Week in Review

IN THE NEWS

• The U.S. District Court for the District of Columbia ruled that the U.S. Department of Education’s delay of the Obama Administration’s Borrower Defense Regulation was “arbitrary and capricious,” violating the Administrative Procedure Act (APA). Judge Randolph Moss, ruling on suits filed by two for-profit college students, 19 states, and the District of Columbia, found that the Education Department gave “no explanation for why it was necessary to stay” the regulation. The Department “failed to consider how the public interest or the interest of student borrowers would be affected by its decision,” Judge Moss wrote.
• The U.S. Environmental Protection Agency (EPA) waived several fuel regulations in North Carolina and South Carolina in anticipation of Hurricane Florence. The waivers are intended to minimize fuel shortages and facilitate fuel distribution for evacuation and recovery efforts. EPA also announced that it “will not pursue enforcement actions” against fuel tanker trucks for violations of air quality regulations that may occur during the storm and its aftermath.
• EPA proposed modifications to the 2016 New Source Performance Standards for the oil and gas industry. The modifications included relaxing requirements for monitoring methane leaks from wells, a move that California Governor Edmund G. Brown, Jr. (D) called “dangerous and irresponsible” in light of methane’s role as a greenhouse gas. EPA claimed that the modifications will “decrease unnecessary burdens on domestic energy producers” and save approximately $75 million annually in regulatory costs.
• The National Labor Relations Board announced a proposed rule governing its joint-employer standard. Under the proposed rule, a joint employer “must possess and actually exercise direct and immediate control” over employees and the “essential terms” of their employment. Among other changes, the proposed rule would update standards that subject joint employers to collective bargaining relationships.
• The U.S. Food and Drug Administration (FDA) issued more than 1,300 warning letters and fines to retailers for selling e-cigarettes to minors. Acknowledging the “potential” for e-cigarettes to help adult smokers quit combustible cigarettes, FDA Commissioner Scott Gottlieb stated that the positives of e-cigarettes cannot “come at the expense of kids.” FDA called its enforcement action a signal of its efforts to combat the “epidemic” of youth e-cigarette use.
• Apple announced that the latest version of the Apple Watch would include an FDA-approved heart rate monitor. The monitor would use two apps to monitor heart activity and notify the user if an irregular heartbeat is detected. In a joint statement, FDA Commissioner Scott Gottlieb and Center for Devices and Radiological Health Director Jeff Shuren emphasized FDA’s work to “modernize” its regulatory approach in the field of digital health.
• The European Parliament approved the Copyright Directive, which would strengthen copyright protection for artists and publishers, giving them the ability to seek compensation from websites that host copyrighted material. Speaking in favor of the directive, Axel Voss claimed that “creators and journalists will be earning a fairer share.” European Parliament member Julia Reda, a critic of the directive, accused the majority of “putting corporate profits over freedom of speech.”
• The U.S. Court of Appeals for the Eighth Circuit vacated a district court’s ruling that several Missouri laws regulating abortion providers were unconstitutional. Judge Bobby E. Shepherd wrote that the district court failed to “weigh the state’s asserted benefits,” which is required to determine the constitutionality of the laws. Judge Shepherd ruled that the district court must evaluate the case again and undertake a more fact-intensive cost-benefit analysis of the laws.
• In a 64-33 vote, the U.S. Senate confirmed California tax attorney Charles Rettig as Commissioner of the Internal Revenue Service (IRS). Senate Finance Committee Chairman Orrin Hatch (R-Utah) reportedly stated that Rettig is expected to work to update technology used by IRS as part of his new role.

WHAT WE’RE READING THIS WEEK

• In a forthcoming article for the University of Cincinnati Law Review, Stephen M. Johnson of Mercer University Law School discussed the many obstacles faced by the Trump Administration’s attempted “deconstruction of the administrative state,” particularly related to EPA. Johnson noted Congress’s unwillingness to significantly reduce agencies’ authority, the limitations of executive orders, and the “time-consuming” nature of changing agency rules under the APA. He concluded that a long-term deregulatory effect is unlikely due to the public support for environmental regulation and the ability of future administrations to undo executive actions.
• In a recent paper, Professor Sarah J. Morath of the University of Houston Law Center analyzed the controversy surrounding the National Organic Standards Board’s decision to allow hydroponic crops, which are grown without the use of soil, to be certified as organic. Morath detailed the organic farmers’ position that organic certification requires a commitment to improve soil quality, as well as opposing views that hydroponic farming is a sustainable, reliable alternative to traditional farming that merits organic certification.
• “A stable financial system is one in which banks fail,” wrote Brookings Fellow Aaron Klein for the Brookings Center on Regulation and Markets. Klein observed that at least one bank failed every year between the creation of the Federal Deposit Insurance Commission in 1933 and the lead-up to the financial crisis in 2004. But, from 2004 to 2007, no bank failed—until the market crashed and nearly 500 banks collapsed in the ensuing five years. Bank regulators should “get nervous when no banks fail,” Klein concluded, because a healthy financial system allows banks to adjust to market demands, take risks, and fail if they misjudge the market.