Episode Transcript
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Speaker 1 (00:02):
This is Bloomberg Law with June grosseol from Bloomberg Radio.
Speaker 2 (00:08):
A ninety year old legal precedent setting up independent agencies
isn't dead yet, but after the Supreme Court's emergency order
last week allowing President Trump to fire members of two
independent agencies, the effect may be the same. The Court's
nineteen thirty five ruling in Humphrey's Executor said that Congress
(00:30):
in some instances can set up agencies that are independent
from the executive branch and whose members can only be
fired for cause. But in recent years the Supreme Court
has significantly cut back on Humphreys, and last Thursday, over
the descents of three liberal justices, the Court allowed Trump
to fire National Labor Relations Board member Gwyn Wilcox and
(00:54):
Merit Systems Protection Board member Kathy Harris without cause as
their legal challenges play out. My guest is Lauren McFerrin,
senior fellow at the Century Foundation and former chairman of
the NLRB in the Biden administration, tell us about the
Supreme Court's emergency order last week.
Speaker 3 (01:13):
So what the Supreme Court did was stay and order
of the District Court, which had ordered the reinstatement of
Gwynn Wilcox and Kathy Harris, and the removal of Gwynn
and Kathy from office was clearly contrary to statute. The
President is prohibited by both the National Labor Relations Act
and the law governing the Merit Systems Protection Board from
(01:37):
removing people from office except for cause, and no qualifying
cause was given to either of these officials, so the
action was clearly contrary to law. And so the President
kind of took the law into his own hands here
and basically said, I don't care what Congress wanted, and
I don't have to follow Supreme Court precedent, and he
removed them from office anyway. The Supreme Court then stepped
(01:57):
in and on what's called the shadow dockets, which is
supposed to be for emergency relief and emergency orders, indicated
that the President was right to do that, but it
is okay for him to ignore Congress and to ignore
Supreme Court precedent, and kind of went to extraordinary lengths
to keep that result in place because they basically think
the President took a good gamble about their plans to
(02:19):
revisit precedents. So it was very unusual from a court
process perspective. The so called shadow docket is supposed to
be used for, like I said, emergencies. It's typically also
used to preserve the doctrinal status quo, not to overrule it.
You're certainly not supposed to use the shadow docket to
effectively change precedent without the benefit of full briefing and
(02:42):
careful consideration, which is what the descent pointed out. So
it was a procedurally very odd thing to do, but
it certainly sent a very strong signal about where the
Supreme Court is headed in terms of whether it plans
to overrule Humphrey's Executor, which just the decision that had
originally upheld Congress's ability to create positions like this that
(03:06):
can only be removed from office by the President for cause.
Speaker 2 (03:10):
So, according to the dissenting justices, the effect of this
is essentially to overturn Humphrey's Executor.
Speaker 3 (03:18):
I think that will be the practical reads that a
lot of people take away from it. Now. The Majority
did ultimately hedge on that question. The Majority said that
they're not ultimately deciding whether these two agencies fall within
the recognized exceptions of Humphrey's executor. That does suggest that
there still will be some recognized exception, but they signaled
(03:41):
pretty clearly that they didn't think either the National Labor
Relations Board of the Merit System's Protection Board would fall
within that exception.
Speaker 2 (03:50):
Tell us about Humphrey's executor, it's sort of been on
the way out or people have been calling for its
demise for a long time.
Speaker 3 (03:59):
I mean Humphrey's Executive. There's no question that it is
still good law. The case that everyone cites for the
proposition that Humphrey's Executor is on the way out the
door is a case called steal a law, and steal
a law was very careful to say that Humphreys still
is good law and that they were not revisiting Humphreys.
(04:20):
But what they did was that they certainly said they
were not expanding Humphrey's Executor, who encompassed independent agencies that
aren't like the Federal Trade Commission that was the original
subject of Humphreys itself. So they were unwilling to expand
the reach of Humfrey's Executor. This exception that allows Congress
(04:40):
to create entities who leaders can't be removed except for cause.
They were going to expand that exception to a single
headed agency like the Consumer Financial Protection Bureau. But it
is very clear that Humphreys at this point in time,
or at least until this order issued, that Humphreys itself.
