Week in Review

IN THE NEWS:

• Democrats won control of both chambers of the U.S. Congress in the 2026 midterm elections, establishing a divided government for the final two years of President Donald J. Trump’s term. Democrats flipped at least seven Senate seats, including a Texas seat for the first time since 1988. Beginning in January, Democrats will have control of congressional committees, expanding their ability to investigate federal agencies and oversee the Administration’s regulatory policies. Democratic control of the Senate will also give the party authority over confirmation proceedings for presidential nominees, including leaders of federal regulatory agencies. Although President Trump will retain authority over executive agencies and can veto legislation, the new congressional majorities could use committee hearings, investigations, and appropriations to scrutinize regulatory decisions. Democrats now also control a majority of state governorships for the first time in over a decade, potentially reshaping state policies on labor, health care, and energy.
• The U.S. Department of Health and Human Services (HHS) issued a final rule that excludes gender dysphoria not caused by a physical impairment from its definition of disability under section 504 of the Rehabilitation Act, which bars discrimination by federally-funded programs. The law already excludes “gender identity disorders not resulting from physical impairments.” In 2024, however, HHS concluded that gender dysphoria—distress arising from a marked mismatch between a person’s experienced gender and assigned gender at birth—falls outside that exclusion. HHS reasoned that the exclusion should be read as Congress understood it in 1990, when people with symptoms now diagnosed as gender dysphoria would have been diagnosed with a gender identity disorder. Opponents warned that the rule conflicts with a federal appeals court decision and would restrict protections for transgender individuals, but HHS argued that other federal laws still protect people with gender dysphoria.
• Montana voters approved a ballot initiative that would ban artificial persons—such as corporations, nonprofits, and trade associations—from contributing to political campaigns or donating to political parties. Under the initiative, a corporation or other artificial person that wants to receive a charter from the state to do business in Montana would need to agree not to engage in political spending in the state. Supporters of the initiative noted that it is likely to be challenged in court, because the U.S. Supreme Court previously held that the right of corporations to spend on elections is protected by the First Amendment. Supporters also argued, however, that the popularity of the measure—the initiative was approved by 65 percent of the vote—and the fact that it involves the right of states to decide when and how to confer legal status on artificial entities, may make it difficult for the Court to strike down the ban.
• The Employee Benefits Security Administration, within the U.S. Department of Labor, issued a final rule requiring pharmacy benefit managers—who act as “middlemen” in the drug supply chain—to disclose how they are compensated for managing prescription drug claims for large employer health plans. Pharmacy benefit managers negotiate drug rebates, build pharmacy networks, process claims, and collect payments from both health plans and drug manufacturers. The new rule directs pharmacy benefit managers to disclose their direct and indirect compensation when a contract is signed, extended, or renewed, and every six months after that. The Labor Department explained that the new rule complements a recent change made to the Employee Retirement Income Security Act because the regulation helps employers judge whether a contract for managing drug claims is reasonable before signing it.
• The U.S. Food and Drug Administration (FDA) issued final guidance recommending that manufacturers of cellular and gene therapy products adopt comprehensive, risk-based strategies to ensure their products achieve their intended therapeutic effects. The guidance replaced a 2011 framework focused on potency testing with a broader approach that emphasizes ensuring potency throughout product development, manufacturing, and post-approval monitoring. Rather than relying on tests of finished products, FDA recommended that manufacturers incorporate potency considerations into raw material controls, manufacturing processes, and testing strategies to account for variations that could affect therapeutic effectiveness. The agency also outlined flexible approaches for products with short shelf lives and therapies developed for individual patients. FDA stated that the new guidance aims to improve product quality while supporting the development of treatments for serious and life-threatening conditions.
• The Centers for Medicare & Medicaid Services (CMS) issued a final rule that expands the agency’s oversight over organ procurement organizations—nonprofits that recover organs from deceased donors and coordinate their delivery for transplant. Each of the 54 recognized organizations holds exclusive control over its geographic service area, and CMS ranks their performance in three tiers to decide whether each organization keeps its area, competes to retain it, or loses it. Under the new rule, CMS will allow one organization to serve multiple service areas, evaluate its performance separately in each area, simplify certification of new organizations, and stop counting pancreases sent for research as transplants. CMS also rejected public comments warning that replacing low-performing organizations would disrupt organ donation, explaining that retaining an organization that has not met its performance standards would not best serve patients.
• The Nuclear Regulatory Commission finalized a rule designed to streamline the process of adjudicating contested hearings for nuclear energy licenses. The rule organizes license applications into three categories based on their expected complexity and sets different timelines for each category. The rule also limits what information must be disclosed by parties as part of the hearing process and requires evidentiary hearings to begin as soon as possible after identification of a contested issue. The Nuclear Regulatory Commission stated that the rule is designed as a deregulatory action that is intended to make the licensing process more efficient.
• The U.S. Commodity Futures Trading Commission (CFTC) and the U.S. Department of Agriculture (USDA) announced a memorandum of understanding to strengthen oversight of agricultural markets. The agreement established a framework for sharing regulatory information, identifying emerging market risks, and coordinating policies to reduce duplicative oversight. The agencies also committed to improving farmers’ and producers’ access to futures contracts, which allow agricultural businesses to manage price fluctuations by locking in prices for future transactions, and clearing services, which help reduce the risk that counterparties will fail to fulfill their contractual obligations. The agreement provides for regular interagency consultations and confidential information sharing between the CFTC and USDA for regulatory and enforcement purposes. Michael S. Selig, Chair of the CFTC, stated that the partnership would strengthen protections for agricultural producers through more efficient data sharing.
• The Pipeline and Hazardous Materials Safety Administration (PHMSA) announced that it is preparing to update the rules that set safety standards for liquified natural gas facilities. PHMSA explained that the current rules regulating safety at natural gas facilities were issued when the facilities were smaller than they are today and primarily served local markets. Since that time, production of natural gas in the United States has expanded, and the natural gas industry has begun exporting significant amounts of gas. In response to those changed conditions, PHMSA plans to revise its regulations by clarifying and expanding when facilities must report safety-related incidents, incorporating safety standards set by the natural gas industry, and updating its approach to evaluating proposed sites for new facilities.

