Week in Review

IN THE NEWS:

• The U.S. Department of Commerce reportedly ordered Anthropic to disable use of its Fable 5 and Mythos 5 large language models to U.S. citizens present in the United States, prompting Anthropic to suspend access to all users. Anthropic argued that the cybersecurity concern identified by the federal government was less significant than officials claimed. Anthropic CEO Dario Amodei reportedly advocated stronger AI regulation and maintained that the government should have the authority to restrict the use and release of dangerous technologies. He reportedly contended, however, that the cybersecurity concern was vague and originated from a misunderstanding of the safeguards limiting customer use of Fable 5 and Mythos 5. Other industry leaders suggested that the Trump Administration acted out of animus toward Anthropic and deployed the regulation in a biased manner that favored the company’s competitors.
• The United Kingdom’s Department for Science, Innovation and Technology announced plans to prohibit social media platforms from offering services to individuals under the age of 16. The proposal would apply to user-to-user platforms such as TikTok, YouTube, and Instagram while exempting messaging services such as WhatsApp and Signal. The proposal also would restrict online livestreaming and communication between strangers and users under the age of 16. The government stated that the measures are intended to protect children online, noting that live content can be difficult to moderate and that algorithmic feeds can increase exposure to harmful material. Officials announced plans to introduce enhanced age verification checks to ensure the rules are followed and noted that first regulations could take effect in spring 2027.
• The U.S. Department of Education announced new agreements with the U.S. Department of Justice and the U.S. Department of Health and Human Services (HHS) to transfer responsibility for key disability and civil rights functions. Under the agreements, HHS will oversee many programs currently administered by the Education Department’s Office of Special Education and Rehabilitative Services, while the Justice Department will assume responsibility for enforcing federal civil rights laws in education and handling student privacy matters. U.S. Secretary of Education Linda McMahon stated that the partnerships will strengthen support for individuals with disabilities while maintaining federally required protections. The transfers followed a continued effort by the Trump Administration to reorganize the Education Department. Critics of the shift argued that the move will limit federal oversight of special education and reduce investigations into complaints of discrimination under federal law in education.
• The U.S. Department of Agriculture (USDA) removed parts of its regulations that permitted disparate impact discrimination claims under Title VI of the Civil Rights Act of 1964, which prohibits federally funded programs from discriminating on the basis of race or national origin. The USDA maintained that Title VI prohibits only intentional discrimination, an interpretation that aligns USDA regulations with the Justice Department’s implementation of an executive order requiring agencies to eliminate affirmative action programs. For example, the USDA’s regulation eliminates effects-based liability for facility siting, meaning that “affirmative action” in site selection for operations receiving USDA funding is no longer permissible. The rule also removed disparate impact language from the USDA’s definitions of employment practices that violate Title VI, leaving only protections against intentional workplace and hiring discrimination in place.
• A federal district court overturned the U.S. Department of Energy’s cancellation of $82.1 million in clean energy grants that had been awarded during the Biden Administration. Judge Amit Mehta of the U.S. District Court for the District of Columbia vacated the termination of 11 projects located in New York, Oregon, Connecticut, Minnesota, and Colorado that included initiatives to reduce the costs of hydrogen energy. The court held that the Energy Department’s grant terminations violated the Fifth Amendment’s equal protection guarantee because they were motivated by the political affiliation of recipient states rather than a legitimate governmental interest. Energy Secretary Chris Wright stated that politics were not involved in the decision making process.
• The Centers for Medicare & Medicaid Services (CMS) proposed a rule to implement the Medicare Drug Price Negotiation Program established by the Inflation Reduction Act.. The proposed rule would turn policies that CMS had previously issued through guidance documents, which are not legally binding, into official regulations. These policies include procedures for selecting drugs for negotiation and negotiating maximum fair prices. CMS also proposed several updates to the program, including changes to the treatment of certain combination drugs, procedures for evaluating generic and biosimilar competition, and requirements governing renegotiation eligibility for selected drugs.
• The U.S. Securities and Exchange Commission (SEC) proposed amendments to Regulation NMS, a set of rules that governs how stocks are traded in U.S. markets. The proposal would remove two rules adopted in 2005. One of these rules requires brokers and exchanges to send stock buy and sell orders to the market offering the best available price. The other rule prevents markets from displaying conflicting buy and sell prices for the same stock. The SEC argued that advances in trading technology and increased connectivity among markets have made these rules less necessary. According to the SEC, the proposed amendments would lower compliance costs, simplify stock trading, and allow competition and innovation to play a larger role in shaping market structure.
• The European Parliament approved new regulations governing the design, manufacture, sale, reuse, and recycling of vehicles. The Parliament and the European Council designed the regulations to increase oversight of vehicles throughout their life cycles and ensure greater sustainability in the automobile industry and in consumer use. These regulations would prioritize recycling and sustainable disposal, requiring manufacturers to cover the cost of collecting and handling end-of-life vehicles within the European Union.