(05:01):
But the exception it creates for quasi judicial and quasi
legislative agencies that are structured like a multi member body
like the National Labor Relations Board of the Merit Systems
Protection Board still exists, and that exception is still valid.
Speaker 2 (05:16):
The Supreme Court in recent years has cut back on Humphreys.
I mean, it's still standing, but is it in sort
of chatters.
Speaker 3 (05:25):
I think it's safe to say that the Court has
constrained its reach and has at times, you know, one
or two justices in a separate opinion or indicta in
a majority opinion, have called into question its continuing viability. Basically,
this notion that there can be an entity, even if
(05:48):
it is structured like a multi member body, even if
it is a body of experts that's supposed to make
expert decisions, that there could be an entity like this
that would not be sufficiently executive in the nature of
the powers that it is exercising, such that its leaders
should not be removable by the President. I mean, that's
(06:10):
the core issue here for proponents of the unitary executive
theory on the Court is that any entity that is
exercising any level of executive power should be removable from
office by the President. And the Court has certainly said
signals in recent years that it thinks the scope of
the universe of agencies that might actually not exercise any
(06:32):
executive power is minimal or non existent.
Speaker 2 (06:37):
The justices took pains to point out that this doesn't
affect the FED. The FED is different.
Speaker 3 (06:45):
Yes, that was a really strange little red flag in
this decision. It kind of comes out of nowhere in
the decision. They might as well have basically said, oh,
by the way, President Trump, please don't take this order
as a green light. You can fire the chair of
the FED. And they carved out the fad in like
two sentences. What it wasn't an issue in the case.
(07:07):
And they carved out the said by making what is
basically a factual observation about the set, which is that
it is uniquely structured and it has a distinct historical tradition.
That is actually true of many independent agencies right now,
my own agency that I used to work for, the
National Labor Relations for that is certainly true. It is
uniquely structured, and it has a distinct historical tradition, But
(07:30):
that doesn't speak to the reasons why the FED is independent,
which are fundamentally similar to the reasons that other independent
agencies are independent. The reason that Congress chose to create
independent agencies is because it wanted to have entities, even
entities within the executive branch, that made decisions based on expertise,
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and that made decisions and were capable of making decisions
that might be in the short run politically unpopular, but
in the long run in the best interest of the country.
And it's very easy to see, of course, how that
plays out in the context of the FED, and particularly
when the FED is wearing its monetary policy hat, it's
very easy to see why it's going to have to
(08:15):
make decisions that are short term politically unpopular but long
term beneficial to the country. But the SEED is not
unique in that regard. And one agency that leads to
my mind, for example, is the Consumer Product Safety Commission.
Sometimes it is very politically unpopular to find a product
to be unsafe, to pull a product off the market,
but it might well be in the long term public interest.
(08:38):
So there's not something that makes the FED distinguishable in
a principled manner from other independent agencies when it comes
to the reason for its independence.
Speaker 2 (08:47):
Let's say the Supreme Court does get rid of Humphrey's Executor.
What might the repercussions be, Well, it would.
Speaker 3 (08:54):
Depend on how the Supreme Court did it. There's a
lots of people who predict about these things, and there's
a group of predictors to say that they will basically
get rid of Humphrey's Executor, but carve out the set,
or at least the set in its monetary policy role.
I think there's an argument to be made that they
could also kind of fl the baby in different ways.
I think one of the most difficult challenges that we
(09:16):
will have in a post Humphrey's Executor world if Humphrey's
Executor is swept off the book, is what to do
with agencies that are primarily adjudicative, you know, that do
business as courts basically. And it's very hard to imagine
how an agency that's sposed to function as a court
will function when it's adjudicators can be fired for the
(09:36):
outcome of individual decisions. So I think there's potentially a
chance that the Court could also look at the various
functions that agencies are performing and say these are executives
and these are not executives. And this order, being a
preliminary order, doesn't delve into that at all. But you
could have a course that says, well, if an agency
is making rules, it is by nature executive, because rulemaking
(09:59):
is an executive function. But leave open the question, for example,
of whether if an agency was truly just a court system,
you know, like the tax courts or something like that,
whether that potentially could be treated differently. So I think
it's a question of whether the court will just wipe
Pumper's executor off the books altogether, with some possible car
about for the FED and monetary policy, or if it
(10:21):
will kind of pick and choose which agency functions it
seems to be so executive in nature that the president
must be able to control them.
