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Meta Settles With States & White House Ballroom · Bloomberg Law

• 0:02
  Speaker 1: This is Bloomberg Law with June Grosso from Bloomberg Radio.
• 0:08
  Speaker 2: This is a breakthrough. This is a milestone. This is transformative.
• 0:12
  Speaker 2: And we're proud of what we've accomplished today.
• 0:14
  Speaker 3: California Attorney General Rob Bonta described the landmark settlement where
• 0:20
  Speaker 3: META will pay up to $ 18 billion and put stronger
• 0:24
  Speaker 3: child safety measures on its platforms to end a trial
• 0:28
  Speaker 3: over teen social media addiction.
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  Speaker 2: This is a significant victory for families across the country,
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  Speaker 2: for parents, for children, for those who are suffering in
• 0:39
  Speaker 2: silence and those who are suffering in public. This is
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  Speaker 2: a major breakthrough, a milestone moment, a watershed moment, because
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  Speaker 2: when it comes to protecting our children's mental health, there
• 0:51
  Speaker 2: is no time to lose.
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  Speaker 3: Under the proposed settlement, Metta agreed to adopt a series
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  Speaker 3: of safety features for users under 18. including a two-hour
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  Speaker 3: daily cap on using Instagram and Facebook, a lock of
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  Speaker 3: the apps from midnight to 6 a.m., and the disabling
• 1:11
  Speaker 3: of features such as like counts. The deal comes in
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  Speaker 3: the second week of a jury trial in federal court
• 1:18
  Speaker 3: in California that posed enormous risk for Meta, which has
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  Speaker 3: lost both jury trials on youth social media addiction in
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  Speaker 3: New Mexico and California. But this is not the end
• 1:30
  Speaker 3: of similar litigation against Meta. The company faces thousands of
• 1:35
  Speaker 3: lawsuits by individuals and school districts across the country. Joining
• 1:40
  Speaker 3: me is an expert in Internet law, Eric Goldman, a
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  Speaker 3: professor at the Santa Clara University School of Law and
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  Speaker 3: co-director of the High Tech Law Institute. This is being
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  Speaker 3: called a landmark settlement. AG Bonta said they got as
• 1:55
  Speaker 3: much and perhaps more than they could have in litigation.
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  Speaker 3: I mean, how do you view it?
• 2:01
  Speaker 1: The settlement amount is a huge, absolute number.
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  Speaker 4: There's no doubt that this is a major financial landmark.
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  Speaker 4: At the same time, this number is not a number
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  Speaker 4: that materially changes Meta's business. I don't want to say
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  Speaker 4: it's pocket change for them, but it's a quarter of
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  Speaker 4: their 2025 net income. In other words, they can afford this.
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  Speaker 4: And also, I would point out that Meta was subject
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  Speaker 4: to a judgment in New Mexico that ordered cumulatively roughly
• 2:32
  Speaker 4: a billion dollars of damages against Meta. And New Mexico's
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  Speaker 4: roughly 0.6% of the U.S. population. If you were to
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  Speaker 4: multiply that billion-dollar judgment in New Mexico by the 0.6% population, Actually,
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  Speaker 4: the $ 17 billion number looks smaller.
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  Speaker 1: Than we might expect.
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  Speaker 3: Bonta said that the money was secondary. What was important
• 2:55
  Speaker 3: was the changes that Meta has agreed to make. Do
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  Speaker 3: you think those changes are significant?
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  Speaker 4: The changes are important in part because Meta has resisted
• 3:05
  Speaker 4: them for quite some time. And Meta has obviously flipped
• 3:09
  Speaker 4: internally and decided that they could live with these particular changes.
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  Speaker 4: So the state AGs were able to accomplish something that
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  Speaker 4: regulators around the globe have had difficulty forcing META to do.
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  Speaker 1: What's less clear is if these.
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  Speaker 4: Changes are in the best interest of the constituents that
• 3:27
  Speaker 4: the state attorneys general seek to serve. We don't know
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  Speaker 4: if any of these changes solve the quote mental health crisis.
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  Speaker 4: We don't know if any of these changes materially benefit
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  Speaker 4: any population of users. Simply put, we don't have science
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  Speaker 4: to back up that these changes solve any problem. And
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  Speaker 4: we also don't know if these changes will cause other
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  Speaker 4: users to have new problems because of the restrictions. In
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  Speaker 4: other words, the state attorneys general are gambling that these
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  Speaker 4: changes are beneficial to users without having.
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  Speaker 1: The science to back it up.
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  Speaker 4: And we'll find out if they're right or wrong, but
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  Speaker 4: if they're wrong, then we're going to have a lot
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  Speaker 4: of people who actually have been harmed by this agreement.
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  Speaker 3: I mean, when I look at some of the changes,
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  Speaker 3: like a two hour daily cap on using Instagram and
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  Speaker 3: Facebook and locking Instagram and Facebook from midnight to 6am,
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  Speaker 3: even if they don't help teenagers, it doesn't seem like
• 4:32
  Speaker 3: they would harm them.
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  Speaker 4: Let me disagree with you on that one. So Let
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  Speaker 4: me give you an example of how something like the
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  Speaker 4: nighttime restrictions on usage might be disadvantageous. It's been well
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  Speaker 4: documented that many teens use social media as a form
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  Speaker 4: of coping with mental health episodes that they're dealing with. Now,
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  Speaker 4: there might be other teens who are actually suffering mental
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  Speaker 4: health episodes because of social media, but let's focus on
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  Speaker 4: the users who actually use social media as a coping mechanism.
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  Speaker 4: If a teen's having a late night mental health episode,
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  Speaker 4: this agreement would say, you're on your own to the team.
