Bloomberg LawAlex Hontos, a partner at Dorsey & Whitney and a former Justice Department attorney, discusses the White House rescinding the freeze on federal grants. David Lopez, a professor at Rutgers Law School and the former General Counsel of the EEOC under President Obama, discusses Trump’s order that the government recognize only two sexes. June Grasso hosts.
This is Bloomberg Law with June grosseol from Bloomberg Radio. President Trump plunged the country into chaos, a cruel, nasty, and illegal chaos.
Senate Minority Leader Chuck Schumer said that after President Trump's Monday order freezing all federal grants, loans, and financial assistants, his office was flooded with calls from panic people about programs that support everything from nonprofits to school boards to police departments. The blanket freeze caused mass confusion and chaos across the country, with the potential to disrupt a massive segment of federal spending that's relied on by local government, schools, and police departments. New York Attorney General Letitia James was one of twenty two Democratic state ags who sued the Trump administration on Tuesday.
Not only does this administration's new policy for people at risk, but it is plainly unconstitutional. The president does not get to decide which laws to enforce and for whom.
That same day, a federal judge in Washington temporarily halted the order, and then, in the most significant setback and the biggest about face to date of the president's ten day old term, the White House rescinded the order today. Joining me is Alex Hontos, a partner at Dorsey and Whitney and a former Justice Department attorney. Alex how broad was the scope of this order?
So the omb order issued on Monday by the administration was exceptionally brought, covering all forms of federal assistance, with the exception of a few carve outs in the order, so Medicare was carved out, for example, but notably Medicaid was not mentioned. So it covered on its face trillions of dollars of federal spending. That's about as broad as you can get.
In his first administration, Trump issued a Muslim travel ban and it took three tries, three different versions before it got approval from the Supreme Court. Is there a way for him to rewrite this and try again.
Well, I certainly expect that this will not be the end of the administration's efforts to root out programs that it believes, you know, should not be in federal spending policies, procedures, that kind of thing. So I think they're going to try again. But what is striking about this is instead of targeting specific programs, they did a blanket pause and you know, normally you would do a census of specific programs, first identify programs that were perhaps against your policy objectives, and then work those programs. And that's the angle that they came at this from. They might change that, though, and we might see that next, and in fact that's probably what is coming next.
So then they would actually have to do some work to figure that out.
Yes, that's right. So there is going to need to be a census, if you will, within the federal government for kind of a cataloging of the programs. And boy, are there a lot of them out there. Thousands of programs and offices and grants and contracts and things of that nature that will need to be assessed, analyzed and then sort of reviewed for whether they're compliant or not compliant with the administration's objectives. So it's a herculean effort.
So it will take a while.
It'll take a while.
That's right.
Let's talk about the order itself and the problem with it. The legislative branch is supposed to be the one that decides where the money goes. Is that the basic problem.
That's one of the problems.
That's right.
So under the constitution, the power of the purse. That is the legislative branch's purview, not the executive branch. The executive branch is supposed to execute the laws. Congress gets to dictate where funds are appropriated and stand up certain programs. So that is one of the fundamental challenges that the administration will have if it's trying to defend this kind of behavior in court. Courts are going to be asking questions about separation of powers and authority. There's also you know, lawyers in MySpace this week had a dust off the Empowerment Control Act of nineteen seventy four and kind of go back to the Nixon era, and you know, look through the lens of whether the president has an authority issue when it comes to spending money that Congress has directed be spent, and certainly the legislative branch. Congress believes that when it says to spend money, the president has to do that. And so there are a whole host constitutional, statutory of potential hurdles that the administration is really going to have to get around to effectuate this policy. And those are not even taking into account the political consequences of some of these actions. And you saw that occur shortly after the Omb memo was issued, when red state governors Blue state governors, we're both howling about what this might mean for state budgets. You know, large for profit clients of mine were very concerned about what this might mean for them. Higher education and university clients of mine were equally concerned. So you actually had a broad base of the American economy that really was concerned. So you have multiple challenges if you're the administration. One is a straight legal challenge and that is a fraud area and be played out in the courts principally. But the other is a policy and kind of political issue related to this. And I think they bid off more than they can chew here in rolling this out in the way they did, because they certainly galvanized opposition in an incredibly fast way. I'm not so sure that the honeymoon for this administration is over, but it might be, and this might be the beginning of the end, at least of the honeymoon for the administration.