Speaker 2 (10:31):
And as far as your old agency, the NLRB, what
effect would it have if the president is able to
fire board members without cause.
Speaker 3 (10:41):
I think it's really hard to overstate how different that
would be from the way that the agency operates now.
The NLRB and many other adjudicative agencies. Like I said,
the NB does business primarily by deciding cases like a court,
and we as judges never had to worry about whether
(11:02):
our decisions were going to be politically popular or politically unpopular,
or whether we were deciding a case in favor of
somebody that the president was friendly with or someone that
the president was not friendly with. I think you can
see this playing out totally differently in a world where
board members, I eeds, the judges could be fired for
(11:22):
the outcome of a particular case. So it will go
from being an adjudicator that jealously guards the integrity of
its adjudicative process and tries to treat like cases similarly
whenever possible, to being a fundamentally different and political entity
where judges are making decisions at the peril of their
(11:44):
job based on their predictions about whether they'll face backlash
for them or not.
Speaker 2 (11:48):
Thanks for joining me, Lauren. That's Lauren McFerrin, senior fellow
at the Century Foundation. Coming up, Trump versus Harvard. This
is Bloomberg. Donald Trump has been waging a campaign to
pressure elite colleges to make a wide range of policy changes,
and Harvard University, the nation's oldest and richest university, has
(12:12):
borne the brunt of it.
Speaker 1 (12:14):
They have fifty two billion dollars as an endowment. They
have fifty two billion dollars, and this country's paying billions
and billions of dollars and then give student loans and
they have to pay back the loans. So Harvard's going
to have to change its ways.
Speaker 2 (12:28):
The administration has already moved to freeze more than two
point six billion dollars in federal research money and block
Harvard's ability to enroll international students. The latest escalation, the
administration is moving to cancel all remaining federal contracts with Harvard,
worth an estimated one hundred million dollars, and Trump is
(12:51):
also threatening to divert three billion dollars of grant money
away from Harvard and give it to trade schools. My
guest is Jody Farie. He's a partner in the higher
education practice at Church Church, Hittle and Antrim. Let's start
with the Secretary of Homeland Security, Christie Nome, revoking Harvard's
(13:12):
certification to host international students. And it didn't take long
for a judge to use you a temporary restraining order
to stop that from going through. What was Harvard's argument
against what the Department of Homeland Security had done.
Speaker 4 (13:26):
I think what Harvard's position was is that that the
very act of doing that was you know, quashing their
First Amendment free speech rights because of the nature of
what they were saying. You know, they were indicating Baby
administration were indicating that Harvard was, you know, fostering and
(13:48):
aiding and abetting this anti Semitic behavior there on campus.
And you know, and I think Harvard's saying, hey, you're
basically holding us hostage, which is in fact what that is.
It is a you know, holding an institution hostage and
unless they've been to the will of an administration and
you know, and that's not.
Speaker 3 (14:08):
Their right to do. But there was no process to
it at all.
Speaker 4 (14:11):
Right, it was it was a swipe of the pen.
It was a very sweeping action taken because what Harvard
was being asked to do was to kind of fling
open the books for a fishing expedition into the you know,
acts and actions and behaviors and academic files of seven
(14:32):
thousand international students without any kind of probable cause to
do so. Right there was they were being asked. It
was just such an overreach, such an overbroad request, and
that is I think part of what Harvard was saying,
you can't do this. You can't just shut this process
down just because we wouldn't bend to the will of
(14:53):
an inappropriate request in the first place. You know, with
no due process whatsoever.
Speaker 2 (15:00):
Due process claims and claims of not following the Administrative
Procedures Act seem to be frequent complaints against Trump administration actions.
Speaker 4 (15:11):
I think that's probably the most shocking part of what
we're seeing here, is that these things are happening with
a swipe of a pen instead of any kind of
due process. That is is sort of foundational to who
we are as a nation. Right, So we're going to
with a swipe of the pen, we're going to you know,
(15:32):
take away billions of dollars in research funding, no matter
what it was for, right, no matter the importance or
the value of it. We're going to threaten your tax
exempt status without any without any process, you know, with
without the even the notion that you lose tax exempt
(15:52):
status for a very finite number of reasons after a
very lengthy process. But that's been threatened, you know, taking
away a civas registrations with no process whatsoever. Doing these
things by a swipe of the pen is a really
dangerous government overreach, and Harvard is an easy target. It's
(16:15):
not something that the American public is likely to rally behind.
