Weekly Review | Regulatory Review

IN NEWS

• The U.S. Department of Labor, Occupational Safety and Health Administration (OSHA), has proposed new regulations to protect millions of workers from health hazards associated with extreme heat, including heatstroke and death. The proposed regulations would require employers to develop plans to prevent injuries and illnesses in workplaces exposed to excessive heat. The regulations would also impose requirements for drinking water, taking breaks, controlling room temperatures and protecting workers who are not accustomed to excessive heat. Employers would be required to implement training and procedures for responding to heat-related employee illnesses.
• Boeing pleaded guilty to one count of conspiring to defraud the United States for its role in two deadly Boeing 737 Max crashes. Boeing accepted $487 million in fines that were criticized by victims’ families as insufficient. The settlement included oversight by an independent monitor for three years to ensure compliance and improve safety. The company admitted to defrauding the Federal Aviation Administration during the certification of the Boeing 737 Max, a plane that has faced numerous regulatory hurdles amid deadly crashes and other serious accidents. In addition to those remedies, Boeing continues to face ongoing safety concerns and potential further legal scrutiny, with questions about regulatory compliance and the effectiveness of penalties imposed.
• The United States Court of Appeals for the Third Circuit rejected the National Collegiate Athletics Association’s argument that the Fair Labor Standards Act (FLSA) did not apply to college athletes because of their amateur status. The Third Circuit left open the possibility that college athletes could qualify for minimum wage under the FLSA if “the relationship between the athlete and the college or NCAA discloses an economic reality that is an employer-employer relationship.” The case, Johnson vs NCAAwill return to the Eastern District of Pennsylvania, where the trial court will likely apply an economic realities analysis.
• The Internal Revenue Service (IRS) has published final regulations regarding how taxpayers report excise taxes imposed on the sale of designated drugs. The regulations apply to manufacturers, producers, and importers of specified drugs that are “dispensed, furnished, or administered under Medicare during specified statutory periods.” Specific milestones in the Medicare Drug Price Negotiation Program, which apply only to specified high-spending drugs, are defined by statutory periods. The IRS will apply these regulations retroactively, beginning at the beginning of the fourth calendar quarter of 2023.
• The U.S. Treasury Department has issued a proposed rule that would increase oversight of real estate transactions by foreign persons near U.S. military bases. The new rule would expand the authority of the Committee on Foreign Investment in the United States (CFIUS), which reviews real estate transactions near sensitive U.S. government properties, in response to national security concerns about purchases by Chinese individuals near U.S. military bases. The proposed rule would expand CFIUS’s jurisdiction to cover transactions within one mile of 40 U.S. military bases and within 100 miles of 19 other sensitive U.S. government locations.
• The U.S. Department of Justice has issued a final rule establishing a process for determining whether an individual is an employee of the Public Health Service. This designation provides employees with protection under the Federal Tort Claims Act in the event of a medical malpractice lawsuit. The U.S. Attorney General or designee may determine that an individual is not an employee if treating the individual as such “would expose the government to an unreasonably high risk of loss.” One or more of five criteria determine the risk of loss: whether the individual has complied with policies and procedures; whether there is a history of claims filed against the individual; whether the individual has refused to cooperate in the defense of such claims; whether the individual has provided false information about job performance; or whether the individual has been the subject of specific disciplinary actions.
• The Wisconsin Supreme Court has overturned a nearly complete ban on mail-in ballot drop boxes, allowing voters to use them again in the upcoming presidential election. The 4-3 decision overturned a 2022 ruling that declared unattended ballot drop boxes outside clerks’ offices illegal because the Wisconsin Constitution was silent on the issue. The majority of the justices, now considered more liberal after the election of Justice Janet Protasiewicz, ruled that the previous ban was wrongly issued. In its new decision, the court said city officials can use secure ballot drop boxes at their discretion, even if it is not explicitly listed in the Wisconsin Constitution. Conservatives argued that overturning the ban so close to the presidential election could cause confusion, while liberals stressed that the ruling supports the convenience and reliability of voting. Wisconsin is expected to be a key battleground in the upcoming presidential election.
• New York City Mayor Eric Adams and the New York City Department of Sanitation have announced a requirement for special snap-lock bins for properties with one to nine units to rid the streets of black trash bags. Only New York City property owners and building managers can purchase the “NYC Bin,” which is priced below market average for its size and utility and will be required by June 2026. However, until November 2024, New York City property owners and building managers must use a bin with a secure lid or face a fine. Mayor Adams referred to the ordinance as “taking another step forward in the city’s ‘garbage revolution.’”
• Germany has agreed to ban critical components from Chinese companies Huawei and ZTE from core parts of its 5G networks from 2026. Interior Minister Nancy Faeser announced that components from those manufacturers would be banned from 5G core networks by the end of 2026, and that critical management systems in 5G access and transport networks must be replaced by the end of 2029. The move is aimed at protecting Germany’s communications infrastructure from security threats such as sabotage and espionage. The United States and other countries have similarly restricted Huawei equipment over concerns about cyber espionage and sabotage, allegations that Huawei has denied. The move has been seen as a concession to the United States, which has tried to pressure Germany for the past few years to reduce its reliance on Chinese infrastructure.

