Week in Review

IN THE NEWS

• President Donald J. Trump issued an executive order aimed at reducing prosecutions of criminal regulatory offenses. The order directs agency heads to produce reports identifying the criminal regulatory offenses enforceable by the agency or the U.S. Department of Justice, as well as the range of potential criminal penalties for those offenses. The order also indicates that, at present, criminal regulatory offense prosecutions should target individuals or entities who are alleged to have known they were engaging in illegal conduct. President Trump claims that the order will “ease the regulatory burden on everyday Americans.” The House Judiciary Committee held a hearing on the same topic this week, where witnesses emphasized the injustices of alleged overregulation and urged the government to shift away from criminal regulatory offenses that do not require a guilty mental state for conviction.
• President Trump issued an executive order aimed at lowering prescription drug costs by requiring drug manufacturers to offer American consumers the lowest price they charge in other developed nations. The order directs federal agencies to implement policies that secure these “most-favored-nation” prices and to take regulatory, enforcement, and trade actions if drug companies refuse to comply. The Trump Administration argued that this policy initiative will stop Americans from subsidizing foreign health care systems and ensure affordable access to life-saving medicines for patients in the United States.
• The Consumer Financial Protection Bureau (CFPB) withdrew 67 guidance documents, including policy statements, interpretive rules, and advisor opinions, dating back to 2011. Acting CFPB Director Russell Vought suggested that revoking these documents will reduce compliance burdens and advance President Trump’s deregulation goals. The rescinded documents include CFPB policies on overdraft fees, fair lending, disclosures, and the Fair Credit Reporting Act. Vought also indicated that the CFPB will continue to reduce its regulations to only “statutorily required” areas, noting that industry should treat the withdrawn documents as nonbinding.
• President Trump signed four Congressional Review Act resolutions into law, repealing Biden-era regulations on energy efficiency standards for consumer and commercial appliances. The repealed regulations were U.S. Department of Energy rules that imposed stricter standards for household appliances, including dishwashers, washing machines, and gas-fired water heaters, as well as commercial equipment such as walk-in freezers and refrigeration units. The Trump Administration and other supporters, such as Congressman Brett Guthrie (R-Ky.), Chairman of the House Committee on Energy and Commerce, maintain that the repeals will reduce costs for manufacturers, small businesses, and consumers by protecting product availability and consumer choice, while opponents, such as the Appliance Standards Awareness Project, warned that the rollbacks could increase energy consumption, raise utility bills, and undermine long-term environmental goals.
• The U.S. Environmental Protection Agency (EPA) announced plans to weaken limits set by the Biden Administration last year on four Per- and Polyfluoroalkyl Substances (PFAS). These “forever chemicals” have been linked to health conditions including “cancer, kidney and thyroid issues, weakened immune systems and fertility issues.” EPA will eliminate and reconsider the four limits. EPA will also keep two other Biden-era limits on “common types” of PFAS, but EPA will extend that compliance deadline by two years. EPA Administrator Lee Zeldin said the agency plans to “uphold nationwide standards to protect Americans,” while at the same time providing “common-sense flexibility in the form of additional time for compliance.”
• President Trump signed a rule into law under the Congressional Review Act, repealing a Biden-era Consumer Financial Protection Bureau (CFPB) rule that expanded federal oversight of digital payment platforms. The rule, known as the “Large Participant Rule,” required nonbank financial technology providers, such as digital wallets and peer-to-peer payment apps, to submit to direct CFPB supervision. Supporters, including U.S. Senator Pete Ricketts (R-Neb.) and the Financial Technology Association, argued that the repeal limits regulatory overreach, protects innovation in digital payments, and lowers consumer costs. Opponents, such as the Center for Digital Democracy, however, cautioned that the repeal could limit oversight of financial services and reduce consumer protections.
• The U.S. Department of Energy (DOE) announced its largest deregulatory effort in history, proposing the elimination or reduction of 47 regulations and citing cost and “quality of living” concerns. DOE estimates that this deregulatory effort will save approximately $11 billion and cut more than 125,000 words from the Code of Federal Regulations. The eliminated regulations include consumer appliance standards and nondiscrimination requirements for grant recipients.
• The U.S. House Committee on Energy and Commerce proposed a tax bill aimed at banning states from enforcing any regulation related to artificial intelligence (AI) for a 10-year period. The bill would specifically prohibit the enforcement of any law or regulation on “artificial intelligence models, artificial intelligence systems, or automated decision systems.” If passed, this bill would align with the Trump Administration’s emphasis on promoting AI “innovation over regulation.” Last year alone, states considered nearly 700 AI bills, 113 of which were enacted into law.

WHAT WE’RE READING THIS WEEK

• In an article in the Stanford Law Review, Nicholas Bednar, an associate professor of law at the University of Minnesota Law School, argued that “insufficient capacity” prevents Presidents from implementing their policy agendas at federal agencies. Bednar noted that policymaking capacity varies across federal agencies much more than people assume and that, especially among low-capacity agencies, Presidents often struggle to implement their agendas regardless of whether they have significant control over those agencies. Bednar suggested that, in order to pursue presidential policy agendas effectively, administrations need to prioritize effective management, rather than presidential control, which can cause agencies to struggle to hire experts.
• In a paper published by the C. Boyden Gray Center for the Study of the Administrative State, Andrea Renda, a senior research fellow at the Centre for European Policy Studies, analyzed international “regulatory budgeting” schemes, including “One-In-One-Out” offsetting mechanisms that tie new regulatory costs to equivalent reductions in existing burdens. Renda surveyed nine jurisdictions, including Canada, France, Korea, and the European Union. He found that implementation choices such as measuring costs based on activity, exempting certain groups from rules, and embedding the process into government’s regular operations drove varying degrees of success in reducing costs and reviewing existing rules, while offsetting mechanisms achieved both of these goals. Renda recommended reviving cost-based offsetting rules and leveraging digital platforms to enhance transparency and regulatory quality.
• In a recent Brookings Institution article, Brooke Tanner, a research analyst at the Center for Technology Innovation at Brookings, argued that the basic elements of AI policy have remained the same between the Biden and Trump Administrations. Tanner explained that the recent memoranda issued by the Trump Administration’s Office of Management and Budget preserve Biden-era commitments to innovation and trustworthiness and requirements for agencies to appoint Chief AI Officers. She contended, however, that the Trump Administration’s revised list of sensitive AI uses eliminated Biden-era protections for election infrastructure and nonconsensual likeness replication. Tanner noted that these memoranda may preview the priorities in the forthcoming AI Action Plan under development by the Office of Science and Technology Policy as mandated by a recent executive order.

EDITOR’S CHOICE

• In an essay in The Regulatory Review, Shonn Hiatt, an associate professor at the University of Southern California Marshall School of Business, and Jake Grandy, an assistant professor at the University of Arkansas Walton College of Business, suggested that allowing agency officials greater discretion in applying and enforcing policy leads to improved outcomes for entrepreneurs in the U.S. energy market. Hiatt and Grandy found that greater agency discretion reduced the lobbying influence of incumbent energy firms and enhanced the impact of stakeholder activism through the administrative process. They urged that elected officials, when trying to advance clean energy policy, should also seek to improve agency organization and licensing processes.