This is Bloomberg Law with June Grossel from Bloomberg Radio. President Donald Trump started his second administration with the blitz of executive orders on issues ranging from trade, immigration, and US foreign aid to demographic diversity, civil rights, and the hiring of federal workers. Some orders were challenged in federal lawsuits before the end of his first day in office.
Attorneys general from twenty two states have filed suits to block his executive order aimed at ending birthright citizenship, and the National Treasury Employees Union, which represents federal government employees and dozens of agencies, has launched a legal attack against
Trump's Schedule F executive order. It's a directive to reclassify federal employees that makes it easier for his administration to fire career employees, basically reinstating the order Trump issued at the end of his first term, which was quickly revoked by President Joe Biden. Joining me is Anne Lafasso, a professor at the University of Cincinnati Law School and a former attorney at the NLRB, and will you explain what Schedule F is.
Schedule F is a new classification of employees or sub classification that will remove employees that are currently in the Competitive Service into the Accepted Service. So there's three main classifications of employees. They are the Competitive Service, the Accepted Service, and the Senior Executive Service. So the Senior Executive Service are the super politicals that's you know, like cabinet members and the deputy to the General Council of sending the
General Council. Those are the ones that have absolutely no job protection, and then the Competitive Service has all job protection. It's almost all federal jobs. And that was put in place over one hundred years ago by I think it was President Arthur. They were trying to get rid of cronyism that really started in the Andrew Jackson era to the Victor Goes the Spoils, which was the idea of just putting only loyalists into the government and then there'd
be a lot of corruption. And Teddy Roosevelt was really involved in the Competitive Service and think this was really important to have civil servants. I mean, obviously everyone has their politics as citizens, but as government employees, they would just serve whoever the administration is and they would be experts. They're the ones who have to take the Civil Service exam and they're the ones who are the vast majority
of employees for the federal government. The accepted service then are just exceptions to the competitive service where it doesn't make sense to give them this civil service exam like all attorneys or accepted service. In other words, the presumption is everyone in the government is competitive service unless there's an reception or unless you're a political appointee. The political appointees are very very few. They're the very top top people, and they have no job security. They often get fired
when there's a new administration. That makes sense because they're calling the shots. They're saying, we're implementing the new administration's policies. The schedule S is essentially a way of reclassifying these competitive service employees so that they no longer have any job security. Now, the administration feels that they need to do this because it's hard to fire people, and they have made a case so that they need to be able to fire people because people are not doing their
job well. And the president does have power to make changes in classifications where they're necessary for good administration.
I mean, the theory of having career employees is that every time the administration changes, you don't want all the workers changing that would mean no institutional memory at all, exactly.
So you have to have a balance between implementing policy and stability of a government. And so the civil service basically is running the governments and there's a few people that are the boss and they're implementing policy. But you know, I worked for the federal government ten years. I worked five years for the Clinton administration and five years for the Bush to administration, and my job did not change. The only thing that changed was the type of decisions
that were coming down. And the Clinton administration they were more pro union and in the Bush administration they were more pro management. But I did the same exact thing. My job was to enforce whatever decision came down.
This executive order from Trump complained that accountability among federal employees is currently sorely lacking. Any power they have is delegated by the president, and they must be accountable to the resident. What does this order actually do.
It makes it easier for the president, through his administrators like general counsels and people like that, to fire employees. Basically, there's about fifty thousand people that they think could be affected by this order. I mean, there's three million little under three million people who look for the federal government. But this is going to have large effects. It's also possibly going to not just take away their due process rights, but also all their union rights because a lot of
these competitive service people are actually unionized. Some of the accepted services are also unionized. They're in unions. And what this administration believes is that anything that gets in its way of efficiently firing someone is too much. It is said, it takes too long and it's too hard to fire people. That is just not true. Managers need to manage the way that you can fire someone. You just have to
give them due process. In fact, all of Europe that way, all of Europe, there's no such thing as at will employment. You have to give people due process if you're going to fire them. So if you want to fire a poor performer, and this is what Trump is mostly saying, he's complaining about it, poor performers, then you just have to document them and then you fire them. They get their due process and you prove your case. Yeah, it's different than if they're at will. You could fire them
in one day. That is true, unless your reasons for firing them is unlawful under federal Estate law. But here, what he's really doing is taking away their due process rights. Now, federal law says that once an employee has due process rights under the Constitution, then you can't just take them away. So the NTU is saying that they're taking away these rights. Well, you can't just take away property right.