It's not not something that everyone in America Harbor's great
warm feelings. But the actions being taken here are dangerous
because with no DO process whatsoever, if this can happen
(16:36):
to Harvard, and this is what I think is so
important for folks to remember, this can happen to three
nine hundred non elite, non selective educational institutions that are
doing really important work in communities across the country, I
think that's what's important.
Speaker 2 (16:56):
So the blocking of the grants was the first thing
I believe that Harvard took to court. But I don't
think those grants have been restored.
Speaker 4 (17:06):
Not only have they not been unfrozen, but they've they
you know, they've also been told not to apply for
new grants. And so I think I used the term earlier.
It is my opinion that we are in a hostage
situation here and that amount of funding for really critical
research in progress is creating a hostage situation where that
(17:30):
amount of pressure, and you know, Harvard is doing everything
in their power to backfill that with private, private funds
but that is not going to last forever. Right, That's
not a forever solution. That is a temporary solution to
an existential problem. But those who are going to be
affected by that, that's all of us, right, That's that
(17:53):
is all of us. So yeah, no, those, to my knowledge,
those have not been unfrozen.
Speaker 2 (17:59):
The Trump administration is moving to cancel all remaining federal
contracts with Harvard, worth an estimated one hundred million dollars,
and in a letter seen by Bloomberg News, Federal Acquisition
Service Commissioner Josh Gruenbaum, in directing federal agencies, alleges that
(18:19):
Harvard has continued to engage in race discrimination, including in
its admissions process and in other areas of student life.
And he referred to alleged discrimination at the Harvard Law
Review and a federal task force did recently call out
the Harvard Law Review's award of a sixty five thousand
dollars fellowship to a protester who faced criminal charges for
(18:43):
assaulting a Jewish student on campus. How does that all
fit in?
Speaker 4 (18:49):
Well, I think you're asking, though, is there a way
of canceling all contracts based on one that may have
been inappropriate? Right, so again, and what these are are
sweeping overreaches. So I think in the letters that Harvard
has responded, they have often said, we can do better.
(19:12):
We recognize we can do better, but to cancel everything
based on one with a swipe of the pen, that
is an overreach. And so it was the same way
with admissions, and Harvard's response was, we can do better.
Let us work. But this is a negotiating tactic. This
(19:33):
is what we're seeing here. Is not a direct request
to remedy a particular situation that may or may not
be inappropriate. What it is is a negotiating tactic to
try and accomplish the whole slate of requests that were sent.
And it's just it's a way of increasing pressure on
(19:53):
Harvard to bend to the will of an administration that
wants certain things right, and so far Harvard has been
unwilling to do that. So I consider this just one
more negotiating tactic. Though it may have been an instance
of you know, something that may in and of itself,
when you cancel everything based on that, that's too much.
(20:15):
You've gone too far.
Speaker 2 (20:16):
You mentioned the president wants to revoke the school's tax
exempt status. Tell us about that and what kind of
roadblocks it might face.
Speaker 4 (20:26):
So there is a there's a well worn path for
revoking tax exempt status, beginning with a you know, an audit,
an IRS audit of the whether or not the institution
has retained its tax exempt purpose, has done its appropriate documentation.
You know, it's done it, it's tax filings, it's not
engaged in inappropriate actions, you know, political actions and other
(20:52):
things like that, so inappropriate lobbying something, you know, those
kind of things. But what has happened here is that
the administration has just threatened to just revoke it, as
if that is a thing that can be done, because
they're indicating that Harvard's no longer serving its tax exempt purpose.
But the Harvard's tax exempt purpose is education. And it's
(21:15):
difficult to make the argument that that Harvard is no
longer engaging in its tax exempt purpose education, you know,
when it very clearly is. And so again, I think
these mounting pressures are negotiating tactics. And you know, were
it not for the fact that Harvard is well enough
resourced to defend itself, they might be quite effective. And
(21:37):
we've seen that other places. It concerns me for less
resourced institutions that wouldn't be able to necessarily defend themselves.