How much discretion does a president have not to spend the money that's been appropriated by Congress? I mean, is that a settled issue?
Yeah, So it depends the lawyer's favorite answer, right, So, certain programs direct the expenditure of funds. If a statute directs the expenditure of funds, the president's ability to not spend those funds is significantly constrained. You know, there can be some timing issues and that kind of thing where the president might have some flex ability, but if the president is directed to spend, that's weak round for the president to try to defend and say I don't have to spend now. In other types of programs, where an appropriation is made, say to an agency the Defense Department, to further some general objective or innovation or something like that, where the Congress has not been crystal clear about who and what and why the expenditures will go out, the executive might claim to have more authority to have discretion to choose who gets those grant awards, for example, or contract awards, but there are still regulatory overlays that would apply even in that context as well. So while there is discretion at some level, it's cabined in many ways by statutes of general applicability. So on the government contract side, there's a Competition and Contracting Act where basically competition for government contract towards is the general rule. Another example is the Administrative Procedures Act, where if the agency is going to do something and it falls within the purview of the APA, it has to do it in a certain way.
Right.
So you have these general statutes that may confine presidential executive discretion. You have the specific statutes that may develop or create a particular program that would have limitations on presidential discretion. And you have both of those things that will be I think used by certainly adversaries of the administration's attempts, those affected by the administrations attempts to change grants or cancel grants. Those things, they will be leveraged, and there will be arguments in court about whether, in a given context or the issuance of an memo, perhaps the president overstepped.
Other presidents have tried to get around this very issue before, have any of them been successful.
I don't know that any other president has done what the president tried to do this week. And the idea of sort of stopping everything, which is a bit overblown June, but not that much overblown that I can't think of a time when another president has tried to do that. I do think there's some interesting parallels, and I want to, you know, think about a little bit during the Biden administration. The Biden administration somewhat famously tried to use federal contracts as a vehicle for policy objectives. So, you know, very common example is the federal contractor vaccine mandate, where the Biden administration was trying to require that anyone who was a federal contractor had to have a vaccinated workforce. Another example that President Biden tried was the government contractor minimum wage. Now, both of those efforts were attacked in the courts by constituencies affected contractors' states that basically said the president lacked the authority to take those steps. And there's a bit of a mixed bag, but by and large, the courts agreed with those challenges and said that President Biden didn't have the authority to use sort of contractual terms with governmental counterparties contractors for example, to implement those policy objectives. That existing law did not allow him to go that far. And so I think you're going to see a lot of that authority that was used against President Biden's initiatives, or at least some of his initiatives sort to turn back around now as a basis to challenge this and future efforts by the Trump administration to sort of do the same thing but just to effectuate different policies.
During his campaign, he vowed to abolish the Empowerment law altogether. So if he was able to do that, let's just say he's able to do that, he's able to get the votes. Does that eliminate his problems here or not?
It doesn't eliminate his problems. He's got two problems on that. One is the statute itself, the empowerment Statute itself, So he would have to get that repealed, which would require congressional action more substantially changed. So that's that's a big if. But even if that could happen June, you still have and you will have deployed constitutional arguments that you know, fundamentally, the power of the purse is a core legislative function, and the idea that the legislature appropriates funds and you know, decides how much is spent in the United States, that's pretty clear, I think from the text of the Constitution that's what that's about. And if it's possible for a president to accept the appropriation from Congress and just not spend it at all. That seems to significantly erode the constitutional protection afforded by the spending costs, and so I think there will be challenges to this kind of regardless. I think you're going to see challenges raising statutory and constitutional challenges to the president's authority if that is something that he presses.
Thanks Alex. That's Alex Hontos of Dorsey and Whitney. Coming up next, the impact of Trump's executive order recognizing only two sexes. I'm June Gross when you're listening to Bloomberg.