So the National Treasury Employees Union sue Trump in DC federal Court on Monday to block the Schedule F executive order. They argue that it's contrary to congressional intent and violates the Administrative Procedure Act. So explain why they say it's contrary to congressional intent.
First, Well, Congress created this whole system in order to give specifically to give job security to employees, so there wouldn't be a changeover for most employees from administration administration for one's ability and to combat cronyism, and so this would be contrary to the whole idea of stability. So that's I think is the most important thing that the union is arguing.
And tell us about their claim that this order violates the Administrative Procedures Act.
Well, the Administrative Procedures Act is the basis for making regulations, and these are regulations that have been put in and they have to be done in a certain way. And what Trump is trying to do by executive order is what is supposed to be done by m implementing regulations through a congressional act. So an argument is he's essentially
usurping or commandeering the power of the legislature. Now he says he can do this because of his powers that Congress gave him under the Administry of the Procedures Acts, and the Union saying no, you have very limited powers under the Administrative Procedures Acts, and those are to create accepted service in the most limited circumstances, which is pretty much what the Act does say. But of course we know that words can be interpreted different ways depending on judges,
and so they're going to litigate that. This is definitely going to be litigated. I mean, it's not going to be thrown out of court.
Trumpett enacted this Schedule F executive order at the end of his first term, and Biden revoked it, and then the Biden administration's Office of Personnel Management published a final rule in May of twenty four to protect against this kind of executive action. So is that rule an obstacle in the way of Trump enforcing this executive order on Schedule F.
So it's actually really basic constitutional law if you think about. So, what he's saying is that one I have constitutional power to do this, and two I have congressional power to do this, and no regulation basically can tell me that I can't do this. So what he's saying is that he has this authority and they have to be accounted directly to him. I think he would probably go so far as to say that to the extent that Congress took away that power, that it was unconstitutional. I'm going
to guess that they will make that argument. Okay, So you see how that works is that there's a congressional act. Then there are the regulations, and that's an administrative act, which means this executive branch that was done through Brden to implement these what you're allowed to do. That's all administrative law. Then there's what the President is doing now, which is executive orders. And of course the courts will interpret these things. Now, remember Chevron has been overturned, which
means none of these agencies getting different. So the courts are going to decide with very little input from the agencies, what this means. I mean, yes, the agencies can say what they think these regulations mean, and in the meantime, Trump will make its own regulations based on Congress's Act. But remember they have to implement what the Act says,
unless under two circumstances can change. One is Congress has to change the Act to give the president more power, or two the president's can have to argue that to the extent that the Act is read as taking away power to do this from the president, it's unconstitutional.
Stay with me and coming up, continue this conversation with Professor Ann Lafasso of the University of Cincinnati Law School. The Trump administration has ordered federal employees in DEI offices to be placed on paid leave by Wednesday at five pm as the agencies wind down diversity initiatives. I'm June Grosso and you're listening to Bloomberg. The National Treasury Employees Union launched a legal attack against President Donald Trump's Schedule
F executive order. It's a directive that makes it easier for his administration to fire career employees who work across administrations. It's the latest lawsuit seeking to block Trump's efforts to cull the federal workforce. On Monday, unions and other groups file complaints in federal court seeking to end the Department of Government efficiency. I've been talking to an expert in labor law, Professor Ann Lafasso of the Universe Have Cincinnati
Law School. It takes a while to change a regulation. Does the Trump administration have to change your regulation before they can start, let's say, firing people.