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  Speaker 4: This resource that you might have relied upon in the past,
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  Speaker 4: you might need to rely on now, is simply not
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  Speaker 4: available to you because we've decided that's not in your
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  Speaker 4: best interest. So I think we should be careful about
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  Speaker 4: assuming that these restrictions aren't actually going to cause other
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  Speaker 4: users harm because of the fact that there's so many
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  Speaker 4: different use cases. People are using social media in so
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  Speaker 4: many different ways to solve so many different problems. And
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  Speaker 4: The state AGs have sided on one answer to the question.
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  Speaker 4: That's not necessarily the only answer.
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  Speaker 3: My daughter has grown up, so I'm not familiar with
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  Speaker 3: how these safety features might work. Can you explain, are
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  Speaker 3: they going to check ages of users? Are they going
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  Speaker 3: to require parents to check in? How are they going
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  Speaker 3: to implement these?
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  Speaker 4: I describe these categories of restrictions as segregate and suppress.
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  Speaker 4: The first step is to segregate the user population between
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  Speaker 4: adults and minors. And then the second step is to
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  Speaker 4: suppress some resources for the minor population. This agreement codifies
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  Speaker 4: that approach. In order to do the segregation, Meta has
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  Speaker 4: agreed to deploy age authentication on its user base. And
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  Speaker 4: the agreement has very detailed specific provisions about how that
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  Speaker 4: age authentication is going to work. Among other things, something
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  Speaker 4: that really was interesting to me is that the agreement
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  Speaker 4: contemplates that age authentication.
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  Speaker 1: Will never be perfect.
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  Speaker 4: And it actually provides error rates where a medic can
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  Speaker 4: make mistakes and still be in compliance with the agreement.
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  Speaker 4: This is really central to the question because it means
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  Speaker 4: that there will be some minors who will not be
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  Speaker 4: protected by this agreement because of those error rates. And
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  Speaker 4: I don't see that as a flaw, but it's actually
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  Speaker 4: a big concession by regulators to even admit that that
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  Speaker 4: could happen.
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  Speaker 3: Do you think that Meta, the trial was going so
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  Speaker 3: badly and Meta saw the writing on the wall or
• 7:03
  Speaker 3: they didn't want to chance Mark Zuckerberg taking the stand again?
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  Speaker 3: I mean, what do you think pushed them to this point?
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  Speaker 4: Well, obviously, the settlement has been in the works for
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  Speaker 4: many days, if not for weeks or even months, because
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  Speaker 4: it's so long and detailed and it required the agreement
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  Speaker 4: of 51 different state AGs. So, you know, this agreement
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  Speaker 4: didn't just happen because this trial has been going poorly.
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  Speaker 4: This conversation is much longer standing than that. But I
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  Speaker 4: don't know exactly what caused Meta to flip on this
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  Speaker 4: particular issue, but this is a standard practice for Meta
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  Speaker 4: that they will push and fight against restrictions until they
• 7:45
  Speaker 4: decided somehow in their interest, and then they're all in.
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  Speaker 4: And they're, like, super excited about it. And as the
• 7:51
  Speaker 4: agreement reflects, and they want everyone else on the same
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  Speaker 4: program too. Like they're like, okay, we've decided here's what
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  Speaker 4: the industry should do. We'll be the first, but make
• 7:59
  Speaker 4: sure everyone else goes on the program as well. So
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  Speaker 4: I don't know what caused Meta to reach that point
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  Speaker 4: where they decided enough is enough, but it isn't some
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  Speaker 4: new thing. It's something that obviously has been on their
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  Speaker 4: minds for a while.
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  Speaker 3: We had talked before that losing the trial could cause
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  Speaker 3: Meta to have to change its platform. Would you consider
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  Speaker 3: this platform changes what they've agreed to?
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  Speaker 1: Yes, absolutely.
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  Speaker 4: And that's why Meta has resisted them for so long.
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  Speaker 4: It doesn't want to make these concessions. It wants to
• 8:26
  Speaker 4: decide how to best cater to its audience without the
• 8:29
  Speaker 4: government putting the thumb on its decisions. So Meta has
• 8:32
  Speaker 4: given up some of that independence that it's had. It's
• 8:35
  Speaker 4: given up some of that editorial discretion. And the state
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  Speaker 4: AGs have taken over those particular aspects of how it operates.
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  Speaker 3: The deal includes the appointment of an independent auditor to
• 8:45
  Speaker 3: oversee compliance, someone who can issue documents their own recommendations
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  Speaker 3: and report findings to the states. Do you think that
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  Speaker 3: that's sufficient to ensure compliance by Meta? Because I remember
• 9:01
  Speaker 3: some years ago when Meta was still Facebook, it didn't
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  Speaker 3: comply with agreements with the FTC over users' data privacy.
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  Speaker 4: Yeah, Meta has a history of having independent auditors that
• 9:16
  Speaker 4: have had no real impact on its business. And so
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  Speaker 4: I'm guessing Meta thinks that it got a little bit
• 9:23
  Speaker 4: of a fast one here, that the state AGs are
• 9:26
  Speaker 4: going to think this independent auditor is going to dictate
• 9:29
  Speaker 4: things to Meta. And I'm guessing Meta is thinking it
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  Speaker 4: will dictate to the independent auditor.
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  Speaker 5: Okay.
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  Speaker 3: Stay with me, Eric. Coming up next on the Bloomberg
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  Speaker 3: Law Show, we'll look at the framework for the agreement
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  Speaker 3: and how it pushes the state attorneys general to go
• 9:44
  Speaker 3: after Meta's competitors and seek similar deals. I'm June Grosso,
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  Speaker 3: and you're listening to Bloomberg. Meta has reached a landmark
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  Speaker 3: settlement with every U.S. state except New Mexico and Florida.
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  Speaker 3: It agreed to pay up to $ 18 billion and add
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  Speaker 3: stronger child safety measures to its Facebook and Instagram platforms.
