Week in Review

IN THE NEWS:

• Judge Jesse M. Furman of the U.S. District Court for the Southern District of New York ruled that the U.S. Department of Justice’s firing of Maurene Comey, the daughter of the former FBI Director James Comey, was unlawful. Maurene Comey claimed that the Justice Department fired her because of her father or due to her perceived political views and not for a cause authorized by Congress. The Justice Department argued that the firing was lawful because any congressional limitations on firing of staff are unconstitutional. Judge Furman reasoned that the U.S. Supreme Court has held that Congress can restrict the firing of “inferior officers,” which are federal workers who are not directly appointed by the President or are not considered principal officers. The Justice Department stated that it would appeal this decision.
• The Federal Trade Commission (FTC) ordered nine major companies to disclose information about their use of personal data to set consumer prices and compensation for ridesharing and food-delivery drivers. The FTC issued the orders to Delta, United, JetBlue, Lyft, Uber, DoorDash, Instacart, Target, and Walmart under section 6(b) of the Federal Trade Commission Act, which authorizes the agency to conduct studies and compel responses to information requests. The FTC will assess whether prices vary based on factors such as consumers’ participation in loyalty programs or their personal data analyzed by artificial intelligence (AI) algorithms and whether driver pay varies based on their phone usage or acceptance history for past offers. Andrew Ferguson, Chair of the FTC, stated that the agency intends to scrutinize the methods some companies use to determine consumers prices and gig worker compensation.
• The U.S. Department of Agriculture proposed a rule that would require states to provide Supplemental Nutrition Assistance Program (SNAP) users with chip-enabled electronic benefit cards. SNAP cards typically use magnetic strips and personal identification numbers to remain secure, which are vulnerable to scams. The proposed rule would require cards provided to have chips rather than magnetic strips, making it harder for scammers to steal information. The update to chip cards would reduce benefit theft from those using SNAP benefits. The proposed rule would provide a two-year timeframe from finalization of the rule to state implementation of the new switch to chip Electronic Benefit cards.
• The U.S. Court of Appeals for the Fifth Circuit ruled that restrictions on interstate switchblade sales and distribution under the federal Switchblade Act violate the Second Amendment of the U.S. Constitution. In Knife Rights v. Blanche, the Fifth Circuit held that switchblade knives are arms protected by the Second Amendment because they have long been used for self-defense and other lawful purposes, and the right to bear arms necessarily encompasses the right to acquire them. Applying the U.S. Supreme Court’s framework in New York State Rifle & Pistol Association v. Bruen, the Fifth Circuit found that the government failed to establish a history of comparable weapons regulation, as only two of nearly 200 historical statutes cited by the government regulated bladed weapons in a similar manner. The Fifth Circuit reversed the lower court’s dismissal and sent the case back for further proceedings.
• The Centers for Medicare & Medicaid Services proposed a rule that would require state-operated Affordable Care Act marketplaces to confirm eligibility information before allocating benefits. Under the proposal, enrollees seeking the health tax credits for the next plan year would need to confirm place of residence, citizenship or immigration status, and household income and family size. Although marketplaces would still renew their plans if enrollees do not reconfirm this information each year, enrollees would need to confirm this information yearly to keep their tax credits—a change from plans that currently renew automatically.
• The Federal Communications Commission published a final rule allowing consumers to opt out of some robocalls they no longer wish to receive while continuing to receive robocalls they still want. Robocalls are phone calls that are made using an autodialer or a prerecorded voice that companies use to reach many consumers. The rule will replace an earlier requirement, which had not taken effect yet, that would have treated a request to stop one type of robocall as a request to stop all robocalls from that caller. The Federal Communications Commission explained that the change will give consumers more power to choose which robocalls they receive.
• The U.S. Department of Health and Human Services announced coordinated efforts with the Agency for Healthcare Research and Quality and DenseBreast-info to help strengthen breast cancer screening, expand breast density education, and improve timely diagnostic follow-up. The new program will begin to analyze national breast screening and follow-up patterns to improve current care practices. These coordinated efforts by the Department of Health and Human Services are aimed at implementing Executive Order 14337, which is focused on improving health outcomes for women in the United States.
• The U.S. Supreme Court declined to halt a settlement between the U.S. Department of Justice and Texas that invalidated a Biden Administration rule. The rule allowed immigration judges to pause deportation proceedings in certain circumstances, including when a noncitizen seeks protection as a neglected child or crime survivor. Three cities argued the settlement was a collusive arrangement that eliminated a federal regulation without the standard rulemaking process as required by the Administrative Procedure Act. Chief Judge Reed O’Connor of the U.S. District Court for the Northern District of Texas, who approved the settlement, ruled the cities had no legal right to join the case. The Justice Department and Texas defended that ruling before the Supreme Court, which denied the emergency petition without explanation or noted dissent.