Not according to them. First of all, they can always fire a b ses to senior executive service, but they want to fire more people. So what they're saying is that the mere executive order does the trick and that they can just do this now. Or what they're saying is they're reclassifying people, which under the Act they're allowed to do. Okay, so that's what they're really doing. So they're just saying, we are reclassifying people right now. Then what the Union is saying is the whole purpose of
the reclassification is so they can fire them more easily. Now. They're not just taking that out of thin air. These are statements by Trump that you know, if you look at the twenty twenty executive Order that's been reinstated, it says all of this. I we read it last night. It says all of it. So what they're saying is, you know, listen to his words, this is what he wants to do, and he said he wants to do this also, so I don't think there's any doubt that
that's the fact. So then the question is is he allowed to do this under these regulations and under this law, And even if he's not, are the laws unconstitutional which and he's allowed to do it anyway, or are the laws somehow wrong, incorrect or not being interpreted correctly. It is very complicated, and.
What's your opinion of this executive order?
If I were a judge, I would say, he can't do this. I don't know what the courts are going to do, but my guess is that he's going to be cut back severely, and generally, the courts have not surprised me. I wasn't surprised by Roe being overturned. I wasn't surprised by a lot of things. So I'm not a person who just always picks the progressive side, because that's what I wish would happen. If you try to really think through and it seems like this is a
step too far, but you know, you don't know. You know, you could get as a trial judge, you'd get someone like an alien cannon who does get overturned quite a bit. You might see the President win initially, and then it goes up to court appeals, and then it might go to an no bounk even which is the full court of appeals, and then it could go to the Supreme Court. So this could take years.
If this litigation is going to go on for years, the key then would be whether the district court would grant some kind of injunction to stay the enforcement of this while the litigation proceeds.
They may very well put in a planmary junction because they make a really good case for harm. Now I don't see a tro though a temporary restraining order, but then again it hasn't been implemented yet. Maybe if they try to implement it, they would. They're asking for a full restraining order right now, so this is just the lawsuit.
So then if they do go into court for a preliminary or temper restraining order, which is before a full hearing could be made, then they have to do the four factor tests and the balance of equities, and with this would there be harm which basically which side would have greater harm. My guess is that it would be greater harm to fire all these people. Then the president will make some sort of national security argument that he has to have these people fired because it's turning the
entire government. The other side goes, they, no, the government hasn't collapsed, and all these people are gonna be fired, and it's gonna not only hurt these fifty thousand people, but it's also going to hurt it's gonna have tertiary effects on the economy. Again, if you're gonna ask me what I thought, I would issue the temporary restraining order.
But again it's going to depend on the judge, and then it will go to the DC Circuit, and then that could go much quicker, the temporary part, and then maybe that even goes to the Supreme Court, or maybe the Screme Court denies Tergerri on that and just lets whatever the DC Circuit does.
And let's turn for a moment to the Department of Government Efficiency, which Trump established and is led by billionaire Elon Musk to cut federal government spending. Unions have filed in federal court against that department. Are the same issues involved or different issues.
Well, I think they're overlapping issues there because that department is trying to get rid of what they see is a lot of government waste. And part of that, you know, what's the easiest thing to get rid of if you were a private company and this is being headed by well, I think Romaswani's out of it, but it's still with people with private enterprise experience, you know, like Elon Musk.
Then the fastest thing to do always is to cut labor, because you can't just cut capital meaning leases and buildings and things like that right away. You know, you can't just get rid of a government contract right away, but you can get rid of employees. We can't because they're competitive service. So you see, that's what's going on here, and so that I think they are very very closely related.
