Week in Review

IN THE NEWS:

• President Donald J. Trump issued an executive order directing federal financial regulators to review existing regulations and supervisory practices that may impede financial technology firms from entering financial services markets. The order states that regulations should be updated to facilitate the integration of digital assets into traditional financial services while removing burdensome practices that only benefit incumbent financial services firms. The order instructs agencies including the U.S. Securities and Exchange Commission, the Commodity Futures Trading Commission, and the Consumer Financial Protection Bureau to encourage innovation, competition, and collaboration between financial technology firms and federally regulated financial institutions.
• The U.S. Environmental Protection Agency (EPA) proposed a rule rescinding its previous per- and polyfluoroalkyl substances (PFAS) regulations in drinking water. The previous regulations set maximum contaminant levels for PFAS and required public water systems to comply with the contaminant levels by April 2029. EPA explained that, in adopting those existing regulations, the agency had proposed its regulatory determination and finalized the previous regulations at the same time, which the agency now has claimed violated the procedures required by the Safe Drinking Water Act. EPA noted that it will evaluate whether more PFAS regulation is necessary after finalizing its proposed rescission.
• The U.S. Department of Justice (DOJ) announced the new “Anti-Weaponization Fund” as part of a settlement agreement in Trump v. Internal Revenue Service. The Fund will receive $1.776 billion from standing congressional appropriations, providing a process for individuals alleging they were subjected to government weaponization to seek formal apologies and monetary relief. Under the settlement, President Trump, his sons, and the Trump Organization agreed to drop their lawsuit against the IRS in exchange for the Fund’s creation, although they will receive no monetary damages. A separate addendum to the agreement granted President Trump, his family members, and his businesses immunity from pending and future tax audits and prosecutions, drawing criticism from tax experts who raised concerns about the action.
• The Centers for Medicare & Medicaid Services (CMS) announced a new anti-obesity pilot program that will provide eligible Medicare beneficiaries with access to certain weight loss medications, including Wegovy. The Medicare pilot program will run from July 1 through December 31, 2027, and it is intended to lay the groundwork for CMS’s Better Approaches to Lifestyle and Nutrition for Comprehensive Health (BALANCE) model launching next year. Under the BALANCE model, CMS would negotiate directly with drug manufacturers on behalf of state Medicaid agencies to lower costs and increase access to chronic weight management medications for Medicare and Medicaid beneficiaries. State Medicaid agencies can apply to participate in the BALANCE model through the State Request for Applications process now through January 1, 2027.
• EPA announced new efforts to address rising grocery prices by loosening federal rules that require supermarkets and air-conditioning businesses to reduce their use of hydrofluorocarbons, a type of greenhouse gas used in refrigerants. The Trump Administration argued that the transportation of refrigerated goods contributes to high food costs. Although the Biden Administration issued the refrigerant regulations, they stemmed from the bipartisan American Innovation and Manufacturing Act, which President Trump signed in 2020 to phase out hydrofluorocarbons by 2036. EPA Administrator Lee Zeldin emphasized that these new actions will give businesses cost-saving flexibility in choosing cooling systems while still complying with the Act’s statutory requirements.
• Minnesota passed a law banning the operation of prediction markets in the state, making Minnesota the first state to enact a prediction markets ban. The law, which will go into effect on August 1, 2026, criminalizes the creation and operation of markets that allow people to place bets on outcomes of future events, such as athletic games, political developments, and international events. In response, the U.S. Commodity Futures Trading Commission filed a lawsuit seeking an injunction to block the law from taking effect, claiming that only the federal government can regulate prediction markets.
• A federal district court barred immigration agents from routinely arresting individuals attending proceedings at several New York immigration courts. Judge P. Kevin Castel of the U.S. District Court for the Southern District of New York granted an injunction limiting arrests at immigration courthouses after concluding that individuals should be able to pursue asylum claims and attend deportation hearings without fear of detention.The ruling addressed an enforcement practice adopted during the Trump Administration that permitted federal agents to detain noncitizens after court appearances. Judge Castel explained that the federal government retained the authority to conduct arrests away from immigration courts and to detain those who pose serious public safety threats.
• A federal district court temporarily barred a Georgia judicial oversight panel from publicly disclosing alleged judicial conduct violations involving two candidates for the Georgia Supreme Court. Judge Leslie Gardner of the U.S. District Court for the Northern District of Georgia issued a temporary restraining order preventing a special committee of the Georgia Judicial Qualifications Commission from releasing accusations that the candidates violated judicial conduct rules during their campaigns. The committee had alleged that the candidates improperly supported one another in the election and made statements about reproductive rights that could indicate how they might rule on future cases. Judge Gardner ruled that the candidates’ public statements about reproductive rights and endorsements from advocacy organizations constituted protected speech under the First Amendment.

WHAT WE’RE READING:

• A report by the U.S. Government Accountability Office (GAO) examined agency efforts to manage cybersecurity risks associated with telecommunications and video surveillance equipment linked to China. When equipment covered by foreign entities is connected to an agency’s information technology (IT) network, cybersecurity risks increase because the equipment can then be exploited remotely by malicious threat actors. GAO reviewed how six federal agencies, including the U.S. Department of Defense and the U.S. Department of Energy, addressed any potential risks associated with covered equipment through inventory searches and IT network scans, among other methods. GAO found that only the Defense Department and the Energy Department reported identifying a small number of devices linked to China and took steps to address associated risks, including blocking external access.
• In a recent Brookings Institution working paper, Michael D. Bauer of the Federal Reserve Bank of San Francisco, Diego R. Känzig of Northwestern University, and Glenn D. Rudebusch of the Brookings Institution examined how carbon pricing policies affect inflation expectations in Europe. They studied how financial markets responded to regulatory announcements under the European Union Emissions Trading System and found that higher carbon prices increased expectations of future inflation over both short and long time periods. They also found that investors did not expect the European Central Bank to respond to those inflationary pressures through higher interest rates. Bauer, Känzig, and Rudebusch concluded that central banks may need to account for the inflationary effects of climate regulation when making monetary policy decisions.
• A report by GAO investigated the approach of the U.S. Army Corps of Engineers for overseeing compensatory mitigation activities. The Corps issues permits for activities that affect wetlands and streams and requires some permit recipients to complete compensatory mitigation activities that restore affected wetland areas to offset other damage. GAO found that the Corps’ oversight of mitigation activities has improved since 2005, but the lack of specific guidance from Corps headquarters meant that districts vary in their oversight approach. GAO recommended that the Corps develop specific guidance about compensatory mitigation standards to encourage greater uniformity across districts.

EDITOR’S CHOICE:

• In an essay in The Regulatory Review, Jill E. Family, the associate dean for faculty research & development at Widener Law Commonwealth, argued that the push for deregulation in the first Trump Administration conflicted with its increased regulation of immigration. Family noted that the concerns cited by proponents of deregulation mirror issues raised by growing immigration enforcement, such as restrictions on liberty, overwhelming government power, and significant agency discretion. Family suggested that the contrast between the Administration’s approach to immigration regulation and its approach to other forms of regulation raised questions about why the Administration was willing to increase regulation in some areas while criticizing it in other contexts.