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  Speaker 3: But 30 percent of the settlement amount, about $ 5. 3 billion,
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  Speaker 3: will be released to states only if rivals YouTube and
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  Speaker 3: TikTok meet two conditions, implementing similar safety features and paying
• 10:25
  Speaker 3: the same amount, split between the two companies. California Attorney
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  Speaker 3: General Rob Bonta explained the deal's reliance on Meta's competitors
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  Speaker 3: to sign on in order to get Meta to put
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  Speaker 3: in heightened restrictions.
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  Speaker 2: There are some restrictions. One example is the limit of
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  Speaker 2: two hours of use per day. If that applies to
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  Speaker 2: just Meta Then it remains two hours. But if other
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  Speaker 2: industry players make commitments similar to what Meta has made here,
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  Speaker 2: then the commitment, the restriction ratchets up to one hour
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  Speaker 2: per day.
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  Speaker 1: And that is the hope.
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  Speaker 3: I've been talking to Professor Eric Goldman of Santa Clara
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  Speaker 3: University Law School. Eric, so Meta said the framework will
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  Speaker 3: only work if all our peers join us because teens
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  Speaker 3: move fluidly across dozens of apps. We need an industry-wide solution.
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  Speaker 3: Is that what this is really about?
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  Speaker 4: This is a Meta-specific issue. Meta really, really doesn't like
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  Speaker 4: being obligated to comply with laws that its competitors don't
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  Speaker 4: also have to comply with. So Meta is less resistant
• 11:44
  Speaker 4: to legal compliance. It's more willing to accept that the
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  Speaker 4: regulators can tell it how to run its business, but
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  Speaker 4: only if, in Meta's mind, it's a level playing field.
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  Speaker 4: So it was absolutely critical to Meta in this case
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  Speaker 4: that if it settled, it was going to drag along
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  Speaker 4: its competitors, whether they really wanted to be dragged along
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  Speaker 4: or not, to the same deal so that teens can't
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  Speaker 4: just check out a Meta, go to the competitor down
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  Speaker 4: the information superhighway and get a better deal there and
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  Speaker 4: Meta then is at a competitive disadvantage. And it mattered
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  Speaker 4: so much to Meta that they did two things of interest.
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  Speaker 4: The first is that it agreed to restrict miners' usage
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  Speaker 4: of Meta even more if other competitors agreed to the
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  Speaker 4: same restrictions. So that's a carrot for the state AGs
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  Speaker 4: to go out and get even greater alleged protection for
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  Speaker 4: minors if they can get the competitors under that program.
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  Speaker 4: The second thing is that Meta conditioned a large chunk
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  Speaker 4: of the payments on the state AGs going out and
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  Speaker 4: getting the competitors under the same program. In other words, essentially,
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  Speaker 4: Meta has now deputized the state AGs as its police
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  Speaker 4: against its competitors, and is paying them to do its
• 13:03
  Speaker 4: dirty work. So the state AGs might think that this
• 13:06
  Speaker 4: is a win, but Betta is also looking at this as,
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  Speaker 4: we got the state AGs to go out and harass
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  Speaker 4: our competitors, and we're willing to pay them to do that.
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  Speaker 3: Speaking about the competitors, and Bonta said in the press conference,
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  Speaker 3: we already have a case against TikTok, and we'll start
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  Speaker 3: focusing on that. And he mentioned Snap and YouTube as well.
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  Speaker 3: So will this settlement encourage other social media companies to
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  Speaker 3: make similar settlements?
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  Speaker 1: Well, so that's the point.
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  Speaker 4: The agreement motivates the state attorneys general to go after
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  Speaker 4: those competitors in order to get the extra payday that
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  Speaker 4: Meta is dangling in front of them. So the competitors
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  Speaker 4: may not like this deal at all, but now Meta
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  Speaker 4: and the state AGs are collaborating together against these other competitors.
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  Speaker 4: So I can assure you that YouTube and Snap and TikTok.
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  Speaker 1: Are reading this agreement.
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  Speaker 4: At each line, you could just see the anger bar
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  Speaker 4: rising in their heads because this is an agreement that's
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  Speaker 4: against their interests. They had no say in the agreement.
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  Speaker 4: And now Meta is throwing hundreds of millions of dollars
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  Speaker 4: at this problem to try to get the state AGs.
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  Speaker 1: To bind them.
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  Speaker 3: As far as the other cases that are going on,
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  Speaker 3: I know Tennessee... has an ongoing case against META, right?
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  Speaker 3: What happens to those?
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  Speaker 4: So META was currently in trial in Oakland in the
• 14:36
  Speaker 4: federal MDL, but there were other lawsuits that are taking
• 14:40
  Speaker 4: place throughout the country. And this agreement actually wraps up.
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  Speaker 1: All of those.
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  Speaker 4: Even the ones that weren't part of the MDL were
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  Speaker 4: consolidated together, but were taking place independently. This agreement wraps
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  Speaker 4: up most of those And I think the way I
• 14:56
  Speaker 4: read it resolves them. So, for example, Meta just appealed
• 15:01
  Speaker 4: one of the rulings from Massachusetts and Nevada to the U.S.
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  Speaker 1: Supreme Court.
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  Speaker 4: And I believe that this agreement moots that appeal because
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  Speaker 4: those two states have agreed to this broader agreement. The
• 15:13
  Speaker 4: one state that didn't agree was New Mexico. New Mexico
• 15:16
  Speaker 4: got this pretty sizable judgment. And I think it looks
• 15:20
  Speaker 4: like the New Mexico attorney general thinks that they're going
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  Speaker 4: to stick it out And they're going to get their
• 15:24
  Speaker 4: own independent resolution with META.
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  Speaker 3: And the Florida AG posted today that they're going to
• 15:30
  Speaker 3: reject the $ 17 billion settlement. He called it a slap
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  Speaker 3: on the wrist for a trillion-dollar company. So we'll see
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  Speaker 3: where that goes. And there are also thousands of other
• 15:43
  Speaker 3: cases out there against META, right? Personal injury cases and
• 15:48
  Speaker 3: school district cases.