But remember the old adage that democracy stuck except for all the rest, the worse form of government, except for all the rest. You know, we trade a little bit of efficiency for freedom. Democracy means we're free. It means that we get a say. Getting a say is definitely less efficient than one person dictating what is going to happen. So there is built into a democracy from inefficiency it's
not profit runs. And I think that the Trump administration has done a great job of marketing of government employees. There's slackers. They are not doing their jobs, and that's like a stereotype. I worked for ten years and I'm going to tell you I worked. I also worked till nine o'clock at night. I worked from home, you know, addition to what I was working in the office. And I didn't see a lot of slackers. I know that say I'm a godal, but that's my experience at the
National Air Relations Board. So it's not that it's just the things take time, just like lawsuits take time, and it's because we have a democracy and that's about freedom. So the other side, I think, if they were going to market this properly, should be talking about that this is really a war on democracy. And then and Trump's going to say, no, this is to make our democracy stronger. That's the rhetoric that I think is going to be employed. And the counter to what Trump is saying is that
it's actually a war in democracy. Democracy has built into it a certain amount of inefficiency because you get to hear different points of view. By the way, also, I want to make this point when I was in the government, and this is the true for every attorney in the government. It is our job when political tells us we want X, and we want it done using why means, let's say why means is unlawful. It was my job to tell them, one, you can't do it that way because why is unconstitutional
or it's unlawful or whatever it is. However, I'm looking for solutions to still try to get you to X. So, for example, one thing he could do is the long solution, go to Congress, put a new bill in, change the laws right. That takes time. I think some of the things he's done are actually unconstitutional. I might be wrong, but it's certainly an argument. And what I would be telling someone is it would be my job as a lawyer to say, hey, you can't necessarily do it this way.
It's going to take longer. In fact, I did that at the NRB. I never thought my job was in danger because I did my job and the politicals didn't like it. I never had a problem with you. It's not one Republican, not one Democrat, telling them what I thought the law was and showing them my reasons, and they could reject it. They were lawyers also if they didn't like what I said, but it was my job to be as honest as possible about what the law was so that they don't get in trouble. So I
think that's another thing that people have to understand. It's not disloyal to tell the president or his agents that what they're doing is unconstitutional. It's actually loyal to protect them. So I think that's a really important point for people to understand.
Trump has directed that all federal employees of diversity, equity and inclusion offices be placed on administrative leave with pay by five pm Wednesday. This follow is an executive order he's signed on Monday, ordering a sweeping dismantling of the federal government's diversity and inclusion programs.
So what he's doing is he's limiting the damages because if you put them on paid leave, then they're not being injured. Well, they're being injured psychologically, but they're not being injured monetarily, So it's terribly inefficient. Well, I guess he doesn't see it as inefficient because he doesn't believe in DEI, so there's no job to perform. So what he's essentially saying is these jobs no longer really exist.
But to be on the safe side, we're going to give them paid leaves, and that would only be a monetary loss if they're forced to take their own annual leave. So he's just giving extra leave to them, because each of them is entitled to a payout of their annual leave when they leave if they separate from service, not their sick leaves, but they are entitled to their annual leave, and you can you can accumulate that. At least when
I was there, you were able to accumulate that. And definitely, so if you have a year's worth of annual leave, then they would owe them a year's worth of staff. So if you have two weeks, you get two weeks of salaries. So if he's just giving them leave right now, additionally, there's no harm to them.
But what about the firing. Is he allowed to fire? If he's doing away with DEI completely.
That would have to be litigated. Let's just say let's do it a little less controversially. Okay, let's say there really is something that's redundant, like we don't need this anymore because we don't need people who run copy machine. You remember back in the seventies. How you like xerox things. Okay, we don't do that anymore, and we can't find new positions for them. You can make a position redundant, so that's easy. The question would be that would be litigated.
Is allowed to just say we don't need any of these people. Oh and by the way, we can't find jobs for them anywhere, So that's going to have to be litigated, and his position will be that these jobs no longer exist, and then that's a finding of fact and law that some judge is going to have to decide.