WHAT WE’RE READING:

• In a recent Center for American Progress report, Rosa Barrientos-Ferrer, a senior policy analyst at the Center, examined the role that Deferred Action for Childhood Arrivals (DACA) recipients play in addressing the nation’s nursing shortage. Barrientos-Ferrer highlighted the experiences of three registered nurses with DACA recipient status who provide critical frontline care in their communities despite ongoing uncertainty about their immigration status and threats of deportation. She found that DACA recipients help fill important workforce gaps in the health care sector at a time when the United States faces a growing shortage of nurses and increasing demand for medical services. She stated that state licensing restrictions, delays in DACA renewals, and heightened immigration enforcement create barriers that can disrupt the health care workforce and limit access to care. Barrientos-Ferrer advised protecting DACA recipients and providing a pathway to permanent legal status to bolster the nursing workforce and improve health care access for communities across the country.
• In a recent article in the Yale Journal on Regulation, professors Gladriel Shobe, Jarrod Shobe, and William W. Clayton of Brigham Young University J. Reuben Clark Law School argued that the contentious contractual control rights invalidated in West Palm Beach Firefighters’ Pension Fund v. Moelis & Co. were uncommon and tended to dissipate in the years following a corporation’s IPO. Shobe, Shobe, and Clayton claimed that Delaware’s legislative response to Moelis went beyond protecting existing industry standards and instead enabled broader private contractual control for shareholders. Shobe, Shobe, and Clayton argued that the legislation particularly favored private equity sponsors and that founder-focused corporate governance faced less risk from the Moelis decision than advocates of the legislation asserted.
• In a recent report for the Brookings Institution’s Hamilton Project, Kimberly Clausing, the Eric M. Zolt Chair in Tax Law and Policy of UCLA School of Law, argued that the United States should strengthen its international corporate tax system and pursue greater international tax cooperation. She explained that the current U.S. international tax system leaves corporate tax revenues low and continues to permit substantial profit shifting to low tax jurisdictions. To address these concerns, Clausing proposed raising corporate tax rates for the largest corporations, adopting a stronger minimum tax on multinational corporations’ foreign profits, and expanding the corporate tax base to better target excess profits. Clausing estimated that the proposed reforms could raise about $4 trillion over the 2030–2039 budget window, while increasing taxes on the largest corporations and reducing some incentives to shift profits to low tax countries.

EDITOR’S CHOICE:

• In an essay in The Regulatory Review, Nicolas Terry, a professor at the Indiana University McKinney School of Law, argued that the Health Insurance Portability and Accountability Act (HIPAA) has struggled to keep pace with technological change over its first 25 years. Terry examined how HIPAA was designed to regulate health information generated within the traditional health care system, but an increasing amount of health-related data is now collected through consumer technologies and digital platforms that often fall outside HIPAA’s protections. Terry explained that this shift has created significant gaps in privacy safeguards because consumers may assume their health information is protected when it is not. He also cautioned that health care providers and technology companies increasingly rely on data-sharing arrangements that complicate HIPAA’s regulatory framework. Terry urged for updated privacy protections due to HIPAA’s shrinking influence in the digital health era.