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  Speaker 4: This settlement only applies to the claims by the state
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  Speaker 4: attorneys general. It doesn't apply to any of the other
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  Speaker 4: pending litigation that's been brought by the school districts, the
• 15:59
  Speaker 4: Native American tribes, and by individual victims, of which there
• 16:03
  Speaker 4: are thousands of individual victims who've already sued META. So
• 16:08
  Speaker 4: at the moment, all of those cases are essentially unaffected
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  Speaker 4: by this settlement, and that's why META essentially is only
• 16:16
  Speaker 4: resolving part of its legal liability, and there's a large
• 16:19
  Speaker 4: overhang of additional legal risk that it still needs to resolve.
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  Speaker 4: This settlement doesn't have any bearing on that.
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  Speaker 3: What about the comparison being made between this and the
• 16:29
  Speaker 3: big tobacco settlement?
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  Speaker 4: This is a major development in internet law. This is
• 16:37
  Speaker 4: a major development in social media. This is a major
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  Speaker 4: development for Meta. And I think it's a major development
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  Speaker 4: for the state attorneys general who are part of the settlement.
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  Speaker 4: But does it change the industry? And the short answer
• 16:49
  Speaker 4: is we don't know. This clearly will change Meta's practices,
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  Speaker 4: but we're not sure how much of an effect that's
• 16:57
  Speaker 4: going to have on Meta's users. And we don't know
• 17:00
  Speaker 4: if it's going to be positive or negative. And even
• 17:03
  Speaker 4: if all of Meta's competitors were bound by the same agreement,
• 17:06
  Speaker 4: we still don't answer those fundamental questions. How does that
• 17:09
  Speaker 4: affect user engagement with social media? And does it end
• 17:13
  Speaker 4: up being a net win for users? So the big
• 17:16
  Speaker 4: tobacco moment was really the idea that we were making
• 17:19
  Speaker 4: some demonstrable progress against a longstanding health.
• 17:23
  Speaker 1: Risk to our community.
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  Speaker 4: And I feel like this is just qualitatively different because
• 17:29
  Speaker 4: for all we know, these agreements are actually going to
• 17:31
  Speaker 4: exacerbate the problems that it was trying to solve.
• 17:34
  Speaker 1: And so it's actually potentially counterproductive.
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  Speaker 3: Is there anything else that concerns you, broadly speaking, about
• 17:41
  Speaker 3: this settlement?
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  Speaker 4: The agreement represents the concession of META of certain editorial
• 17:50
  Speaker 4: decisions that it traditionally had the prerogative to make. And
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  Speaker 4: it's interesting and a little uncomfortable that the state attorneys
• 17:59
  Speaker 4: general have bound meta to that. In a sense, this
• 18:02
  Speaker 4: was part of the bargain for price was the state
• 18:05
  Speaker 4: AGs getting remedies that might very well have not been
• 18:09
  Speaker 4: available to it in court because of the fact the
• 18:12
  Speaker 4: restrictions on free speech that essentially the state AGs are
• 18:18
  Speaker 4: controlling how meta.
• 18:19
  Speaker 1: Talks with its users.
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  Speaker 4: So there's something disquieting about the idea that meta and
• 18:25
  Speaker 4: the state AGs have agreed to what are fundamentally restrictions
• 18:29
  Speaker 4: on Meta's freedom to publish, especially when we don't even
• 18:33
  Speaker 4: know if that's constitutionally permitted. One possibility this agreement will
• 18:37
  Speaker 4: look really weird if that question gets answered by the
• 18:40
  Speaker 4: Supreme Court, and the Supreme Court says that states have
• 18:43
  Speaker 4: no power to dictate how online publishers present content to users.
• 18:49
  Speaker 4: This agreement, Meta's agreed to that, and it might very
• 18:51
  Speaker 4: well be that that agreement is based on an unconstitutional premise.
• 18:57
  Speaker 3: Would that make the agreement invalid then?
• 18:59
  Speaker 4: I don't think so. I need to go and take
• 19:01
  Speaker 4: a look at it. There might be some boilerplate about that.
• 19:03
  Speaker 4: I will note that the agreement is 10 years long.
• 19:06
  Speaker 4: So another possibility is that this agreement is going to
• 19:09
  Speaker 4: go poof. And at that point, who knows what the
• 19:11
  Speaker 4: industry will look like. But at that point, we might
• 19:13
  Speaker 4: have some legal answers that make it clear whether or
• 19:16
  Speaker 4: not this agreement ever was properly formed in the first place.
• 19:19
  Speaker 3: Thanks so much, Eric. you really brought out some fascinating
• 19:24
  Speaker 3: aspects of this settlement that run below the surface, shall
• 19:28
  Speaker 3: we say. That's Professor Eric Goldman of Santa Clara University
• 19:33
  Speaker 3: School of Law.
• 19:35
  Speaker 4: The people that are opposing the ballroom are people that,
• 19:39
  Speaker 4: in my opinion, are very disloyal to our country, very,
• 19:42
  Speaker 4: very disloyal to our country.
• 19:44
  Speaker 1: And I think we're doing very well.
• 19:46
  Speaker 4: We're way ahead of schedule.
• 19:47
  Speaker 3: President Trump is racing as fast as possible to construct
• 19:51
  Speaker 3: the 90,000 square foot concrete and steel superstructure known as
• 19:57
  Speaker 3: the White House Ballroom on his own accord, without any
• 20:01
  Speaker 3: input from Congress or the public. And despite two courts
• 20:05
  Speaker 3: ruling that Trump is flouting the law. Speed is essential
• 20:09
  Speaker 3: because Trump is racing against the courts, and so far
• 20:13
  Speaker 3: he's outrunning them. And now Chief Justice John Roberts has
• 20:17
  Speaker 3: given Trump the go-ahead to outrun the Supreme Court. The
• 20:21
  Speaker 3: chief is allowing him to keep building his ballroom while
• 20:24
  Speaker 3: the justices take more time to consider the issues. This
• 20:29
  Speaker 3: is nothing new for Trump. He's been acting first and
• 20:32
  Speaker 3: then daring the courts to catch up with him since
• 20:35
  Speaker 3: he took office for the second time. My guest is
• 20:39
  Speaker 3: James Fander, a professor at Northwestern School of Law. The
• 20:43
  Speaker 3: chief justice issued this order on Friday. Does it tell
• 20:47
  Speaker 3: us anything about how the Supreme Court is going to
• 20:50
  Speaker 3: look at this?