I see so much litigation ahead for so many of these executive orders. We'll have to see how the courts respond to them. Thanks so much, Anne. That's professor Ann Lafasso of the University of Cincinnati Law School. Coming up next on the Bloomberg Law Show. The Supreme Court justices seem skeptical of the government's arguments that it should curb where e cigarette manufacturers can sue in order to cut back on form shopping. I'm June Grosso, and you're listening
to Bloomberg. A case at the Supreme Court about the proper place to sue the federal government highlights how far right. The nation's most conservative appeals court has shifted with opinions that the Supreme Court has increasingly had to push back on. It's one of thirteen cases this term out of the US Court of Appeals for the Fifth Circuit. That's more
than twenty percent of the Supreme Court's current workload. The statute at the heart of the oral arguments on Tuesday limits where tobacco companies can challenge the Food and Drug Administration's denial of an application to sell their products. The Fifth Circuit is the only circuit to sign with manufacturers, and the government said that has led almost all challenges to FDA denials to be brought in that circuit. Joining me is healthcare attorney Harry Nelson, a partner at Leech
Tishman Nelson Hardiman. Harry tell us about the issue before the Justices.
And the ability of private parties to essentially shop for where they want to challenge the FDA. Right, the FDA has the authority under this law It's fifteen years old, called the Family Poking Prevention and Tobacco Act to regulate
tobacco products. And so when R. J. Reynolds had a FDA denial on an attempt to market mental labored e cigarette even though based in North Carolina, and they could have filed in federal court there in the fourth federal circuits, they looked around and they realized that they would get a much more favorable audience in the fifth Circuit down in Texas and Mississippi, and so they went over to shop as people adversely affected by the law to get
a decision. And so the FDA essentially is challenging that, and now the federal government is pushing back, and the question is where does this case need to be heard.
So it's an interesting case because it goes to the ability of people challenging the federal government generally the FBA in particular, to shop for places where they may have a strategic advantage based on the judges that we'll hear it, based on private previous decisions, and so you know, it's an interesting case that sort of pits on the one side, sort of the free market and the opportunity for in this case, tobacco product manufacturer and retailers to choose a
place where they think they're going to have the best chance of preventing their case, and on the other side, a federal agency the FDA that's afraid of its regulations being more vulnerable because of that of that choice. Even though its specifically a tobacco case, it has a lot of implications for other industries, for drugs, for food, about you know, the power of federal agencies.
Just to clarify, the Fifth Circuit, which is the most conservative circuit in the country, is the only circuit that sided with manufacturers on this issue.
Exactly. Yeah, the Fifth Circuit has reliably over the last few years become the most conservative circuit and it's the only one that really where the FDA didn't prevail on its authority to limit these tobacco products from the market.
The law says that any person adversely affected by a denial can challenge in their home circuit or the DC Circuit. They certainly don't want to go to the DC Circuit, which has expertise and administrative law. So the question then was whether these retailers were adversely affected.
That's a big question. The FDA is making other arguments, you know, is challenging whether retailers can go to court whole The question is do they have the right to go to court to challenge a public health decision by the sea in the first place. And then the other question is where if they are allowed to go, where do they get to go in the time when we're watching the power of federal agencies sort of the weekends.
This is another case that would strengthen certainly anyone challenging regulations.
Several justices suggested that the plain language of the statute includes retailers because they're adversely affected by the denial, just as Sprett Kavanaugh said, retailers are losing money by not being allowed to sell these products, and that sounds like adversely affected. So did it seem like a majority of the justices were leaning toward RJR and threetailers here?
I think there is going to be some sympathy within the particularly within the conservative justices, for giving more freedom to parties to choose where to file their cases. You know, On the one hand, r JR Is based in North Carolina. On the other hand, they sell their products nationally, so you know, so there certainly is an argument if you're interested in the freedom of companies, of private actors who are selling products all over the country. It's not like
r J. Reynolds has no tie. It's just that they have the strongest tie in the place where they're based. So I think that the conservative justices are going to be receptive to the idea that plaintiffs as long as they have some basis for why they're choosing the place they're choosing, they should have more choices in filing their cases.