I mean, this is an extraordinary slate of a tax
against a particular institution. And as I said, Harvard is
you know, it's an easy target, not one that's going
to elicit a load of public sympathy, but it should
(22:01):
because of the risk to lots of other institutions that
stand in the same stead. So, for example, the tax
exempt status, if you can revoke Harvard's tax exempt status,
which was granted to them for the purpose of education,
then you could do that to a smaller private institution
(22:21):
for not bending to the will or to the request
of an administration. There would be no difference, right, So
every private institution in the country holds a tax exempt
status just like Harvard does. And if we can take theirs,
then then that extends to those who are far less
well resourced and less able to withstand those kinds of attax.
Speaker 2 (22:44):
Coming up next on the Bloomberg Law Show, I'll continue
this conversation with Jody Ferris and we'll talk about the
concerns of other educational institutions. I'm June Grosso. When you're
listening to Bloomberg, the future of nearly seven thousand and
international students at Harvard University hangs in the balance this week,
(23:05):
with a hearing set for Thursday to determine whether a
temporary block should be extended. Last week, Judge Allison Burrows
temporarily blocked Trump's move to bar Harvard University from enrolling
foreign students.
Speaker 1 (23:20):
Part of the problem with Harvard is that they're about
thirty one percent, almost thirty one percent of foreigners coming
to Harvard. We have Americans that want to go there
and to other places.
Speaker 2 (23:32):
The administration claims that Harvard failed to provide sufficient information
about misconduct by foreign students, and is pushing for changes
to the university's governance, admissions, and faculty hiring, as well
as its handling of anti semitism on campus. I've been
talking with Jody Ferris, a partner in the higher education
(23:53):
practice at Church, Church, Hiddle and Antrim. So, Jody, have
you gotten calls from any of you your education clients
with concerns based on what's happened to Harvard?
Speaker 4 (24:05):
I do you know? I just got a call from
a client last Friday who had watched with concern as
Harvard's see this program was revoked their ability to enroll
international students. And I have a client that has a
similar sort of ratio. Harvard has about twenty seven percent
international students, and I represent an institution that has a
(24:27):
very significant number of international students. And you know, and
they reached out just last week, and that's one example,
and you know, their concern was what can we do
kind of proactively? And my advice to them was stay
out of the crosshairs. Honestly, you are not resourced as
(24:49):
Harvard is. You don't have that kind of a financial
depth to be able to withstand it. And you don't
want to tell your clients to fade into the background.
You know. I'm not attorney who normally would urge a client,
you know, to fade into the background. But in this instance,
the best thing that we can advise clients to do,
I think, is to say, what's your processes, what's what's
(25:11):
on your website, keep yourself out of focus, out of
the gaze of the administration. Because most of the institutions
that I represent could not withstand that kind of a
of a challenge, you know, that the mounting pressure of
you know, of a variety of attacks coming at them.
So yes, I have clients who had international students whose
(25:33):
student status was revoked. And that's that's the crazy part
of this is it's an ongoing battle where these things
go into effect and then you know, judicial resources are
exercised and then we have an injunction reversing it and
it gets stayed or you know, and what happens is
(25:54):
is that in the meantime there are things that happen.
So I had clients who had international students whose status
got revoked, and before the injunctions even came, you know,
stopping that and reversing it, before the administration reversed course
on that, several of these students had already left the
United States in April, you know, when their semester was
(26:18):
done in May. And it's such a shame, right, It's
really affecting institutions across the country who are watching the
fight that Harvard's engaged in.
Speaker 2 (26:29):
So do you think there would be more sympathy from
the public if the attack wasn't on elite institutions of
higher learning?
Speaker 4 (26:38):
Yeah, I think and I've kind of said this already,
but you know, I think that while Harvard might not
engender a lot of sympathy across the United states, or
or be a relatable institution in communities across this country.
There are colleges that are fulfilling these same purposes, right, educating,
(27:00):
becoming economic anchors of the communities, and they are impacted
by these things, very much impacted by these things. I
saw this morning. One of the latest things is, you know,
if they're going to take away the funding, they're going
to redirect it to trade schools. And that's fine. But
what you know, trade schools are fine. But what we
(27:22):
need to recognize is that this is a yes and right.
Private higher education is important. Public higher education is important.
