,
(07:15):
let's bring you in. Holly from has become our resident
tariffs Maven, especially on the legal side of things. So Holly,
obviously a lot of news yesterday with the auto tariffs
next week. You know we're anticipating in reciprocal tariffs on
Liberation Day April. Second, you've written a lot about the
(07:39):
different statutes that are involved the different processes and what
you know, what potential legal challenges might look like. Any
thoughts on what's happening with all these tariffs.
Speaker 3 (07:50):
Well, sure, heir so Trump yesterday, just just yesterday, said
that he was going to impose a twenty five percent
tariff on autos and the basis, the purported basis for
that was that it the imports foreign import's threatened or
threatened to a pair national security.
Speaker 4 (08:13):
I think what's interesting about his use of that statue,
which is Section two thirty two of the Trade Expansion Act,
is that that requires an investigation. Unlike some other statutes
that he could use, that one requires an investigation by
his Commerce department. So what he did was he relied
on a seven year old investigation that was done when
(08:36):
he was president in twenty nineteen, and in the executive
order that he signed yesterday saying that he's going to
implement this tariff on April second, he said, you know,
my Commerce department says that nothing has changed, and it's
not clear whether that's sufficient under the law. I could
envision a scenario where a challengers will say circumstances changed
(09:02):
and they need a new investigation. So that's something that
I think you know is a potential interesting argument. And
then with respect to reciprocal tariffs, generally, the president can
use what you said was he's going to impose on
Liberation Day on April second. The president can use different statutes,
and two of the statutes we think he may invoke
(09:25):
are section three thirty eight of the Trade Act of
nineteen thirty That's an interesting one because it's never been
used before to impose tariffs and a trading partner. But
that statute allows the president to impose tariffs if he
finds that a country is discriminating against US commerce, are
(09:45):
burdening US commerce. And what's what's I guess appealing could
be appealing to him about that statute is that also
doesn't require an agency investigation.
Speaker 5 (09:55):
He could do it by proclamation.
Speaker 3 (09:57):
So another section set three oho one, which is very
very similar in the justification for tariffs, like burdening US commerce,
is also requires an investigation, so that one could take
some time. So there was an interesting article in the
Financial Times on I think Monday that said the president
(10:20):
may use section three thirty eight, which which requires no investigation,
and then back up his that tarriff with an investigation.
Speaker 5 (10:32):
That he puts out later.
Speaker 1 (10:33):
Very interesting. So so wait, so he would impose the
three thirty eight terrorsts based on an investigation, but why
would then why would he then need the three oho
one section terrorifs.
Speaker 3 (10:44):
In addition, it's sort of a dual cover. So three
thirty eight requires no investigation. He could do it bright
proclamation and he could do it immediately, and then the
three oh one, which requires an investigation, he could say
to his US Trade rep. And I think he has
already look into all these countries. Are they burning US commerce?
Are they discriminating against US commerce? And then if they
(11:05):
have a full investigation, that's where it gives him cover
to say, yes, our US Trade Rep investigated this and
he found indeed that I was right, they're discriminating against
US commerce.
Speaker 1 (11:16):
Interesting, so sort of like a suspenders approach exactly. Wow,
really interesting. Have you heard any rumblings though, of anyone
threatening to sue, because I haven't really seen anything. So
I wonder if you know how realistic it is that
we might see litigation around this stuff.
Speaker 5 (11:30):
I think it's realistic that we'll see litigation.
Speaker 3 (11:32):
But it's funny that you mentioned that, because I did
look the other day and I saw nothing, so you know,
these these would go to the US Court of International Trade,
and so far I haven't seen any cases filed. And
the one that we would have seen is the one
that was imposed on Mexico, Canada and China, because that's
(11:52):
already happened, or perhaps steel which are already into a feft.
Speaker 1 (11:56):
And who do you think would too, like companies or
trade groups on behalf of some of these other countries.
Speaker 5 (12:01):
We could be trade groups on behalf the industries or companies.
Speaker 3 (12:05):
Last time, in twenty eighteen, when Trump and posted tariffs
on China under section three oh one, the companies, through
the whole bunch of companies sued. So dozens of companies
sued US Court of International Trade.
Speaker 5 (12:22):
If if.
Speaker 3 (12:25):
If a country were to sue, say, say because that
violates a trade agreement, I think they'd have to sue
the World Trade Organization. But the dispute, the dispute resolution
process there is different because you know, the president has
been very critical of the WTO, He's been very critical
of the dispute resolution process there. And I think also
(12:48):
there's you know, there may be an indication that he's
not going to abide by what they what they rule,
whereas if a court in the US rules a certain way,
I think he you know, he would have to buy
it theoretically.