It will henceforth be the official policy of the United States government that there are only two genders, male and female.
President Trump's order on day one directing the federal government to recognize only two sexes is bound to draw legal challenges, clashing with recent interpretations of a US Supreme Court case that cemented anti bias protections for LGBTQ plus workers. The boss Doc v. Clayton County decision was the foundation for agency actions like the eeoc's Harassment Guidance addressing gender identity protections, which advises employers against misgendering and barring employees from using the bathrooms fitting the gender with which they identify. Trump's order addressing so called gender ideology extremism is part of his broader push to roll back Biden era diversity, equity and inclusion policies. Joining me is David Lopez, a professor at Rutger's Law School and the former General Counsel for the EEOC under President Barack Obama. David, what does this order on only two sexes actually do? I mean, what does it direct the federal government to do?
Well? I mean, first of all, the executive order is to status to the executive Orders, so it can't change existing law and it can't change you know, the boss DOOC decision. But it basically requires that the federal government act consistently with the order in terms of recognizing only two sexes and really erasing you know, transgender and other non binary identities. Right. And so that has, in turn, I think, cascaded through the federal government in terms of their actions in terms of you know, even allowing individuals to identify their pronouns in their message signature. And then I think ornatency like EOC, I think probably more damaging is that it really places and center as a priority, you know, to address issues related to the executive order, and of course they cook at all in the protection of women. But you know, basically the first statement of the acting share of the it was, you know, basically identified you know, a couple priorities sort of anti dei and then sort of this issue of women being compelled I guess to go to restrooms with transgender individuals. And you know, certainly those are not anywhere near the top of the type of discrimination that POLKSI out in the field offices. It's just an ideologically driven agenda, so that has actual, cansible material consequences.
So in the Biden administration policies, did they protect workers from misgendering and allow them to use bathrooms that aligned with their gender identity?
I mean, I think what's important remember is that, you know, Boston came out a few years ago and Boss Stock expressly ruled that the prohibition against sex discrimination embraced sexual orientation and gender identity, and that the courts have been sort of working that through. But I think in the interim, I think it's important to remember that the Eleventh Circuit, which is one of the most conservative circuits, you know, ruled that misgendering someone deliberately over time does constitute harassment under Title seven. And then the Tenth Circuit upheld a jury verdict, a very large story verdict and ruling by during the Western District of Oklahoma and not necessarily regarded as you know, the most liberal part of the country on behalf of a transgender professor who is then my tenure. And so what that illustrates to me is that when people look at the law and they look at the fact and the injustices that people are suffering based on gender identity, both the law and factor on the site. So what the Biden administration did is, you know, when it issues guidances, I mean they don't invent stuff, right, They basically what the policymakers do is they look at, hey, what if the courts decided, what are the issues out there? What's the logical reading of the US Supreme Court's decision and stock And that's what they include in the guidances. Right. So, again, an administrative agency like the e SC when it issues a guidance or issue to technical assistance, they can't make the law. I mean, they don't make the law. They give basically their best, you know, the agency's best interpretation of the law based on what the courts are doing, right, And they do that so that employers understand their responsibilities and employees understand the rights and employee wants to contest it. They do all the time, you know. Unfortunately, the guidances aren't always deferred to by the courts, and sometimes the courts you know, go against them completely right, But what the EESC is trying to do is it's trying to provide a mechanism for the good faith employers who don't want to discriminate.
The Biden administration. EEOC policies. Do they test the boundaries of the law or were they clearly within what the courts have said?