WHAT WE’RE READING:

• In a recent Brookings Institution essay, Elena Patel, codirector of the Urban-Brookings Tax Policy Center, and Aparna Mathur, resident scholar at the American Enterprise Institute, examined five proposals for taxing AI. Patel and Mathur explained that policymakers are considering taxing AI because it threatens to displace workers and erode federal tax revenues by shifting income from workers to businesses, which face lower effective tax rates. Patel and Mathur identified three additional reasons to tax AI: the environmental and infrastructure costs of data centers, overinvestment in AI, and the national security risks of moving AI development overseas. Patel and Mathur recommended using broader tax reforms, such as capital income tax, a carbon tax, or a value-added tax. Patel and Mathur argued that these tax approaches would better address the underlying concerns because these reforms work with the existing tax code, avoid distorting a single industry, and raise revenue from a wider base than an AI-specific tax.
• In a recent Urban Institute report, Amelia Coffey, a senior research associate in the Family and Financial Wellbeing Division at the Urban Institute, studied state financial support for students attending college. Coffey conducted a nationwide study, gathering data about state financial aid navigators and the ways in which navigators support students’ access to financial aid. Navigators are defined by Coffey as college-based staff that provide a human connection and hands-on help to students attempting to access public benefits, campus resources, and community support. Coffey found six states have already passed legislation that requires the state to have navigators, which has allowed parents and students to better understand the support within their state. Coffey explained that although evidence is still being collected, anecdotal evidence suggests that navigators lead to improved student academic performance, higher program completion, and better well-being for the students. Coffey recommended that more states should adapt legislative requirements around navigators and provide funding services to navigators to ensure navigator websites remain up to date and able to respond to locals’ needs and questions.
• In a forthcoming article in the Administrative Law Review, Joshua Blank, a law professor at University of California, Irvine School of Law, and Leigh Osofsky, a law professor at The University of North Carolina School of Law, argued that federal agencies must disseminate legal information to the public in a more diligent manner given the rise in AI. Agencies often provide explanations through frequently asked questions sections, fact sheets, or other summaries that help citizens understand their obligations under new laws. Blank and Osofsky contended that the rise of AI has led to a rise in misinformation in agency regulations because AI sources can also generate information on these laws. Without clear guidance from agencies, these sources may spread inaccurate information to a wide audience. Blank and Osofsky concluded that it is imperative for agencies to provide explainers that make complex statutes and regulations understandable to the general public without the use of AI, and to identify ways to ensure that affected parties see them.

EDITOR’S CHOICE:

• In an essay in The Regulatory Review, Mary Sullivan, a visiting scholar at the Regulatory Studies Center of George Washington University and a former economist at the Federal Trade Commission, argued that a broad ban on hidden fees may cause prices to rise elsewhere. Sullivan explained that regulators must distinguish between “junk fees”—hidden charges that provide no value to the consumer—with hidden fees that serve legitimate purposes. As an example, Sullivan noted that, although generally disliked by the public, early termination fees on subscription services help companies account for the fixed prices of beginning a service. Without such a fee, providers would likely increase the cost of service of all users. Sullivan contended that regulators should take an individualized approach that targets hidden fees that harm consumers more than they help.