Speaker 1 (13:01):
Yeah. So the other trade related note you put out
this week, it was also really interesting. You wrote this
with a transport channalyst, Lee Clascow, on these fees that
the US government wants to impose on Chinese built or
Chinese operated vessels that are using US ports. You know,
(13:21):
the headline that lero was US fees on Chinese ships
a self and inflicted supply chain shock, which is, you know,
really interesting. But anything you wanted to say about that
sort of in terms of, you know, the process and
the legality around that.
Speaker 5 (13:35):
Sure.
Speaker 3 (13:35):
So, yeah, the US Trade Rep has proposed imposing fees
of five hundred thousand to one point five million dollars
per port call for Chinese built ships or Chinese operated
ships calling on US ports. Interestingly, the investigation was initiated
under Biden, that was April of last year, and the
(13:57):
Trade Rep found d that that China was dominating the
shipping industry unfairly so, and he's recommending that these fees
be imposed under Section three oh one, which again allows
the President to impose tariffs if a country is burdening
US commerce or is unfairly restricting commerce. So I think
(14:23):
it's you know, pretty clear in the statute that these
that that the President can impose these fees, and the
statute was amended to allow uh fees to be imposed
on shipping in the event that a government is subsidizing shipping,
which is considered unfair and that and that's what it
(14:43):
is alleged here. I haven't seen the Trade Rep make
that finding yet that you know, China's subsidizing their shipping industry.
But that's what the petitioners who filed the petition to
get to have the Trade Rep initiated investigation alleged.
Speaker 1 (14:59):
And so that's why you're waiting for a next the
US Trade Rep to come out with that finalized determination basically.
Speaker 3 (15:05):
Exactly, so he the Trade Rep, has a year to
make that determination, but he could ask for an extension
for six months. So if he makes the determination within
a year, that would put us at April, and then
the determination has to be implemented within thirty days of
the action has to be implemented within thirty days of
the determination, so that would put us at May potentially,
(15:28):
where you see these these imposed, but if they ask
for an extension, the outside date for implementation these fees
would be November.
Speaker 1 (15:35):
Got it? All right? Great stuff? All right, thanks Holly,
all right, justin TERESI, let's bring you in. You follow
a lot of cases that the FTC has brought Yeah,
so many? Yeah, right, Well, certainly in the last administration,
we'll see, well and maybe in this administration too, but
you following cases against Meta Amazon, the pharmacy benefit managers.
(15:58):
But what I want to talk about is, well, last
week President Trump fired two FTC commissioners, the two that
were appointed by Democrats, you know, sort of consistent with
what he's been doing with other other agencies, including the
National Labor Relations Board and the Merit Systems Protection Board,
(16:20):
you know, sort of taking an aggressive approach in terms
of how much control the president has over what used
to be considered independent agencies but might no longer be.
Just before we started recording this, uh, those two FTC commissioners,
Slaughter and Badoya, sued the Trump administration, so we'll be
(16:40):
following those as well. They are challenging their terminations. But
why don't you come in tell us you know what
you think it means for these FTC cases that you're watching.
Speaker 6 (16:50):
Yeah, yeah, definitely, you're right fresh off the press here,
it looks like Commissioners Slaughter and Badoia are going to
challenge their firings. I think no surprise there. I think
everybody's kind of expected is going to happen. You know,
I know you've been tracking the read through on this
to Humphrey's executor and perhaps you know, might happen to
Drome Paul over with the FED. But yeah, you know,
in terms of actual day to day business and existing cases,
(17:12):
new investigations at the FTC, the impact from this really
there's really not too not much of one at all,
And I think the reason being that with the new
administration coming in with the expiring term of former chair
Lena Khan, the setup was going to be a three
to two split at the FTC already anyway was led
by Republican Chair Andrew Ferguson, so that control of the
(17:34):
agenda was already the Republicans to have with that firm
majority there in place, So anything that could have happened
in terms of voting to initiate a new lawsuit or
a new investigation, voting to block a deal, all of
that already had that Republican majority in place, or would
be in place with the confirmation of Mark Mader, who's
right now up first, and of confirmation as the third
(17:55):
a third Republican FTC commissioner. So in terms of the
read through to the cases investigations, not that much of
a difference from what would have been the case anyway,
you know, had the two Democratic commissioners state, maybe less tossents,
maybe less transparency, but in terms of actual business kind
of the same stuff over at the FTC.
Speaker 1 (18:13):
What's the status of the confirmation of the heavy pnounces
as they made or yeah, yeah.