Well, they're completely consistent with what the courts have sat up right, And I think what's happening now is that this whole anti transgender movement they're looking for, you know, kind of carveouts to argue that what the Supreme Court said and Boss Stock they really did not mean. I mean, Boss Stock is a decision that related directly to gender identity. The gender identity case was actually an EEOC case, the Harris Funier Holmes case, and there's really no language in there that kind of supports a carve out, and so what's happening instead is it's sort of like this, you know, political movement that is funded by millions and millions of dollars, and you saw it first in the campaign, and you continue to see it that you know, really kind of attacks at its core. I think what the Supreme Court did, and it's really really important to remember, really important to remember that, you know, the EOC participated as a meekus and several of the cases that addressed issues of sexual orientation and gender identity. As I mentioned, a gender identity case that went to the Supreme Court was the Harris Funeral Homes case. Right, So that was one of the three that were part of the sort of the Boss Doc trilogy. And this happened at the beginning of the first Trump administration. The first Trump administration would not defend the e SC position and actually switch sides at the Supreme Court and actually ended up on the losing side of the case. And I would also say, you know, frankly on the losing side of history and morality. Right. So this is part of a consistent track record, and you know, right now what they're trying to do is by executive FIAT try to you know, almost like gaslight people and are thinking that the law is when it's not. But you see these decisions. You see the Supreme Court, you see the Eleventh Circuit, you see the tenth Circuit that goes really in the opposite direction.
The EC let's say, issues guidance under the Trump administration, will the guidance itself be challenged in court?
Well, I mean, I think you said, you know the guidances, and you know, guidance can mean different things. Guidance could be something, you know, actually a policy guidance that's issued by the Commission after a vote, or it could be you know, sort of a much more modest technical assistant that is issued by its Office of Legal Counsel. And so I think certainly the Biden administration you saw, you know, really numerous challenges to both the harassment guidance but also to the regulations under the Pregnancy Workers Fairness Act. So it's not uncommon the challenge of guidance in the courts. I mean, I think a lot of people have to ask about what the ultimate purpose is and the ultimate endgame in terms of challenging the guidances, because what's going to happen is that the courts are going to just you know, look at the statute with the case on make their rollings based on that.
At the end of the day, the Department of Justice is already backing off its defense of the EEOC in a lawsuit by seventeen republic and led States over its twenty twenty four workplace harassment guidance. So that's the first example I guess of what the Trump administration intends to do.
Yeah, I mean, I think that's also consistent with the executive order. So you know, on one hand, an executive order cannot make law, but an executive order can basically direct the conduct of I would say cabinet level agencies like the EOC is kind of falling in line on this or not the agency, but the acting chair of the EOC is falling in line and this also, And I think that's what you can expect, right. I think that it's basically almost like throwing in the towel on this guidance. But the interesting thing is that given what I regard as unlawful terminations of Commissioners Charlotte Burrows and Jocelyn Samuels last night, BOC has left out quorum and that guidance is still good guidance, right, and so we'll see how this plays out, right, But I think what's really important to remember again is that the Supreme Court has ruled. So you know, a lot of this sort of satellite litigation around the guidance center around the EEC trying to give its best reading of the Supreme Court's decision and other court decisions across the country. You know, at the end of the day, if the EEC has turned into a zombie agency, or if the you know, Department of Justice Civil Rights Division has said that they're pausing all litigation and investigations, you know, you have a private right of action, You have the private bar out there. You know, people are still bringing cases under this, and I have faith in our federal courts. You know, I tell my students, it's like, you're not going to love all of these decisions, and you're gonna hate some of them, and some of them are going to just stly piss you off, right, And you know there's some judges that will often almost rule like they work for the administration. But I just think you only have to look at what the Elements Kit did and what the ten Circuit did, and about regular folks coming out in Oklahoma here in the fact and saying, hey, what happened to this infessor? That's an injustice And not only is an injustice if you look at the jury verdict, they considered it an outrageous injustice. Right. So, I think when people hear the stories and hear the narratives instead of you know, get kind of caught up in the gas lighting and the sort of right wing media bubble. You know. I think both the courts and the people respond consistent below and consistent with I think humanity.
Let me ask you one thing about Boss Stock. And this is a Supreme Court that has overturned precedent. Suppose a case involving misgendering or the bathroom use, whatever comes before this Supreme Court. It's a different Supreme Court than heard the boss Stock case. Will the boss Stock case still be recognized as precedent.