• 20:51
  Speaker 5: I don't think we learned much from the order that
• 20:54
  Speaker 5: the chief issued on Friday. It seems to me like
• 20:57
  Speaker 5: just a request for some additional time, suggesting the court's
• 21:01
  Speaker 5: taking the issue seriously but hasn't yet found its way
• 21:04
  Speaker 5: to a resolution.
• 21:06
  Speaker 3: So you've had two lower courts ruling that the ballroom
• 21:11
  Speaker 3: project is probably illegal, but work was allowed to continue.
• 21:16
  Speaker 3: I mean, why was work allowed to continue when they're
• 21:20
  Speaker 3: saying that it's illegal?
• 21:21
  Speaker 5: I think it was an attempt to accommodate the national
• 21:25
  Speaker 5: security concerns that are associated with the proposed construction below ground.
• 21:31
  Speaker 5: The government took the position that both in the district
• 21:34
  Speaker 5: court and the appellate court, that the below ground construction
• 21:37
  Speaker 5: was separable from the ballroom construction and that the below
• 21:42
  Speaker 5: ground construction had all sorts of security implications, bunkers and
• 21:49
  Speaker 5: emergency medical care facilities and.
• 21:52
  Speaker 1: That sort of thing.
• 21:54
  Speaker 5: Very difficult for a court to second guess those kinds
• 21:57
  Speaker 5: of concerns. especially when the government is basically admitting, down
• 22:02
  Speaker 5: below anyway, that the ballroom part of the project is
• 22:06
  Speaker 5: separable from the below-ground national security or security part of
• 22:11
  Speaker 5: the project.
• 22:12
  Speaker 1: So the government.
• 22:14
  Speaker 5: Pitched the matter to the courts, I believe, the lower
• 22:17
  Speaker 5: courts anyway, as a situation where we can do this
• 22:21
  Speaker 5: below-ground thing without prejudice against to the eventual construction of
• 22:26
  Speaker 5: a ballroom above ground, and we can figure out what
• 22:29
  Speaker 5: the legality of that is down the road. But in
• 22:31
  Speaker 5: the meantime, we've already gotten this far with the national
• 22:35
  Speaker 5: security below ground work, so let's continue with that. And
• 22:39
  Speaker 5: I think that's why both courts agreed that the below
• 22:43
  Speaker 5: ground work could continue, thinking that they would retain some
• 22:48
  Speaker 5: control over the ultimate shape of.
• 22:50
  Speaker 1: The above ground ballroom.
• 22:52
  Speaker 5: Now the government's taking the position, of course, that the
• 22:54
  Speaker 5: above-ground ballroom is integral with the below-ground security concerns that
• 23:00
  Speaker 5: led to the continuation of the construction in the first place.
• 23:03
  Speaker 3: Does it make any difference that over the weekend it
• 23:06
  Speaker 3: came out and that there already is a secure bunker
• 23:10
  Speaker 3: that the president and his staff could live in for
• 23:13
  Speaker 3: weeks on end if it came to that? Does that
• 23:16
  Speaker 3: make the allegations of national security concerns Less convincing?
• 23:23
  Speaker 5: Right. The national security concerns have been a little bit,
• 23:27
  Speaker 5: I guess you'd say, convenient throughout the litigation.
• 23:30
  Speaker 1: One thing that the D.C.
• 23:32
  Speaker 5: Circuit said that makes a lot of sense to me
• 23:34
  Speaker 5: is that the president and the people responsible for his
• 23:39
  Speaker 5: security no doubt thought through the security implications of this
• 23:45
  Speaker 5: construction project. And they made alternative arrangements that were satisfactory
• 23:51
  Speaker 5: to all concerned security agencies and responsible parties for keeping
• 23:56
  Speaker 5: the president safe and keeping the White House operational while
• 24:00
  Speaker 5: the construction project went forward. And the revelation of the
• 24:05
  Speaker 5: existence of a bunker is not really news in some ways,
• 24:08
  Speaker 5: but it does reflect the fact that the government itself
• 24:14
  Speaker 5: would have doubtless made appropriate arrangements for interim measures to
• 24:20
  Speaker 5: ensure the safety of the president, the bunker being one
• 24:23
  Speaker 5: of those and other, no doubt, other features of the
• 24:27
  Speaker 5: existing plan would be included in that assessment.
• 24:30
  Speaker 1: So, yeah, I mean, I don't know that it changes things.
• 24:33
  Speaker 5: One of the things that it teaches me is that
• 24:34
  Speaker 5: it's important to litigate these very factually intensive matters at
• 24:39
  Speaker 5: the lower court level because, you know, It's a changing
• 24:43
  Speaker 5: world and it's going to be hard for the Supreme
• 24:45
  Speaker 5: Court to get its arms around it effectively on the
• 24:50
  Speaker 5: interim docket, I think.
• 24:51
  Speaker 3: I mean, what we had here was President Trump knocking
• 24:55
  Speaker 3: down the East Wing before anybody could blink their eyes.
• 24:58
  Speaker 3: I mean, it was there one day. It seemed like
• 25:00
  Speaker 3: it was down the next day.
• 25:01
  Speaker 1: Three days, yeah.
• 25:03
  Speaker 3: So he took that action without any authorization and it's done.
• 25:09
  Speaker 3: So what do the courts do to catch up to him?