Speaker 6 (18:19):
So he's been reported out of committee, he's on the
floor calendar well, so could be really any day now.
Not not sure what the particular delay on his nomination
might be in the Senate, but I think overwhelmingly we're
expecting that to be approved. I think there's been you know,
very support from both parties on his nomination. Obviously, the
firings probably shake things up a little bit among the
(18:40):
Senate Democrats, but you know, I think we're expecting that
to move forward. But you know, looking at the kind
of the cases the FTC has right now against Meta
and Amazon, cher Ferguson's been really out there supporter of
those efforts against big tech and in interviews he's done recently,
So we don't really think there's going to be much
of a difference with the way that those proceed And
there's also been some speculation that because Commissioners Buduya and Slaughter,
(19:04):
the two were fired, were the only two who voted
to approve that the case against PBMs the Pharmacy Benefit Managers,
that that kind of leaves the case in limbos somehow
because Jerff Ferguson and Commissioner Holyoke, the other Republican had
recused themselves from the case when it was filed back
at September. That's not our reading of the rules though
that case is already deep into discovery. There's not really
(19:24):
a need for the Commission to take action and anything
right this moment. And once major's in the rule is
the rules that CCFTC are is that a quorum is
constituted by a majority of whatever commissioners aren't recused from
the matter. So in this case, you know that that's one.
Speaker 1 (19:41):
Of one.
Speaker 2 (19:42):
So there you go.
Speaker 1 (19:43):
Wait, so, but what do they need the quorum for
at this point? I mean at this point, it would
just be to like.
Speaker 6 (19:48):
Right, if there was any lawsuit exactly exactly, if there
were any move to a mend or withdraw the lawsuit
or you know, perhaps agree to a settlement coming in
from a different lawsuit or something like that, that's what
they need a majority for. But again, you know, but
that suit's proceeding, it's deep in discovery. You know, the
FTC is looking to move the date of the internal
trial they have for that lawsuit a little bit later
(20:08):
into January of next year. So what is it currently
scheduled for schedule for August? They're looking for January. The
PBMs are saying, hey, wait, you guys chose to bring
this case in the in the tribunal.
Speaker 1 (20:17):
You did.
Speaker 6 (20:17):
You've got to live with the timeline now. But you know,
reality is being what they are with discovery. I think
it's probably slated to happen at least don until fourth quarter.
Speaker 1 (20:24):
And we know why and Ferguson were recused. I think
we don't. And that's the thing.
Speaker 6 (20:31):
I mean, you know, it could be a personal reason,
it could be an actual conflict, but we're also you know,
we can't just assume that whatever caused them to recuse
themselves in September is still the case today. They could
very well have removed whatever issue was in place to
stop them from voting to approve the suit in September
if they if they had, you know, if they wanted to.
And I'll say too, they've both been supportive of action
(20:52):
against health insurance and PBMs in the past two in
their own right, So it's not as if they had
this perhaps you know, moral obligation to the actual you know,
the actual crux of that lawsuit when it was rolling
out last fall.
Speaker 1 (21:02):
Either And do you think Trump just keeps the FTC
with three commissioners or do you think you'll appoint to
fourth and fifth? You know, that's that's a great question.
Speaker 6 (21:11):
I mean at this point, you know, you know what
I'm thinking about more from this perspective of the FTC
and what it means for the FDC from this standpoint is,
you know, we're seeing legislation on Capitol Hill right now
where folks are saying, hey, wait a minute, this anti
trust function at the FTC, it's duplicative and it should
be rolled into DOJ. And we've seen Chaerf Ferguson out
there really pounded the pavement talking about all these strengths
(21:32):
and reasons why you know, the FDC has this relevant
place and anti trust. But you know, if we're removing
this independence of the FTC and we're not going to
fully staff the commissioners, and really if the FDC is
just proceeding as you know, a tool of the executive anyway,
to me that that really makes the case even more
that the actual anti trust enforcement powers at the FDC
(21:53):
are in fact duplicative of those in place at the
at the DOJ. I think it makes that whole Doughe
consolidation argument a bit stronger for those looking to to
actually meld things together and take two enforcement powers and
roll them into one.
Speaker 1 (22:06):
Oh, that would be interesting. Yeah, you know, I think
it's so interesting because you know, I, like you said,
I've been following these other cases involving term, you know,
firing of commissioners at independent and so called independent agencies,
and you know, I read about I'm really curious about
what it means for Jerome Powell at the FED. And
(22:28):
I think it's so interesting that both Slaughter and but
Doya have said, Look, you know, if if it's legal
to fire us, the president can fire Jerome Powell. And
you know, my my reaction to that is careful, careful
what you say, because you know, I I don't think
they're going to win their cases against uh Persian Trump.