I think they're going to firm Boss Stock. You know, I've been wrong before. I err on the side of last half full, but I think boss Stock is going to be okay. I mean, I think there may be some issues that come up with respect to religious exercise, But if you remember in the Harris Spunier Holmes case, they raised the Religious Freedom Restoration Act defense and they were basically smacked down by the Sixth Circuit. And I think they recognized that this was kind of a road to nowhere, and they didn't raise it in the Supreme Court. And so you know, there certainly will be litigation in that area. But in terms of coming back and reversing Boss Stock, I'm hoping it doesn't happen. I actually haven't heard of being a fairy s effort to do that, but you do hear about, you know, these sort of carveouts with respect to restroom usage or to the exercise of the employer's religious liberty. So I think there's certainly been more litigation, but I with hope the boss Stock is said Boss Stock. Yet you also have to understand the politics here is really the politics of penching down because the transgender community is not particularly a large voting block, and they really depend on really raising their voices, but on the allyship of people of good conscience. That certainly Boss Stock was a historical decision with respect to sexual orientation, and you know, it was really an effort to kind of put the court on the right side of history. I don't see boss Stock being reversed. I just think that it's an extremely popular decision.
Stay with me, David. Coming up next, Trump's unprecedented firing of two EEOC commissioners. You're listening to Bloomberg. President Donald Trump has fired two Democratic Equal Employment Opportunity Commission members in an unprecedented move that undercuts the Democrats voting majority on the board. It leaves two seats on the five member civil rights panel to be filed by nominations from the new administration. The firings contradict the historical precedent of leaving commissioners in place at the independent agency. Both have said they'll explore their legal options. I've been talking to David Lopez, a professor at Rutgers Law School and a former EEOC General counsel. David, firing the commissioners is unprecedented, But is it illegal?
I suspect that the system will be litigated, and I certainly believe that it's illegal. I worked with the commission, you know, for several years, and you know the Commission was structured by Congress in nineteen sixty four as an independent agency, you know, deliberately set apart from the different cabinet agencies and deliberately set apart from the sort of the whims of a particular executive's political moment, right, And it was structured as a bipartisan agency so it would have diverse exchange of viewpoints, and the commissioners were given set terms because it was recognized that that was important to maintain the independence of judgment of the agency. You know, this is sort of kind of an overtly political move against two I think, you know, extremely hard working, intelligent, well known civil rights advocates who are basically doing their job, right. I mean, they were basically doing their job trying to educate the country about discrimination and opposing discriminatory practice. And so many people have said in the employment to me, like, if this were a private sector case, this would be like a slam dunk, because you know, clearly the motivation here was that they were opposing discriminatory practices. But I think, you know, sort of separately, the structure of the agencies is one of independents that I actually regard this as illegal, and you know, if it's litigated, we'll see what the court say. There are a couple other things though that our importanner mentioned one is if it's tied up litigation, what does that mean about a quorum for the Commission. Without a quorum, it really fobbles the ability agency to do its work in all areas, right in terms of approving the litigation, in terms of coming up to the internal policies, in terms of addressing you know, complacent discrimination in the federal sector, it's really bad. And when you couple that with, you know, I think the hiring freeze, and couple that with what I found to be an extremely curious first statement by the acting chair which seemed to almost like mimic wholesale the Trump Executive Order and thus suggesting like sort of an abandonment of like the independence of the agency. You know, I think that there's perilous times.
I mean, is there really bipartisanship at the agency?
I will say, And I just think I really think it's important for your listeners to know, and I think the listeners do know this is that the whole bipartisanship and independence of that agency is built into the culture from top to bottom, and the agency has been through democratic administrations and Republican administrations. But I think that you know, certainly the commitment of the Civil Servant goes back to sort of the original vision, and that is that civil rights is not a partisan issue. It's an American issue. And you know, I work under chairs and commissioners of a different party, and I know that when Cary Domingus came in, one of the first things she did is she developed basically a program to address a backfast discrimination against Arab and Muslims and people from South Asia. When cher Naomier came in, she really made an effort to reinvigorate the Commission's focus on anti black racism, you know, the original you know, catalyst for the Commission. I worked with Vicki Litnick for several years. We didn't agree on everything, maybe fifty percent, but you know, she cared about civil rights, she cared about the agency, and she certainly always you know, I think carried out I think sort of the vision of Congress in terms of the independence, in terms of the bipartisan deliberation, and so, you know, I think with the Trump and theministration, we find ourselves, you know, in both administrations in a different world. That really, really I think puts against the grain of what Congress is trying to do with this agency as part of this like landmarks where I checked and a scary time. But you know people are ready. I mean people are going to push back. I mean, I think that's that's to be expected. And to sort of almost like as a first statement, to say that you're abandoning or not to mention at all the legacy and the sacrifice of people and the original catalyst in the civil rights movement for this agency, and to act like you know, I mean, to completely ignore the issue of anti black racism as well as gender and disability, of age and everything else. I certainly can say that's not where the people I meet are. I worked at that agency in many years, and you know they value its commitment to disability, to fight disability discrimination and age discrimination and sexual harassment and the work on behalf of bleulnerable workers. This just takes us to a completely very dystopian place that I do.