• 25:12
  Speaker 3: You know, it's over.
• 25:13
  Speaker 5: Right. So in terms of restoring the East Wing, I
• 25:17
  Speaker 5: think you're right that it is done. And the question is,
• 25:20
  Speaker 5: now what is the proper response architecturally and historically to
• 25:25
  Speaker 5: to the scars that have been created in this place
• 25:29
  Speaker 5: that belongs to the public and belongs to the government.
• 25:31
  Speaker 5: It is within the control and stewardship of the Congress
• 25:34
  Speaker 5: of the United States. And that's a question that is
• 25:37
  Speaker 5: not easy to answer, I believe. There's no way to
• 25:41
  Speaker 5: unring the bell or restore the East Wing. And I
• 25:44
  Speaker 5: don't think anybody believes that what we should do is
• 25:47
  Speaker 5: return to the best reconstruction or recreation of the East Wing.
• 25:52
  Speaker 1: We could find.
• 25:54
  Speaker 5: I think the question is the legality of ongoing construction.
• 25:57
  Speaker 5: And I think the lower courts, at least, with some justification,
• 26:01
  Speaker 5: view that ongoing construction project as unlawful because not lawfully
• 26:05
  Speaker 5: approved by Congress and therefore subject to limitation, control, injunction,
• 26:11
  Speaker 5: and so forth. And then the question is, once that
• 26:14
  Speaker 5: injunction takes hold, what will be the shape of the
• 26:17
  Speaker 5: project going forward if President Trump is required to secure
• 26:21
  Speaker 5: construction the approvals and authorizations that he said he was
• 26:26
  Speaker 5: going to get when he started making noise about the
• 26:29
  Speaker 5: ballroom and never got, you know, because he decided he
• 26:32
  Speaker 5: wanted to do it his own way without anyone else
• 26:35
  Speaker 5: playing a part in the magnificent ballroom he was about
• 26:38
  Speaker 5: to create.
• 26:39
  Speaker 3: Isn't this sending a message that illegal behavior is being rewarded?
• 26:44
  Speaker 3: You get to complete your ballroom even though what you've
• 26:47
  Speaker 3: done is illegal because you've gone this far already? This
• 26:51
  Speaker 3: is a pattern and it happens in immigration cases. It
• 26:55
  Speaker 3: happens in grant cases. It happens over and over again.
• 26:59
  Speaker 3: Once these things go through the court process, it's too late.
• 27:03
  Speaker 1: No, it's true.
• 27:04
  Speaker 5: And what I call the first mover advantage that the
• 27:07
  Speaker 5: president enjoys as an executive or commander in chief or
• 27:10
  Speaker 5: whatever you want to call him, means that he can
• 27:12
  Speaker 5: take action and proceed on the assumption that it's lawful
• 27:17
  Speaker 5: until somebody tells him otherwise. I think that's been his
• 27:20
  Speaker 5: basic MO. And in past presidencies, not in every case, obviously,
• 27:26
  Speaker 5: but presidents showed a great deal more restraint in this
• 27:30
  Speaker 5: shadow of uncertain law. I think this president prefers to
• 27:33
  Speaker 5: move in the shadow of uncertain law. And even when
• 27:37
  Speaker 5: there's no uncertainty at all, if he believes that either
• 27:40
  Speaker 5: the Constitution or some other grant of authority is allows
• 27:43
  Speaker 5: him to take the action, then he will take it
• 27:47
  Speaker 5: and turn.
• 27:47
  Speaker 1: The rest of it over to the lawyers.
• 27:49
  Speaker 5: And we've seen it, as you say, time and again
• 27:51
  Speaker 5: in the immigration space, the removal of aliens under the
• 27:54
  Speaker 5: Alien Enemies Act. We've seen it with the dismantling of USAID.
• 27:59
  Speaker 5: We've seen it with the discharge of employees from positions
• 28:02
  Speaker 5: in the executive branch without due process of law. If
• 28:05
  Speaker 5: there were questions about the legality, there's a way to
• 28:08
  Speaker 5: have a legal proceeding to determine whether a But instead,
• 28:13
  Speaker 5: President Trump would rather fire now and litigate later. And
• 28:17
  Speaker 5: that has been, I think, quite the pattern of his presidency.
• 28:20
  Speaker 3: Well, it continues to work well for him. The Supreme
• 28:24
  Speaker 3: Court seems to continue expanding presidential power. Is there any
• 28:29
  Speaker 3: reason to think that it will limit him in this
• 28:32
  Speaker 3: case with the White House ballroom?
• 28:34
  Speaker 5: There, I think, is reason to think that the Supreme
• 28:37
  Speaker 5: Court will be concerned about President Trump's violation of appropriations
• 28:44
  Speaker 5: limitations that Congress has imposed upon him. I'm not sure
• 28:48
  Speaker 5: that his role as the unitary executive under Article II
• 28:53
  Speaker 5: will be understood to override appropriations restrictions. So that may
• 28:57
  Speaker 5: be a place where the Supreme Court is a bit
• 28:59
  Speaker 5: more protective of the traditional allocation of responsibilities as between
• 29:04
  Speaker 5: the president and the Congress of the United States. And
• 29:06
  Speaker 5: so I think there's some hope in this case, given
• 29:10
  Speaker 5: the fact that there's a pretty strong case to be made,
• 29:13
  Speaker 5: that Congress has previously appropriated money and understood itself to
• 29:18
  Speaker 5: be the responsible party in making decisions about the shape of.
• 29:21
  Speaker 1: White House construction projects.
• 29:22
  Speaker 5: There's some hope that the Supreme Court will understand the
• 29:26
  Speaker 5: threat posed to congressional appropriation power by the actions of
• 29:31
  Speaker 5: President Trump with respect to the White House, and perhaps
• 29:33
  Speaker 5: that will have some you know, radiating effect on other
• 29:36
  Speaker 5: of the projects that he has in mind. There's um,
• 29:40
  Speaker 5: a history, I think, of some minor alterations and improvements
• 29:45
  Speaker 5: in the language of the relevant statute to the White
• 29:47
  Speaker 5: House that are what you might call presidential vanity projects.