You know, it might be a closer call with Jerome Powell,
(22:49):
just because even the current Justice Department has conceded that
the Fed's monetary policy responsibilities are independent of the president.
But but do take a firm position that the Fed's
regulatory responsibilities fall under the president's you know, jurisdiction, under
the executive authority. So you know, I'm not optimistic that
(23:12):
any of these people will be able to win their
lawsuits if they get fired.
Speaker 6 (23:16):
So yeah, I think you're right. I have to say too,
I'm curious, you know, I think it's definitely true. I
think this is probably your point of view as well,
that there's a Supreme Court in place that certainly has
been perhaps itching to overturn Humphreys or interested in the
idea of overturning Humphreys executor for a long time.
Speaker 1 (23:32):
But you know, I think, you know, is there a
little bit.
Speaker 6 (23:35):
More hesitancy or perhaps a carve out in some way
because the stakes are higher. I think for overturning Humphries
now than they would have been even a year ago,
or I were talking about big stuff that maybe wasn't
you know, at the central you know, underpinning of trying
to overturn that the ruling even just a year agon
hour confronted was a really crazy kind of thing.
Speaker 1 (23:54):
So yeah, And I think it was Gorsech and Thomas
who voted in the Sale of Law case. They in
their descent they said they would overturn Humphries. But I
don't even think you need to overrule Humphries for the
president to win these cases, because the Supreme Court and
Sale of Law basically, you know, said Humphries was just
(24:15):
one of two exceptions to the general rule that the
president can fire anyone in the executive branch. And the
two exceptions are one for inferior officers, which doesn't apply here,
and the second is for principal officers, which these folks are,
but principal officers who don't exercise any executive authority. And
(24:35):
you know, in these cases you have to see in particular,
I think is going to be found to exercise executive
authority because it has enforcement power and it has rule
making authority, and so you can carve it out from
the Humphries exception, and you arguably could do the same
for j Run Powell at the FED, and you could
say the FED has you know, exercises executive powers because
(24:57):
it also has rule making authority and enforcement authority. So right,
I see where all these cases go. They're fun, they're
fun to watch. It's fun. It's like a front row
seat to history for better or words. That's right, Yeah, yeah, exactly,
all right, justin good stuff. Thanks, all right, Matt Schanan. Hell,
let's bring you in to round out the discussion today.
You so, Matt is our TMT policy and litigation analyst
(25:21):
also based in DC. You watched a Supreme Court argument yesterday.
I assume virtually maybe you went, I know, sometimes you go.
Did you go?
Speaker 2 (25:31):
Uh no, Actually I was.
Speaker 7 (25:33):
I was there in the courtroom in the in the
bar seating section right behind the podium, so one of
the best best seats in Washington. A.
Speaker 1 (25:41):
Yeah, that's always it's always fun, except you have to
check your phone. That always gives me a little adjutant.
Speaker 7 (25:45):
It's a little bit of a hassle and uh yeah,
but it's it's so worth it to be you know,
twenty feet away from the justices there watching watching history
be made.
Speaker 1 (25:54):
Agree, So tell us about the case. It's a six
billion dollar FCC program to subsidize tell own in Higstol.
Speaker 7 (26:01):
Even more than that in some years, I think it's
eight eight eight to nine billion. It can reach and
and basically, this is a rural broadband program, a rural
telephone program that the FCC has administered since the nineteen
ninety six Act, and and and and in part even
before that, it's had similar programs in place. But but basically,
(26:25):
a group, an advocacy group brought a legal challenge to
the program and sued in multiple courts of appeals and
said that this program, when Congress passed it, Congress was
was not clear enough in giving direction to the FCC
and how to administer it. And the claim was, this
(26:45):
violates the Constitution, the non delegation doctrine for the FCC
to be given this power basically legislative power by Congress
UH to to administer this this rural broadband program that
collect money from telecom carriers then passes it back out.
And basically the claim was Congress needed to be more
(27:08):
clear if it wanted this program to go ahead. That
argument failed in most courts of appeals, three or four
of them, maybe at least two or three. It succeeded
on bank in the Fifth Circuit by a very narrow vote,
and then this case ended up by before the Supreme
Court because there was a circuit split between the courts
of appeals. And so that was the argument tomorrow or yesterday,
(27:31):
whether the law is constitutional, whether this universal service program
is constitution.