WHAT WE’RE READING:

• In a recent Brookings Institution essay, Jon Valant, a senior fellow at Brookings, argued that the Federal Scholarship Tax Credit could disproportionately benefit wealthy families while limiting states’ authority over education funding. The program will allow taxpayers to receive federal tax credits for contributions of up to $1,700 annually to scholarship-granting organizations, which would distribute the funds to families for eligible educational expenses. Valant explained that regulations proposed by the U.S. Department of the Treasury would leave participating states with little control over how these organizations determine eligibility criteria and distribute funds. He warned that the program, projected to reach $26 billion in scholarship funding by 2030, could exceed federal funding for disadvantaged students while directing greater benefits toward affluent communities. He also cautioned that limited oversight and broad discretion over scholarship spending could create opportunities for waste, fraud, and abuse. Valant suggested that a future administration could instead redirect the funding toward an expanded child tax credit.
• In a recent report, the U.S. Government Accountability Office (GAO) found that the National Institutes of Health (NIH) must do more to protect the research it funds from foreign interference—including foreign governments stealing or gaining unauthorized access to its research. From 2017 through 2025, NIH received 697 allegations of potential foreign interference involving researchers on NIH-funded projects and found 264 failed to disclose foreign ties. GAO explained that NIH relied heavily on researchers and institutions to report their own foreign ties and did not verify those disclosures with outside sources on a regular basis, unless it received an allegation. GAO recommended that NIH assess the fraud risk in its research program.
• In a recent report, GAO examined the extent of flood insurance coverage in areas at high risk for flooding. GAO explained that property owners in areas that the Federal Emergency Management Agency (FEMA) has classified as high-risk areas are required to purchase flood insurance but noted that FEMA’s classification does not encompass many areas that end up experiencing significant flood damage. Because consumers underestimate flood risk, overestimate the extent of federal aid they might receive after a natural disaster, or misunderstand what homeowner insurance policies cover, property owners usually do not purchase flood insurance if they are not required to do so. GAO recommended that Congress direct FEMA to update the types of information used to calculate flood risk and make property-level flood risk information publicly available to increase flood insurance purchases.

EDITOR’S CHOICE:

• In an essay in The Regulatory Review, Elizabeth O. Ananat, a professor of economics at Barnard College, and Anna Gassman-Pines, a professor of public policy at Duke University, argued that expanded work requirements for the Supplemental Nutrition Assistance Program fail to account for unpredictable schedules in low-wage employment. Ananat and Gassman-Pines explained that many service-sector workers lack control over their hours, leaving them vulnerable to losing benefits despite working regularly. Their research found that one-third of low-income service workers would fall below an 80-hour monthly threshold at least once annually, even when averaging more than 80 hours per month across the year. Ananat and Gassman-Pines contended that restricting food assistance as a result could undermine employment and economic stability rather than encourage work. They urged policymakers to prioritize stable jobs and adequate wages instead of imposing requirements that penalize workers for scheduling decisions beyond their control.