• 29:53
  Speaker 5: The installation by FDR of a swimming pool indoors, the
• 29:57
  Speaker 5: use of that pool by JFK, the decision to close
• 30:00
  Speaker 5: the pool by Richard Nixon and put a one-lane bowling
• 30:04
  Speaker 5: alley in the White House, and the decision by Gerald
• 30:07
  Speaker 5: Ford to create an outdoor swimming pool. These were all
• 30:11
  Speaker 5: relatively modest changes that don't really change the footprint of
• 30:14
  Speaker 5: the White House or the appearance of it. Nothing to compare, obviously,
• 30:18
  Speaker 5: to a $ 400 million ballroom project of the kind that's
• 30:22
  Speaker 5: currently underway. And so it's hard for the current project
• 30:26
  Speaker 5: to fit within that tradition of alterations and improvements that
• 30:30
  Speaker 5: we've seen in the past. And for that reason, it
• 30:32
  Speaker 5: may be that the Supreme Court pushes back a bit.
• 30:35
  Speaker 3: Does it make a difference that Trump says, although there's
• 30:39
  Speaker 3: reporting that this isn't true, that the ballroom is being
• 30:43
  Speaker 3: funded with donations?
• 30:46
  Speaker 1: Yeah, that's a good question.
• 30:47
  Speaker 5: And I was puzzled by that myself a bit because
• 30:51
  Speaker 5: One of the claims being made here is that the
• 30:54
  Speaker 5: National Park Service collects appropriated funds for use in connection
• 30:59
  Speaker 5: with National Park Service projects. And so this relevant statute
• 31:05
  Speaker 5: characterizes those donated funds as appropriated. And so the government
• 31:10
  Speaker 5: has kind of cobbled together an argument that goes like this.
• 31:13
  Speaker 5: Once the money has been collected and placed in the
• 31:16
  Speaker 5: vault of the National Park Service, it's now appropriated funds.
• 31:20
  Speaker 5: and the authorization to use appropriated funds that appears elsewhere
• 31:25
  Speaker 5: in federal law can be stitched together with those donations
• 31:30
  Speaker 5: and create the appearance that these funds have been, in fact,
• 31:34
  Speaker 5: appropriated for the use that they have been put to.
• 31:37
  Speaker 5: I think that's a very difficult argument to make in
• 31:40
  Speaker 5: the end, given the jealousy with which the Congress of the.
• 31:44
  Speaker 1: United States guards its appropriation powers.
• 31:47
  Speaker 5: And it's uncertain, I think, whether that kind of argument
• 31:50
  Speaker 5: will be accepted by the Supreme Court.
• 31:52
  Speaker 1: But that's the argument.
• 31:54
  Speaker 5: You know, there's been nothing on this scale before in
• 31:57
  Speaker 5: terms of donated funds put to the uses that they
• 32:02
  Speaker 5: are being put to here. And it's at least very
• 32:04
  Speaker 5: hard for me to see how this could be considered
• 32:08
  Speaker 5: the kind of congressional control that we normally associate with
• 32:13
  Speaker 5: the appropriations process.
• 32:15
  Speaker 3: The D.C. appeals court decision was two to one, and
• 32:19
  Speaker 3: the dissenting judge, a Trump appointee, Naomi Rao, said that
• 32:25
  Speaker 3: the plaintiff, the National Trust for Historic Preservation, didn't have
• 32:30
  Speaker 3: standing to sue. The Supreme Court sometimes likes to go
• 32:35
  Speaker 3: off on a standing argument instead of reaching the merits
• 32:39
  Speaker 3: of the case. Do you think that could happen here?
• 32:43
  Speaker 1: They sure could.
• 32:45
  Speaker 5: There are at least two vulnerabilities in the majority's approach
• 32:48
  Speaker 5: to the standing question. As you know, the National Trust
• 32:52
  Speaker 5: for Historic Preservation is a congressionally created nonprofit organization that
• 32:57
  Speaker 5: is devoted to the historic preservation of national landmarks of
• 33:01
  Speaker 5: various kinds. It has both a kind of specific preservation
• 33:07
  Speaker 5: portfolio with respect to the properties that have been placed
• 33:10
  Speaker 5: within its care and and as it sees it at least,
• 33:13
  Speaker 5: a more general advocacy role to play in connection with
• 33:16
  Speaker 5: historic preservation as a more general matter. So that's the
• 33:20
  Speaker 5: group that is, or the association or the organization that
• 33:23
  Speaker 5: has brought the lawsuit. They have asserted associational standing in
• 33:28
  Speaker 5: compliance with the rules of associational standing by saying, hey,
• 33:32
  Speaker 5: we have a member, our member Alison Hoagland, a professor
• 33:36
  Speaker 5: of architecture and architectural history, has standing to sue because
• 33:41
  Speaker 5: she's in relatively constant proximity to the relevant physical spaces,
• 33:47
  Speaker 5: has a deep interest and concern for the preservation of
• 33:49
  Speaker 5: the White House as part of the District of Columbia
• 33:52
  Speaker 5: architectural plan and the like. It's a very persuasive claim
• 33:56
  Speaker 5: of member standing on the part of Dr.
• 33:58
  Speaker 1: Hoagland. And because Dr.
• 34:01
  Speaker 5: Hoagland's a member of the association and because the claim
• 34:04
  Speaker 5: is in some sense germane to the association's purpose, then
• 34:08
  Speaker 5: ordinarily under the law of associational standing, the claim would
• 34:12
  Speaker 5: go forward. The dissenting opinion identifies two problems. I don't
• 34:17
  Speaker 5: know that you could say that they're problems with current law,
• 34:21
  Speaker 5: but they are problems that the Supreme Court has signaled
• 34:24
  Speaker 5: an interest in.