Speaker 1 (27:36):
Just based on the non delegation doctrine. There were no
other like statutory arguments.
Speaker 7 (27:40):
Or anything exactly. This was pretty focused on the non
delegation doctriment. There were two components to it, sort of
the public non delegation doctrine Congress to the FCC. Then
there was a private non delegation doctrine claim the FCC
gave too much power to an administrator, a private administrator
(28:00):
u sac organization that actually does the paperwork in the administration.
And both pieces of that were challenged. The Fifth Circuit
kind of combined them and said, put them together, and
this is this is somehow on constitution. Always strike it down.
Speaker 1 (28:14):
What was your takeaway, I mean from you know, our
sidebar conversations that we've had it sounds like you think
the rule will survive and that there's not a majority
of justices you know, to vote against it based on
either the non delegation.
Speaker 7 (28:27):
Yeah, that's where I that's where I came came away yesterday.
It's hard to see the challenge the FCC's challengers here
getting to five votes. Justice Gorstch clearly feels strongly that
he wants to give new teeth to the non delegation doctrine,
and he's likely to come out against the FCC. He
might have Justice as Alito and Thomas with him, but
(28:49):
like in so many cases, it's the middle of the
court that we're really watching to determine outcomes. And the
Chief Justice, Justice Barrett and Justice Kavanaugh. I really have
a hard time seeing any of them, and certainly not
to two of them joining Justice Gorsic's side on this.
(29:10):
It was a fascinating argument in a lot of respects,
you know, given where the Court has been recently and
cutting back on administrative powers with the undoing of the
Chevron doctrine, uh just just last term and now the
chance to kind of go further and and again cut
away at agency powers and and Paul Clement making the
(29:32):
argument actually in favor of the FCC program, when he
was the one making the argument against agency power in
the Lower Bright series of cases. It just just fascinating
how it all, how it all went. And to see
him going up against Justice gorsic On on the point
was was was just really high level legal advocacy there,
(29:56):
and and and fascinating and and and I thought, he
just you know, I've seen him make very strong arguments
in the past. This was this was you know, one
of his best, I thought, and very convincing that basically
speaking to the conservative justices and saying, look, maybe we
can use the non delegation doctrine to make changes here
in the future, we can reinvigorate it, but this is
(30:18):
not the case to do it. And and I really
think he had a lot of heads nodding and in
agreements with him.
Speaker 1 (30:24):
That's what I was wondering about, Like the you know,
the Roberts and the Barretts and the Kavanaughs, were they
did you get a sense that there's any appetite on
their part to revisit to revive the non delegation doctrine
And it just wasn't this case. But but on the
other hand, they took it.
Speaker 7 (30:39):
Right, right, so they need they had four votes to
take the case when when they when they took it,
they also added a question about mootness, like basically a
way to get out of this, which already signaled, hey,
maybe we don't have four that are real excited about
taking this case. Those three justices, you know, weren't as
clearly on one side or the other as is typical
(31:01):
typically the case. Their questions were more exploratory. And but
and so I think there is openness down the road
if you found the right case. I can imagine Paul
Clement bringing that case. And you know, but and and
and I think there is potential to get to five.
But I don't think it with a program that has
(31:22):
so much history like the FCC program, where the FCC
was effectively drawing from like a common law that it
had established. The justices I think on the whole, where
we're okay and not really worried about the consequences of
if we second guess this one, we're gonna have to
undo a bunch of stuff and we're going to have
(31:44):
a mess on our hands with a whole slew of
statutes getting challenged, and we can go after you know,
statutes in other ways, you know, under the APA, we
don't need to you know, use this non delegation doctrine here.
So I think there there's probably room for it, but
I don't think there's going to be a real big
drive from the justices to use this tool to go
(32:07):
after regulation.
Speaker 1 (32:09):
Got it, And I assume you expect a decision probably
towys En it seems.
Speaker 7 (32:13):
Most likely, unless they make real quick work of it
on some other races. Yeah, it's as possible.
Speaker 1 (32:20):
All right, great, all right, thanks Matt. All right, I
think with that we will wrap up this episode of
Votes and Verdicts. As always, thank you for listening. If
you have any questions about any of the matters we
discussed on this episode, please don't hesitate to reach out
at your convenience with questions. As a reminder, you can
find all of our research on the Bloomberg terminal at
big or on our litigation and policy dashboard at BI
(32:42):
space laws Go, and we also encourage you to listen
to other episodes of Votes and Verdicts on whatever platform
you'd like to get your favorite podcasts. Thank you for listening,
and have a great day.
Host
Elliott Stein
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