And I think they'll be less sympathetic to the FDA, which is warning that you know, essentially this is like forum shopping, where basically you get to choose the most favorable I mean, ironically, a lot of this actually highlights the way that our courts have become so politicized, and that there is that's a difference, you know, in this one area where the Fifth Circuit has been a reliable sort of gadfly for conservative causes, I mean, an interesting flight.
But I would not bet against the private party here. I would not be betting on the FAA in the case.
The Assistant Solicitor General said about seventy five percent of e cigarette cases were filed in the Fifth Circuit, all of them by out of circuit applicants trying to use the tactic.
So, since the Fifth Circuit is often.
The outlier among the circuits.
Does that mean that the Supreme Court's going to have to intervene in all these cases.
Yeah, I mean, I think it's putting the pressure on the Supreme Court not only to decide what the power of the FEA is, but to decide on these important jurisdictional questions that really drives strategy of where litigation gets filed, how it gets processed. So I do think this case is one of self world that's putting more and more pressure on the Supreme Court to you know, be the referee about our entire legal framework when it comes to sederal agencies.
And there is another case before the Supreme Court on the vaping issue and whether federal regulators misled companies before refusing to allow them to sell those sweet flavored vaping products.
The other case before the Supreme Court it relates to
flavority cigarettes. This is the FDA versus Wages in White Lions case, and that case is really focused on the fact that the FEA denied an application to market flavored e liquid with names like Rainbow Road and Cremberula, and the FDA basically argued that these products were just too risky because they're going to you know, recruit more young people to smoke so that case was actually already heard in December, and there seems here also to be like
a divide between the justices about the FDA's power and whether the FDA had given sufficient guidance to manufacturers to allow them to respect public health norms while still creating legitimate products that met public safety standards. So it's another case that sort of hinges on the FDA authority in enforcing public health protection, particularly with the products that appeal
to kids. Yeah, it's interesting to see as we're starting a new presidential administration, you know, with a lot of questions about power federal agencies, whether we're in an environment where where some of the public safety and public health protection is going to get rolled back.
And that was also out of the Fifth Circuit.
Yes, the Fifth Circuit also, by the way, was the circuit where we had the challenge to the abortion medication at the FDA. So the FDA has been a significant sort of brick in the wall of our public health and safety architecture, and so a lot of the challenges to how we're doing things, to what you know private parties can do, to what you know companies can sell, to you know, what kind of reproductive health medications are
on the market. These are all questions that run through the FDA, and the fifth Circuit seems to be the home address for people who want to challenge those might.
The FDA change its approach to vaping in the Trump administration, he has promised to save vaping, right.
I do think that you know, with RFK, I presumably at the HELM, you know, we have this really interesting split where you have, on the one hand, make America healthy again and a lot of initiatives to push public health, but also this greater sort of Trump push for more personal autonomy, more personal freedom, and for companies to have more freedom from regulations. And so I do think we are going to see more permissive activity, and I think one of the questions will be how the public reacts.
And I think there is a divide between, you know, people who take seriously the risk that more kids get hooked on tobacco and all the public health risks that come with that, versus this push for more personal freedom in the sense that we went too far. The predictions about what's going to happen at the FDA are you know, all over the place. It's a dangerous time to be doing too much guess work with the new administration and a lot of new cooks in the kitchen.
I mean, even after the oral arguments, the Trump administration could come in and say we've changed our position on this, and the Supreme coolu.
The Trump administration can use the rule making process to go back and reevaluate FDA standards. It could certainly liberalize some of the rules or establish new public safety standards. And you know, for example, you could have people who are satisfied with labeling warning on the outsides of these products, but not actually preventing you know, products from coming into the marketplace just because they seem to be targeting appealing to kids.
So two vaping cases to watch out of the Supreme Court. Thanks so much, Harry. That's Harry Nelson of Leech Tishman Nelson Hardiman. 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 June Grosso and you're listening to Bloomberg