Week in Review

IN THE NEWS:

• The Supreme Court of Virginia ruled that the constitutional amendment authorizing new redistricting in Virginia violated Article XII, Section 1 of the Virginia Constitution in a 4-3 decision. The new district map was approved by Virginia voters in a ballot question in March by a margin of 3.48 percentage points. Following the ruling, Virginia Attorney General Jay Jones  filed an emergency appeal to the U.S. Supreme Court, asking for a stay on the decision, which would allow for Virginia to use the new map rejected by the state supreme court for the 2026 election. The map used by Viriginia could determine whether the Democrats receive four more seats in the U.S. House of Representatives after the upcoming midterm election.
• The U.S. Food and Drug Administration (FDA) issued a request for information seeking public input on a proposed pilot program to evaluate the use of artificial intelligence (AI) in early-phase clinical trials. The initiative is intended to explore whether AI-enabled technologies can improve trial efficiency, enhance safety monitoring, support dose-selection decisions, and accelerate regulatory decision-making while maintaining FDA’s scientific and regulatory standards. FDA stated that the pilot program would emphasize “trustworthy AI” principles aligned with the National Institute of Standards and Technology (NIST) AI Risk Management Framework. The agency also requested comments on program structure, participant selection, evaluation metrics, and safeguards for AI systems used in clinical research.
• The U.S. Environmental Protection Agency (EPA) proposed amendments to the National Emission Standards for Hazardous Air Pollutants that would ease regulatory constraints on commercial sterilization facilities that use ethylene oxide (EtO). These amendments would save industrial facilities that sterilize food and medical supplies with ethylene oxide, a chemical compound currently heavily regulated by Biden-era EPA rules due to their carcinogenic qualities, up to $630 million in compliance costs over the next two decades. The Trump administration claimed the savings will increase supply chain security and questioned the validity of the Obama-era studies on which the Biden-era regulations are predicated. If EPA adopts the proposed amendment, regulated sterilization facilities must ensure compliance with both federal and state EtO emissions standards as states retain latitude to impose their own regulatory schemes for EtO emissions.
• The Federal Communications Commission (FCC) approved EchoStar’s sale of wireless spectrum licenses to SpaceX and AT&T. The transactions are intended to resolve ongoing FCC concerns regarding EchoStar’s compliance with network buildout and spectrum utilization obligations while allowing the company to reduce debt and stabilize its wireless operations. Under the approved agreements, AT&T will acquire EchoStar’s 3.45 GHz and 600 MHz spectrum licenses for roughly $23 billion to expand coverage in rural and underserved areas. SpaceX will obtain AWS-4 and H-Block spectrum licenses to support next-generation Starlink direct-to-cell satellite services. The sale also comes with an escrow requirement that the company place $2.4 billion in escrow to cover potential disputes. The FCC’s approval follows months of regulatory scrutiny after FCC Chairman Brendan Carr launched an investigation into whether EchoStar had satisfied federal 5G deployment obligations tied to its spectrum licenses.
• General Motors (GM) agreed to pay a $12.75 million civil penalty as part of a settlement with the California Department of Justice for violating the California Consumer Privacy Act and the California Unfair Competition Law. These penalties, the largest in the history of the state, stemmed from GM’s unauthorized sale of hundreds of thousands of customers’ information to two data brokers: Verisk Analytics (Verisk) and LexisNexis Risk Solutions (Lexis). Between 2020 and 2024, GM sold the names, personal contacts, geolocation information, and driving behavior data of its California-based customers without their knowledge or consent, profiting by approximately $20 million in the process. Verisk and Lexis then used the data—sourced from GM’s OnStar emergency vehicle communication systems—to develop analytics for auto insurance companies to set driver-specific insurance rates.
• The U.S. Attorney’s Office for the District of Maryland and the U.S. Department of Justice filed criminal charges against two corporations and their technical superintendent in relation to the March 26, 2024 collapse of the Francis Scott Key Bridge in Maryland. Following an investigation by the Federal Bureau of Investigation, the Coast Guard Investigative Service, and EPA’s Criminal Investigation Division, the indictment alleged that Motor Vessel Dali lost power twice in a four-minute span due to the defendants’ improper use of a flushing pump that could not automatically restart following a blackout, allegedly causing the vessel to crash into the bridge and kill six construction workers. The defendants faced charges including conspiracy to defraud the United States, failure to report hazardous conditions to the U.S. Coast Guard, obstruction of a National Transportation Safety Board (NTSB) proceeding, and false statements to the NTSB, while the two corporations faced additional alleged violations of the Clean Water Act, Oil Pollution Act, and Refuse Act for discharging pollutants into the Patapsco River. These charges follow a $103 million civil settlement the Justice Department reached with one of the corporations and the ship’s owner in October 2024.
• The NAACP filed a motion for a preliminary injunction in its ongoing litigation against a Memphis, Tennessee data center owned by the tech company X.AI. The NAACP, represented by the Southern Environmental Law Center and Earthjustice, sought to halt the use of 33 gas-fired turbines it claims violate the Clean Air Act until X.AI receives proper permits and installs necessary pollution controls. Court filings alleged that the data center, which powers the Grok chatbot, endangers residents of the predominantly Black and working-class surrounding neighborhoods by emitting  nitrogen oxide and other toxins. If granted, an injunction would prove costly for X.AI, as the company has heavily invested in infrastructure in the Memphis region while attempting to compete with OpenAI, Anthropic, and Google.
• The U.S. Attorney’s Office for the District of Massachusetts (USAO-MA) and the Securities and Exchange Commission (SEC), in parallel actions, charged 30 and 21 individuals respectively in a global insider trading scheme involving the misappropriation of confidential information from leading corporate law firms advising on mergers and acquisitions. Nicolo Nourafchan, a Los Angeles mergers and acquisitions attorney, allegedly accessed his firms’ internal networks to obtain material non-public information (MNPI) on pending corporate transactions and, along with his partner Robert Yadgarov, a New York attorney, recruited other attorneys and insiders to serve as additional sources of inside information. Between 2018 and 2024, Nourafchan and Yadgarov allegedly provided MNPI to scheme participants in exchange for kickbacks from trading profits generated across more than 12 pending corporate transactions.