WHAT WE’RE READING THIS WEEK

• In the article in Yale Journal on RegulationAndrew K. Jennings, an assistant professor of law at Emory University School of Law, discussed the problems that arise when M&A buyers assume the target companies’ criminal or regulatory misconduct. Although the terms of the agreement can address the successor’s liability, “the nonfinancial consequences of criminal convictions cannot be carefully managed.” As a result, buyers may be wary of entering into transactions, which reduces market efficiency. Jennings suggested three prosecutorial policies to prevent this harm. First, M&A-related penalties “would ensure that existing businesses do not lose cash flow that would otherwise be used to operate or invest in new projects.” Second, prosecutors could offer buyers amnesty from criminal liability that occurs before the transaction closes. Finally, Jennings recommended treating forced sales with “special sensitivity,” including safeguards such as requiring signatures and using M&A and financial experts to assess the risks.
• In an article published in Yale Journal on RegulationPeter Conti-Brown, associate professor of financial regulation from the class of 1965 at the Wharton School of the University of Pennsylvania and nonresident fellow in economic studies at the Brookings Institution, and David Skeel, S. Samuel Arsht Professor of Corporate Law at the University of Pennsylvania Carey Law School, have proposed a new strategy for the U.S. government to address economic crises. Conti-Brown and Skeel explained that the Federal Reserve tends to focus exclusively on monetary policy until a financial crisis occurs. They argued that the Federal Reserve should adopt a new approach that includes expanded use of the discount window, an existing strategy for lending to depository institutions to maintain the stability of the banking system. Conti-Brown and Skeel suggested that this new paradigm would allow for earlier intervention and would better address issues such as bailouts and the politicization of crisis responses.
• In an article published in Vanderbilt Law ReviewLaura Dolbow, a Sharswood Fellow at the University of Pennsylvania Carey Law School, has argued that courts and policymakers should consider alternative oversight tools when establishing prohibitions on judicial review. Dolbow analyzed 190 statutory provisions in the United States Code that explicitly prohibit judicial review of agency actions, often directed at internal management decisions, and found that alternative oversight tools, such as reports to Congress and stakeholder consultations, often exist when judicial review is prohibited. Dolbow emphasized that these tools promote democratic values ​​of deliberation, inclusiveness, and public accountability. Dolbow argued that alternative oversight tools can balance effective implementation and should play a key role in the future as policymakers design oversight structures. Prohibitions on judicial review have become a highly contentious issue as recent laws, notably those on Medicare, immigration, and patents, increasingly prohibit judicial review.

EDITORS CHOICE

• In the essay in Regulatory ReviewTroy A. Paredes, a former commissioner of the U.S. Securities and Exchange Commission (SEC) and founder of Paredes Strategies LLC, argued that the SEC needs to modernize its regulations to take into account recent technological advances such as artificial intelligence, machine learning, and blockchain technology. To facilitate modernization, Paredes suggested that the SEC should hire more technology experts, including computer scientists, data scientists, cryptographers, and engineers, to work alongside experts in securities regulation and capital markets. Paredes explained that increased expertise will help the SEC identify technological gaps in regulations as new financial technologies emerge.