Week in Review

IN THE NEWS

• California voters passed Proposition 31, a ballot measure to uphold a 2020 law banning the sale of flavored tobacco products. Proponents of the law argued that flavored tobacco products were luring teenagers into potential nicotine addictions. Opponents of the law, however, suggested that banning the products would not eliminate demand for them, creating a black market that would be expensive for the state to combat. California’s nonpartisan Legislative Analyst’s Office estimated that the law will cost the state $100 million in lost tax revenue.
• Missourians voted to pass Amendment 3, a ballot measure to amend the state constitution to legalize recreational marijuana. Amendment 3 will allow adults 21 and older to purchase marijuana for recreational use. The amendment will also expunge misdemeanor marijuana offenses for those who are no longer in prison, on parole, or on probation, and will allow for those incarcerated for misdemeanor marijuana offenses to petition for release.
• Nebraska voters passed an initiative that amended the state constitution to establish a voter identification requirement. Opponents of the change argued this requirement would have a disproportionate effect on elderly, low-income, and transient workers’ ability to vote. Supporters of the initiative noted Nebraska was one of only 16 states without such a requirement. The initiative directs the Nebraska legislature to determine the type of identification that will be required.
• The Office of Personnel Management issued a final rule that plans to restore clean-record agreements, which are settlement agreements that allow agencies to remove adverse information from an employee’s personnel file after resolution of an employment complaint or action. The rule responds to a 2021 executive order issued by President Joseph R. Biden that revoked previous executive orders establishing federal employee removal procedures. With this new rule, the office hopes to “empower agencies” to simultaneously protect and rebuild the federal workforce and retain discretion over personnel management and dispute resolution.
• The New York City Mayor’s Office of Special Enforcement proposed a new rule clarifying the registration requirements for hosts of short-term apartment rentals. The new regulation would prohibit hosts from renting out an entire unit and would require them to provide the city with diagrams of their apartment, a copy of their lease, and other documentation. Hosts would face a $5,000 fine for violating the regulations, while hosting platforms, such as Airbnb, would incur a $1,500 fine per violation. Christian Klossner, the executive director of the Office of Special Enforcement, noted that the new rules would provide straightforward requirements and clarify the laws. A spokesperson for Airbnb, however, contended that they are “draconian and unworkable.”
• The Alcohol and Tobacco Tax and Trade Bureau proposed a rule to update its trade practice regulations that currently ban alcohol distributors from creating exclusive sales partnerships, selling alcohol by consignment, or engaging in commercial bribery. The bureau clarified that the regulations have not been updated in over 20 years and requested public comments to evaluate the current regulations and provide insight on potential updates specific to the digital marketplace. The proposed rule is in response to President Biden’s executive order promoting economic competition, the bureau noted.
• The U.S. Food and Drug Administration (FDA) issued a final rule that determined spirulina extract, an extract from a type of blue-green algae, is safe for consumption. FDA has previously recognized other spirulina-based products as safe for human consumption, and the spirulina extract subject to this rule has undergone similar safety tests and certifications. FDA claimed this action will not have a significant effect on the environment.
• The U.S. Department of Justice announced a proposed settlement with the city of Elyria, Ohio to resolve the city’s violations of the Clean Water Act. The proposed settlement will have a 30 day public comment period before finalization. The settlement would require the city—whose sewers allegedly overflowed into Black River more than 1,000 times since 2011—to improve current water quality and develop infrastructure to limit the sewage leaks. These improvements are anticipated to cost Elyria nearly $250 million, in addition to a civil penalty of $100,000 to the United States and $100,000 to the Ohio surface water improvement fund.

WHAT WE’RE READING THIS WEEK

• In a Brookings Institution report, Jonas Meckling, professor at the University of California, Berkeley and Jesse Strecker, Ph.D. candidate at the University of California, Berkeley, argued that regulations must be tied to public investment to address climate change. Meckling and Strecker acknowledged that the current policy trend of public investment—as evidenced by measures such as the Inflation Reduction Act—is an essential part of decarbonization yet do not mandate the technological innovation that will drive decarbonization. They proposed “green bargains”, which pair government funding with regulatory requirements as a method of ensuring that decarbonization goals are actually met. Meckling and Strecker encouraged policymakers to pair green bargains with accountability measures like monitoring and reporting to enable policymakers to end funding to corporations when they fail to comply with requirements.
• In a Yale Journal on Regulation article, Jens Frankenreiter, a professor at Washington University in St. Louis School of Law, argued that the “California Effect,” or its international counterpart the “Brussels Effect,” may not be a reliable trend in regulatory compliance for all sectors. The effect refers to when a business complies with the most restrictive regulatory standards that apply to it because it would cost more to vary compliance by geography. Frankenreiter studied data privacy laws from the European Union, which give consumers more protections than U.S. law. Frankenreiter found that U.S. companies provide their U.S. consumers with less data protections than their EU consumers. The California/Brussels Effect is not prevalent for all types of regulation, specifically data privacy, Frankenreiter concluded.
• In a Brookings Institution report, Francesco D’Acunto and Alberto Rossi, both professors at the Georgetown University McDonough School of Business, argued that “robo-advisors”—automated programs that use algorithms to provide financial advice—may be a tool for reducing inequality. D’Acunto and Rossi noted that robo-advisors’ growth will soon require regulators to address the issues of potential bias, discrimination, and data privacy concerns in the tools’ algorithms. D’Acunto and Rossi concluded that robo-advisors could lower the cost of financial services, such as investment advice and household budgeting. But they cautioned that existing robo-advisors still do not offer many services aimed at low-income households.

EDITOR’S CHOICE

• In an essay in The Regulatory Review, James A. Gardner, a professor at the University of Buffalo School of Law, argued that Congress must take direct action to ensure free and fair elections. Gardner noted that Americans have traditionally relied on federal courts to ensure elections are democratically legitimate. Gardner warned, however, that recent U.S. Supreme Court cases weakening the Voting Rights Act and failing to take on partisan gerrymandering reveal that this reliance on the judicial system cannot continue. As a result, Gardner urged Congress to act under the election-related regulatory powers granted to it by the U.S. Constitution to pass stalled voting rights legislation.