WHAT WE’RE READING:

• In a recent Urban Institute report, Yipeng Su, a senior research associate in the Urban Institute’s Housing and Communities Division, Will Curran-Groome, a research associate in the Urban Institute’s Housing and Communities Division, and Yonah Freemark, the principal research associate of the Urban Institute’s Housing and Communities Division examined how large-scale upzonings affect housing supply in New York City and Philadelphia. Upzoning refers to the process of revising zoning regulations to permit greater development density on a parcel of land. Su, Curran-Groome, and Freemark found that neighborhood upzonings increased housing supply in New York City by over 4,000 additional units within four years, in comparison to similar areas that were not upzoned. They also found that zoning code reform in Philadelphia increased housing unit permits. Nevertheless, Su, Curran-Groome, and Freemark  advised policymakers looking to enact upzoning programs that the effects of the upzoning changes in these two cities depended on local market conditions and complementary pro-development policies.
• In a recent article published in the Yale Journal on Regulation, Jeremy C. Kress, an associate professor at the University of Michigan Ross School of Business, examined the “least cost” requirement that governs how federal regulators resolve failed banks. Kress argued that the requirement, which directs regulators to minimize costs to the Deposit Insurance Fund, distorts bank resolution by prioritizing short-term financial costs over broader concerns such as competition, financial stability, and inclusion. Drawing on historical analysis and recent case studies, including JPMorgan’s acquisition of First Republic Bank, Kress contended that the framework has contributed to increased market concentration and systemic risk. Kress concluded that Congress should repeal the least-cost mandate to allow regulators to consider a wider range of economic and social impacts when resolving failed banks.
• In a recent Brookings Institution report, Anthony F. Pipa, a senior fellow at Brookings’ Center for Sustainable Development (CSD), and Adam Aley, a policy analyst at CSD, argued that the public-private partnership between the Oregon office of the U.S. Department of Agriculture Office of Rural Development (USDA-RD) and Rural Prosperity Partners (RPP) offers a practical model for expanding affordable broadband access in underserved communities. Although the Infrastructure Investment and Jobs Act set aside nearly $2 billion for USDA-RD’s ReConnect Program, which supports broadband deployment in rural and tribal communities, many rural internet service providers lack the staffing and expertise necessary to navigate federal funding applications. Pipa and Aley suggested RPP’s Oregon Pilot Program helped bridge capacity gaps for three applicants by providing hands-on, tailored support. Pipa and Aley recommended that other pilot programs build on this success by offering individualized support for underserved applicants, implementing follow-on training for grant awardees, and streamlining the grant application process to eliminate barriers to entry.

EDITOR’S CHOICE:

• In an essay in The Regulatory Review, Walter G. Johnson, a fellow at the Center for Law and the Biosciences at Stanford Law School, argued that FDA should consider lessons from the 2008 financial crisis when developing regulations for AI in health care. Johnson noted that a proposed FDA program that would approve developers’ software plans before development and evaluate the final products based on the principles described in the initial plans resembled the principles-based approach used by financial regulators in the United Kingdom before 2008. Johnson claimed that the financial crisis demonstrated the risks of principles-based regulation and argued that increased funding for AI regulation and a focus on “health equity” could help FDA avoid those risks.