Trade schools are important, but we shouldn't be held hostage
to an administration that wants institutions to bend to their
will or else. Right, if these actions are appropriate, then
(27:42):
then they would be appropriate. Not because you want to
hold an institution hostage or force it to bend to
your will. It shouldn't be tied like that. And so
what I guess, what I just always want to end
with whenever I'm doing an interview is just an urging
of folks to remember that as goes Harvard, or as
(28:03):
goes elite, IVY League or IVY plus institutions, still goes
thirty nine hundred other colleges and universities across the United
States who are and will continue to be impacted by
the very same actions that are happening in the upper
echelons of higher education. So it's far more important, I
(28:24):
think than maybe the average American citizens realizes, because the
implications are really staggering for what this could mean. The
other thing that I would would say is about the
international students. I want folks to realize that the world
is watching. The world is watching, and while the administration
(28:44):
may have recently indicated that they're not sure, we really
are receiving the best and brightest from the world. We
are and we have been. During the first Trump administration,
we saw a market downturn in international students coming here.
They many of them redirect to Canada or to Australia.
And I personally had students back then whose parents and
(29:07):
grandparents urged them not to come back to the United States.
So I worry that on the international student front, we
will feel the effects of these decisions for generations, no
matter how that all turns out. Now, we've already sent
a message right to the world that we're not sure,
We're real interested in having international students here, and we
(29:30):
don't recognize the contributions that they've made and continued to make,
not just to our economy, but really to science, to
our industries of all kinds across this country. And I
worry very much about the message that we've sent to
the rest of the world.
Speaker 2 (29:48):
There have any of these investigations so far come up
with hard proof in numbers. Perhaps, I know, the EEOC
launched an investigation into Harvard's hiring and whether it unlawfully
hires faculty based on race and sex.
Speaker 4 (30:08):
In the Commissioner's Charge about you know, where they indicated
that the EEOC was going to investigate because Harvard has
obviously been engaged in discriminatory hiring practices. So the Commissioner's
Charge shows all of this data right that Harvard had
put on a public dashboard and in its twenty twenty
(30:31):
four annual report, and Harvard's, like lots of institutions, like
my own clients in the past, have had, you know,
an annual report, and they show faculty demographics and development
and diversity and who you know got tenure and different things.
And so in Harvard's twenty four annual report, twenty twenty
four annual report. They showed the demographics, and in this
(30:53):
EEOC charge, it says, based on Harvard's twenty twenty four
Annual Report on Fact Development into Diversity, there is reason
to believe these trends show an underlying pattern or practice
of discrimination based on race. So what they're actually saying, right,
that is the leap it makes here is the data,
(31:16):
and based on that report, there is reason to believe
that Harvard has engaged in a practice of discrimination. But
what you're saying, if you just look at the data
and then you say, without more, there's reason to believe
that you've engaged in inappropriate hiring, is that you don't
believe there were that many minorities who were qualified to
(31:37):
work there, And that is discriminatory thinking, right. So it's
strange to me how that is someone considers that an
appropriate basis upon which to launch an EEOC investigation. Because
I did my doctoral research on this very thing, and
I can give you thirty seven other reasons why Harvard
(31:59):
may have, you know, an increase in diversity among their faculty,
and I can give you lots of reasons why it's
important to do so. But they've made the leap an
assumption that if you increase the rate of faculty diversity,
you've probably engaged into discrimination against white, straight folks men,
(32:21):
because otherwise you wouldn't have this data, you wouldn't have
this kind of diversity. But that that itself is discriminatory,
and so that that is just a point that I'd
really like to make, is that that particular EEOC investigation
to me, seems like it's very logic. It's based on
discriminatory logic in the first place.
Speaker 2 (32:41):
We'll have to follow this and see if anything comes
of this EEOC investigation. Thanks so much, Jody. That's Jody
Feris of Church, Church, Hittle and Antrum. And that's it
for this edition of The Bloomberg Law Show. Remember you
can always get the latest legal news on our Bloomberg
Law Podcast. You can find them on Apple Podcasts, Spotify,
(33:02):
and at www dot Bloomberg dot com, slash podcast Slash Law,
and remember to tune into The Bloomberg Law Show every
weeknight at ten pm Wall Street Time. I'm June Grosso
and you're listening to Bloomberg