So what would be the possible legal defenses the commissioners could raise to being fired by Trump? Is it precedent, is it something else?
I think it's a language understandute itself. I mean, you just have to look at the structure of the statute, and there's been a lot of litigation on independent agencies, but I think it's the structure of the statute itself.
The EOC is one of several federal agencies facing lawsuits from challengers who argue that its leadership is unconstitutionally protected from being fired at will. I mean, does it fit in with other agencies or does it stand apart for some reason?
Well, I mean you have to look at all the agencies separately, and I know that there's ongoing litigation brought by basically Elil Musk and Jeff Bezos against the Nationally Relations Board. But all agencies function differently, right, agencies have you know, I think more defined adjudicatory functions. The EESC you know, will engage in some adjudication with respect to it's usually delegated with respect in the federal sector, but it's mostly what it does is mostly policy, right, And I think what's important to remember here is that once the litigation has approved, that General Council is independent authority over that litigation. So, you know, the sort of silver lining here is of litigation should go on. We'll see that the litigation should go one that it already brought. I mean, every agency is different, so all of these cases that will come up or have been raised, will you know, involve sort of a different, different factual scenario.
Do you think Trump is doing these firings just sort of shock and awe or he really expects that this will you know, that it will take that he'll be able to keep these two commissioners off.
I mean, I think it's a little broader than that. And I think you have to understand this in the context of gain litigation in the Civil Rights Division and in the context of basically getting core functions of the OFCCP. Trump has never been accused of having a forward looking vision, and this is a backward vision. I mean, this is an effort to kind of roll roll the clock back, you know, this vision of civil rights agencies or civil rights itself as being infused with what you know, he would probably regard as like identity politics, ignoring you know, the fact that these civil rights agencies have, you know, become an engine of opportunity for workers across the country who have been you know, shut out because not only of race, but also because of because of sex, because of disability, because of age, and so in the effort to chase this sort of ideological phantasma of what he regards as sort of these you know, DEI programs, frount am up or what he regards to sort of a what does it call it, a radical gender ideolis. You know, he's not only wrong on those issues, but he ended up throwing out the baby with the bathwater. And I think this is by design. I don't think this is in the burden. I think this is by design, and I think it's part of a broader, kind of long term plan to really get government generally. So I don't think this is accidental. I mean, this is it's politics, because it's always politics, but it's also politics in service of kind of a backward looking agenda. I don't know what the exact year is. I don't know if it's nineteen fifty five or if it's eighteen seventy six. All this stuff he's doing, They got the civil service, which is based on merit, and replace those folks with political appointees, which by definition are not based on merit. You know, seems to take us back to like eighteen seventy six, which is also the year that reconstruction was gutted. So I don't know if the goal is to take us back to eighteen seventy six to the Gilded Age, or that it takes us back to nineteen sixty three before the Civil Rights Act was passed, or nineteen fifty five with the Eisenhower deportations. But you know, everything that's being done is about taking us backwards instead of addressing changing the dynamic world and trying to ask ourselves, how can we use everybody's talents, how can we bring everybody on board? And so yeah, where to come?
We are only ten days into his second administration. Thanks so much for being on the show. David. That's Professor David Lopez of Rutgers Law School. 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, 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 Junie Grosso and you're listening to Bloomberg
