Week in Review

IN THE NEWS

• The U.S. Court of Appeals for the D.C. Circuit ruled that the Consumer Financial Protection Bureau’s (CFPB) structure is unconstitutional. The D.C. Circuit held that the CFPB director’s broad scope of power and lack of oversight was unconstitutional and a “gross departure” from the multi-member commissions that oversee many other independent agencies. The D.C. Circuit fixed the problem by giving the President the authority to remove the director at will, which Senator Elizabeth Warren (D-Mass.) reportedly called “a small, technical tweak,” but some groups, including the National Association of Federal Credit Unions, allegedly called for the halting of all CFPB rulemaking.

• Acting under the recently-updated Toxic Substances Control Act (TSCA), which was signed into law in June, the U.S. Environmental Protection Agency (EPA) announced that it had selected five new chemicals—all of which are categorized as persistent, bioaccumulative, and toxic (PBT)—to receive expedited action under the law, which gave EPA three years to take expedited action on certain PBT chemicals.

• The Consumer Financial Protection Bureau (CFPB) issued an order requiring Navy Federal Credit Union to pay $28.5 million, after the CFPB alleged that Navy Federal—the largest credit union in the country, whose membership includes many active-duty and retired military members—engaged in various deceptive debt-collection practices, including making false threats “when, in fact, it seldom took such actions or did not have authorization to take them.” Navy Federal consented to the CFPB’s order “without admitting or denying any wrongdoing,” and reportedly stated that it has “a long history of helping members when they are making the effort to pay back their loans, and…will continue to do so.”

• The White House released Preparing for the Future of Artificial Intelligence, a report that discusses the current state of artificial intelligence, how it can be implemented in government, and how to regulate artificial intelligence. In the report, the White House asserts that “rapid progress in the field of specialized artificial intelligence will continue,” and that it expects “that machines will reach and exceed human performance on more and more tasks.” The White House suggested that, in areas that are regulated to protect the public from harm, such as cars and aircraft, an assessment of current regulatory regimes should be undertaken to determine the potential need for new regulations.

• The Pipeline and Hazardous Materials Safety Administration (PHMSA) released an interim final rule implementing a provision of the Protecting our Infrastructure of Pipelines and Enhancing Safety (PIPES) Act of 2016 that granted the agency new authority to issue industry-wide emergency orders in certain circumstances without going through the normal notice and comment process, and establishing procedures by which the agency can issue these emergency orders when a pipeline condition posing an imminent hazard to life, property, or the environment—such as a serious manufacturing flaw—is discovered.

• The Occupational Safety and Health Administration (OSHA) issued a final rule that establishes procedures for whistleblower complaints under the Affordable Care Act (ACA). The rule, which comes more than three years after the publishing of an interim final rule, protects workers who report what they believe to be a violation of the ACA, including the denial of coverage due to a preexisting condition, from retaliation. Also barred is retaliation against employees who receive health insurance tax credits, which can result in tax penalties for employers.

• The Associated Builders and Contractors (ABC) filed suit in the U.S. District Court for the Eastern District of Texas, challenging the U.S. Department of Labor’s Fair Pay and Safe Workplaces rule, released in August 2016. ABC asserted that President Obama had “exceeded [his] authority by forcing government contractors…to publicly disclose mere accusations that they have violated labor and employment laws,” and that “[t]he rule creates additional costs and regulatory burdens that will discourage qualified firms.” The Labor Department, in announcing the rule, had reasoned that “[t]axpayer dollars should not reward companies that break the law, and contractors who meet their legal responsibilities should not have to compete with those who do not.”

• The U.S. Department of Labor obtained a consent judgement from the U.S. District Court for the District of Columbia, requiring two Johnny Rockets restaurants to pay $571,460 to 55 of its servers. The Labor Department alleged that its investigation had uncovered violations of the Fair Labor Standards Act (FLSA), including distributing servers’ pooled tips to non-tipped employees, not paying overtime, and failing to keep records of hours worked. The Labor Department explained that when “an employer utilizes employees’ tips for any purpose other than a valid tip pool…it is a violation of the tip credit provision of the FLSA.”

• The U.S. Department of Education released a final rule for teacher preparation programs that is intended to create more transparency around the effectiveness of the programs by requiring states to report placement and retention rates of graduates from the programs, learning outcomes of the students taught by program graduates, and other metrics. Obama administration officials reportedly hope that these changes will improve the rigor of teacher preparation programs.

WHAT WE’RE READING THIS WEEK

• In an issue brief for the Heritage Foundation, Mike Gonzalez criticized proposed standards released by the Office of Management and Budget (OMB) last month that would create a new Middle East and North Africa (MENA) racial category for federal data reporting purposes, and would also change the way Hispanic people select their race. Rejecting OMB’s characterization of the change as a “limited revision” of existing policy, Gonzalez described the proposal as “the most sweeping changes to the nation’s official racial and ethnic categories in decades.” He argued that the rule would “further divide America along ethnic lines” and “perpetuate divisions within the country because it gives people an incentive to identify themselves with minority groups,” due to the possible availability of affirmative action and other economic benefits.

• An investigative advisory issued by the U.S. Department of Health and Human Services Office of Inspector General found “significant and persistent compliance, payment, and fraud vulnerabilities” within the personal-care services program, which provides in-home medical care for Medicaid recipients. The advisory calls for the Centers for Medicare and Medicaid Services (CMS) to set minimum federal qualifications and screening standards for personal-care workers, and to take other “regulatory action to establish safeguards that will…better protect the program from fraud and patient harm and neglect.”

• In a recent paper, University of Pennsylvania Professor Kevin D. Werbach discussed the issue of “trustless trust” created by use of blockchains—distributed ledger systems that were created to support the digital currency bitcoin. Though blockchains solve some fundamental issues of trust by creating a system that can be trusted regardless of one’s trust in the actors in it, Werbach argues that blockchains create substantial issues of governance, including how blockchains themselves regulate, that are entirely separate from computer science issues.