Week in Review

IN THE NEWS

• The U.S. Food and Drug Administration (FDA) updated the prescription label to Aduhelm, a recently released Alzheimer’s drug, to limit its recommended use to patients with mild Alzheimer’s or mental impairment. Adulhelm’s initial approval by the FDA was broadly designated to treat all patients with Alzheimer’s disease. The initial decision to approve Aduhelm stirred controversy and resulted in the resignation of three FDA advisors. Head of Research and Development at Biogen, Alfred Sandrock, Jr., stated that the label was updated based on “ongoing conversations with prescribing physicians, FDA and patient advocates.”
• The General Office of the Communist Party of China Central Committee and the General Office of the State Council in China reportedly issued guidelines to increase scrutiny of Chinese companies listed overseas. The guidelines are intended to strengthen enforcement measures against illegal conduct in the securities market and improve the security and transmission of data across borders. Economist Rory Green commented that countries such as China “have recognized the importance of data and the need to regulate the utility-like private firms that control its production and flow.”
• The U.S. Department of Education approved plans from six states and Washington, D.C. that detail how each state and district will use funds from the American Rescue Plan to reopen and operate kindergarten through 12th grade schools safely in the upcoming school year. The Education Department previously released two-thirds of the funds earmarked for elementary and secondary schools, totaling $81 billion, to the 50 states, Washington D.C., and Puerto Rico to promote in person classroom safety, and stated it would release the remaining funds upon its approval of individual state plans. The approved state plans included, among other programs, summer learning options from Utah and Rhode Island and measures to make up for lost instructional time from Texas and South Dakota. Secretary of Education Miguel Cardona said the plan approvals “lay the groundwork for the ways in which an unprecedented infusion of federal resources will be used to address the urgent needs of America’s children.”
• The attorneys general for 36 states and Washington, D.C. filed a lawsuit against Google alleging the company engaged in anticompetitive behavior related to its Android app store. The suit claims, among other things, that Google maintained a monopoly over Android app distribution because customers effectively have no choice but to download Android apps from the Google Play Store. New York Attorney General Letitia James, co-lead of the bipartisan coalition of attorneys generals, said that the suit seeks to “end Google’s illegal monopoly power and finally give voice to millions of consumers and business owners.”
• The Federal Aviation Administration imposed a total of nearly $120,000 in fines for unruly passenger behavior, bringing the total fines for the year to date to more than $680,000. During the same period, over 75 percent of reports on unruly passenger behavior related to compliance with the federal mask mandate. The agency also released a public service announcement aimed at reinforcing its zero-tolerance policy for unruly passengers and other violators of federal aviation regulations.
• The U.S. Department of Homeland Security (DHS) and the U.S. Department of Veterans Affairs (VA) launched an initiative to review naturalization policies, improve immigration services, and deliver benefits including COVID-19 vaccinations to noncitizen service members, noncitizen veterans, and immediate family members. The DHS and VA plan to work with the U.S. Citizenship and Immigration Services, Immigration and Customs Enforcement, and Customs and Border Protection to allow deported noncitizen service members, veterans, and their immediate family to return to the United States and to prevent any future unfair removal actions against them. VA Secretary Denis R. McDonough stated that noncitizen service members, veterans, and their immediate family should be guaranteed entry into the United States “no matter who they are, where they are from, or the status of their citizenship.”
• The White House announced that President Joseph R. Biden will sign an executive order directing the U.S. Department of Agriculture (USDA) to issue new rules defining which meat products can be labeled as “Product of the USA.” The executive order will be issued to try to ensure that labeling laws do not force domestic farmers to compete with foreign companies that raise and slaughter beef abroad but process it in the United States. The executive order is expected to direct USDA to develop labels that allow customers to identify products from producers that treat agricultural workers fairly. Jen Psaki, White House press secretary, said that the executive order is intended to “help increase opportunities for small and independent businesses to boost their earnings and to lower prices and increase options for consumers.”
• The U.S. Court of Appeals for the District of Columbia Circuit held that the Cato Institute could not have the court hear its claim that court-ordered settlements with the U.S. Securities and Exchange Commission (SEC) violate the First Amendment. SEC settlements contain a no-deny provision, which prohibits settling parties from publicly denying SEC allegations against them. Without determining the constitutionality of the no-deny provision, the court noted that because its ruling would not bind other circuit courts, a ruling for the Cato Institute would not have prevented other courts from enforcing the no-deny provision. Attorney for the Cato Institute, Robert McNamara of the Institute for Justice, commented that the ruling “inexplicability dismisses the whole case,” and that the Cato Institute should be allowed to challenge no-deny provisions in settlement agreements that were not court ordered.
• In response to the recent collapse of a condominium in Florida, the Florida Bar created a Condominium Law and Policy on Life Safety Task Force to review Florida’s condominium laws, operations, and development. The task force was established to provide recommendations for legislative and regulatory changes that Florida can implement to avoid future building collapses. William P. Sklar, chair of the task force and professor at the University of Miami School of Law, said that the recent building collapse exposed weaknesses in Florida’s building inspections and that the task force will “look at a uniform statewide procedure for building inspections and structural inspections.” Sklar expected recommendations to be made in about 90 days.

WHAT WE’RE READING THIS WEEK

• In an article for Yale Environment 360, John Paul MacDuffie and Sarah E. Light, professors at the Wharton School of the University of Pennsylvania, discussed the path forward for electric vehicles in the United States following General Motors’ announcement that the company will by 2035 only produce electric vehicles. MacDuffie and Light found that, to support an increase in the number of electric vehicles, substantial changes will be needed in the regulation of the U.S. electric grid and that battery development for electric vehicles will be critical. MacDuffie and Light argued that global competition, combined with national policies to support competition, will be needed to support battery development. MacDuffie and Light concluded that the federal government and states such as California that have led the electric vehicle transition, will play an essential role in transforming the transportation sector through laws and regulations that reduce vehicle emissions and provide financial incentives for new electric vehicles.
• In a recent working paper, Wenzhi Ding of The University of Hong Kong and his coauthors discussed the impact of the perceived risk of regulatory penalties on the way board directors monitor a company’s management. Ding and his coauthors found that directors of Chinese companies that sit on boards with directors who previously received regulatory penalties increased the likelihood that the directors cast dissenting votes against management proposals. Dissenting votes are used rarely and may indicate a directors concern with management. Ding and his coauthors concluded that the risk of a possible regulatory penalty can influence how effectively directors perform their duties.
• In another recent working paper, Barak D. Richman and Steven L. Schwarcz, professors at Duke University School of Law, argued that the United States’ response during the COVID-19 pandemic failed, in part, because private health care regulation focuses on separate components within the industry without protecting the stability of the overall system. Drawing on lessons from the 2008 financial crisis, Richman and Schwarcz argued that hospitals can limit the spread of infectious diseases if they share information with each other about capacity and medical infrastructure. Richman and Schwarcz also advocated testing hospitals’ crisis response mechanisms through simulations of pandemics and other natural disasters. Finally, Richman and Schwarcz recommended that countries enter a treaty, with penalties, to disclose novel infections and grant domestic regulators stronger emergency powers in a pandemic.

FLASHBACK FRIDAY

• In an essay in The Regulatory Review, Alina Artunian, then a member of The Regulatory Review staff, outlined the complexities related to country-of-origin labels on meat products. Artunian discussed a 2015 vote by the U.S. House of Representatives to repeal a USDA mandate that required labels on certain meat products with information about where the animal was raised and slaughtered. Artunian highlighted a USDA report that concluded that the potential impact on consumer behavior and the benefits of the policy were both minimal.