Week in Review

IN THE NEWS: 

• U.S. Secretary of Energy Chris Wright issued an emergency order to mitigate blackout risks in the Mid-Atlantic amid rising electricity demand and planned power plant and transmission outages. Issued under Section 202(c) of the Federal Power Act, the order directs PJM Interconnection, a regional grid operator serving 13 states and Washington, D.C., to operate designated generators as needed to maintain grid reliability. The order also authorizes PJM to deploy backup generation as a last resort during severe grid emergencies. The order followed the Federal Energy Regulatory Commission’s rejection of PJM’s proposal to curtail electricity supplies to certain large data centers during shortages, citing concerns about federal authority over retail electricity sales.
• The Internal Revenue Service (IRS) proposed a rule tightening eligibility for the premium tax credit, which helps people pay for health insurance purchased through the Affordable Care Act exchanges, to implement changes made by the One Big Beautiful Bill. The IRS would deny the credit for any month in which an exchange fails to verify an enrollee’s eligibility for reasons related to residency, citizenship, lawful immigration status, household income, and access to other health care coverage. Under the proposal, the IRS would bar some lawfully present immigrants from receiving the credit, including low-income immigrants who are ineligible for Medicaid because of their immigration status. The rule would also eliminate the cap on how much taxpayers must repay at tax time when advance subsidy payments exceed the credit they are owed.
• The Drug Enforcement Administration (DEA) announced it plans to list two potent opioid compounds found in kratom-derived products in the most restrictive category of the Controlled Substances Act, on a temporary basis. The DEA explained that the kratom market has expanded to include concentrated and semi-synthetic products sold online and in gas stations and vape shops, often marketed as lower-risk “botanical” products. Assistant Secretary for HHS Brian Christine recommended limiting restrictions to products with high concentrations of the compounds, so that natural kratom products containing trace amounts can stay on the market. The DEA will adopt HHS’s recommendations next month temporarily.
• The Department of Homeland Security (DHS) proposed rescinding a rule that directs federal officers reviewing work authorization applications to give deference to earlier approvals involving the same applicant and the same facts. Under the current rule, when people apply to renew their work or stay authorizations, DHS defers to previous eligibility determinations, unless the previous decision involved clear error. If the deference policy is rescinded, however, officials would consider the facts of each case without giving weight to previous decisions based on the same facts. DHS argued that the change is necessary to ensure that the applicant bears the burden of proving continued eligibility to work or stay in the United States.
• The U.S. Food and Drug Administration (FDA) announced a new initiative to develop a regulatory framework for drugs and biologics treating rare diseases. The Rare Disease Framework Initiative aims to tailor regulatory requirements to individual diseases, patient needs, and the evidence available from small patient populations. FDA plans to improve regulatory predictability, incorporate patient perspectives into drug reviews, and expand the use of innovative scientific and statistical methods. The agency noted that only approximately five percent of rare conditions have an FDA-approved treatment. The initiative could lead to revised agency guidance, regulations, and review procedures.
• A new rule proposed by the U.S. Customs and Border Protection (CBP) would require train operators to provide advance notice of any person arriving or departing the United States by train. Currently, operators must report to CBP when trains arrive in the United States from a foreign location and can choose to provide advance information about individual travelers. CBP argued, however, that the current system creates security risks because the government does not have enough time to determine if travelers are violating immigration or customs laws. Under the proposed rule, CBP would inspect traveler lists and could recommend that train operators not allow individual travelers to board if CBP determines that the individuals pose security risks.
• The U.S. Department of Agriculture issued a rule amending the administrative review process for actions implementing land and resource management plans on national forests and grasslands. When the Forest Service proposes certain projects on public land, the public can file objections and request administrative review of the projects. The new rule amends the review process by reducing the windows of time in which individuals can object to, and submit comments on, projects. The Department of Agriculture claimed that the changes are necessary to increase the efficiency of the review process.
• The Financial Crimes Enforcement Network of the U.S. Department of the Treasury assessed a $1.2 billion civil penalty against Bank of America for willful violations of the Bank Secrecy Act, including failures to detect and report suspicious financial activity. The penalty ranked as the third largest ever issued in Treasury history. The Financial Crimes Enforcement Network found that deficiencies in Bank of America’s anti-money-laundering program caused it to miss or delay reporting more than $5 billion in suspicious transactions, including activity linked to Chinese money laundering networks and illicit finance along the southwest border. Bank of America admitted to inadequate transaction monitoring, insufficient due diligence on foreign financial institutions, and failures to file required suspicious activity reports. Federal regulators imposed an additional $750 million penalty for related compliance deficiencies.

WHAT WE’RE READING: 

• In a recent Brookings Institute essay, Rachel M. Perera, a fellow in the Brown Center on Education Policy at Brookings, argued that guidance from the U.S. Department of Education regarding school discipline mischaracterized federal law. In July, the Education Department rescinded regulations that held schools liable for disparate impacts–conduct that affects students of different races differently–even without evidence of intentional discrimination. The Education Department then released nonbinding guidance stating that if a school chose to change its policies because the policies affected students of different races differently, the school had engaged in racial discrimination. Perera claimed that the guidance misrepresented federal law, because the new regulations imply that disparate impact by itself is insufficient to prove racial discrimination, but the guidance goes further to suggest that schools can never consider the disparate effects of their policies. Perera noted that the guidance is not legally binding, but argued that it puts pressure on schools to change their policies.
• In a recent Brookings Institution essay, Anil Hurkadli, a former nonresident senior fellow at Brookings, and Josie Stewart, a senior research and communications assistant at Brookings, argued that existing federal privacy laws provide students inadequate protection from expanding school surveillance technologies. The authors explained that the Family Educational Rights and Privacy Act restricts disclosure of certain student records but does not regulate data collection, and the Children’s Online Privacy Protection Act protects only children under 13. These gaps, they warned, leave sensitive student information vulnerable to misuse by technology companies and law enforcement. Although states such as California and Minnesota have enacted additional protections, Hurkadli and Stewart contended that inconsistent state laws leave students exposed. They urged stronger data privacy and minimization safeguards to protect students as schools adopt surveillance technologies.
• In a recent report, the U.S. Government Accountability Office (GAO) found that interest in geothermal energy development on federal lands has surged since 2020, noting that the Bureau of Land Management (BLM) approved 68 geothermal drilling permits in 2024, more than the previous five years combined. Nevertheless, GAO cautioned that developers face inconsistent permitting requirements across the BLM’s field offices, in part because the agency’s geothermal handbooks have remained in draft since at least 2022. GAO found that the BLM lacks a unified system to track permit applications, leaving developers uncertain about the status of their permits. GAO recommended that the BLM publish its handbooks, create a system to track permits, and set goals for processing times.

EDITOR’S CHOICE:

• In an essay in The Regulatory Review, Peter T. Grossi, an adjunct professor at the University of Pennsylvania Carey Law School, argued that HHS should conduct a financial “stress test” before expanding the National Vaccine Injury Compensation Program, which compensates people injured by childhood vaccines, to cover autism claims. Grossi noted that recent HHS actions—including removing a federal statement that vaccines do not cause autism and replacing half of the staff at its Advisory Commission on Childhood Vaccines—suggest the agency will soon attempt such expansion. Grossi cautioned that covering even 2 to 5 percent of profound autism cases would exhaust the program’s funding. Grossi recommended that HHS commit to testing any proposal against existing autism data and release the results for independent review before issuing a change.