• 34:26
  Speaker 1: They may be potential vulnerabilities.
• 34:29
  Speaker 5: So one potential vulnerability is a kind of distrust of
• 34:32
  Speaker 5: bystanders standing generally. We recognize it in the environmental context
• 34:37
  Speaker 5: when a person has an ongoing recreational connection to a
• 34:40
  Speaker 5: piece of water or to a piece of land, and
• 34:44
  Speaker 5: the land is threatened with environmental degradation of one kind
• 34:47
  Speaker 5: or another. That individual has standing to sue based on
• 34:52
  Speaker 5: the aesthetic interest they have in the preservation of that
• 34:55
  Speaker 5: recreational opportunity. The same is true in offended bystanders standing
• 35:00
  Speaker 5: in the religious context where individuals who come across a
• 35:03
  Speaker 5: cross or a creche or some other religious display may,
• 35:07
  Speaker 5: by virtue of their status as observers, have standing to
• 35:12
  Speaker 5: contest the government's establishment of religion. There have been some
• 35:17
  Speaker 5: expressions of discontent with this form of bystander standing. The
• 35:21
  Speaker 5: court has tended to focus more recently on pocketbook injuries
• 35:25
  Speaker 5: instead of aesthetic injuries. So one potential vulnerability is the
• 35:29
  Speaker 5: possibility that the court might move the needle a bit
• 35:32
  Speaker 5: on bystander standing and conclude that Dr. Hoagland doesn't have
• 35:37
  Speaker 5: the kind of connection to the physical location of the
• 35:40
  Speaker 5: White House that is necessary, or even to argue that
• 35:44
  Speaker 5: perhaps taking an offense at the You know, historic degradation
• 35:49
  Speaker 5: is an aesthetic concern that really isn't actionable under Article 3.
• 35:53
  Speaker 5: The other possibility is to take a very narrow view
• 35:56
  Speaker 5: of the association's remit and thereby to question the germaneness
• 36:02
  Speaker 5: of the claim to its responsibilities under its organic statutes.
• 36:08
  Speaker 5: It has responsibility for stuff that has been placed in
• 36:12
  Speaker 5: its charge, but the White House is not in its charge.
• 36:14
  Speaker 1: It's in the charge of the National Park Service.
• 36:17
  Speaker 5: And so one of the arguments made by the dissenting
• 36:19
  Speaker 5: judge was that the assertion of standing fails the germaneness
• 36:24
  Speaker 5: requirement because the responsibilities of the National Trust do not
• 36:29
  Speaker 5: extend to the preservation of this particular property. Those are
• 36:33
  Speaker 5: potential off-ramps the Supreme Court might use just to push
• 36:36
  Speaker 5: this case off the docket for now and allow the
• 36:40
  Speaker 5: construction to go forward.
• 36:42
  Speaker 1: What do you think the.
• 36:43
  Speaker 3: Best case scenario is that the Supreme Court agrees with
• 36:47
  Speaker 3: the lower courts and says what?
• 36:49
  Speaker 5: So if you were concerned about the construction of a
• 36:53
  Speaker 5: ballroom and you wanted the best possible outcome you could get,
• 36:59
  Speaker 5: then it seems a remand to the district court is
• 37:03
  Speaker 5: going to be required, and that's going to require the
• 37:06
  Speaker 5: district court to continue to oversee the project. I mean,
• 37:11
  Speaker 5: one possibility is a hold on above-ground construction, and that's
• 37:15
  Speaker 5: all that's really on the table right now. Put a
• 37:18
  Speaker 5: hold on above-ground construction while we conduct the necessary assessments
• 37:24
  Speaker 5: and run through the necessary authorization and approval processes. That
• 37:30
  Speaker 5: could all be handled as expeditiously as possible.
• 37:34
  Speaker 1: I assume that.
• 37:34
  Speaker 5: President Trump might want to try to get all that
• 37:36
  Speaker 5: done before the November election cycle, but it's obviously up
• 37:41
  Speaker 5: to him to decide how he wants to secure that approval.
• 37:44
  Speaker 1: And then once approvals, if they come.
• 37:46
  Speaker 5: Or forthcoming, have been granted, then the project could continue.
• 37:49
  Speaker 5: And I don't necessarily see it as delaying the completion
• 37:55
  Speaker 5: or leaving a hole in the ground, it seems to
• 37:57
  Speaker 5: me like everybody's going to say at the end of
• 38:00
  Speaker 5: the day, let's do it.
• 38:02
  Speaker 1: Let's just not do exactly all of that.
• 38:04
  Speaker 5: Or maybe we can scale it back or maybe we
• 38:07
  Speaker 5: can make it more, in a sense, maybe it can
• 38:09
  Speaker 5: refer to the pre-existing East Wing in some way that
• 38:13
  Speaker 5: reminds us that it used to be there. I don't know.
• 38:15
  Speaker 1: Hard to predict how it might shake out.
• 38:18
  Speaker 5: But without consultation, you're not going to get anything but
• 38:22
  Speaker 5: Trump's vision, obviously.
• 38:23
  Speaker 3: I'd be surprised if the Supreme Court made a decision
• 38:26
  Speaker 3: on this quickly. But we'll see. Thanks so much, James.
• 38:30
  Speaker 3: That's Professor James Fander of Northwestern Law School. And that's
• 38:34
  Speaker 3: it for this edition of the Bloomberg Law Show. Remember,
• 38:37
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• 38:39
  Speaker 3: Bloomberg Law podcast. You can find them on Apple Podcasts, Spotify,
• 38:43
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• 38:49
  Speaker 3: tune into the Bloomberg Law Show every weeknight at 10 p.m.
• 38:53
  Speaker 3: Wall Street time. I'm June Grosso, and you're listening to Bloomberg.