Week in Review

IN THE NEWS

• The U.S. Department of Labor’s Occupational Safety and Health Administration (OSHA) proposed a new rule intended to protect millions of workers from the health risks associated with extreme heat, including heat stroke and death. The proposed rule would require that employers develop injury and illness prevention plans in workplaces subjected to excessive heat. The rule would also impose requirements for drinking water, taking breaks, controlling indoor temperatures, and protections for workers unaccustomed to excess heat. Employers would be required to implement training and procedures for responding to workers’ heat-related illness.
• Boeing pled guilty to one charge of conspiracy to defraud the United States for its role in two fatal Boeing-737 Max crashes. Boeing accepted fines of $487 million, which were criticized by victims’ families as inadequate. The plea deal included the oversight of an independent monitor for three years to ensure compliance and safety improvements. The company admitted to defrauding the Federal Aviation Administration during the certification of the Boeing 737 Max, a plane that has faced numerous regulatory hurdles amid deadly crashes and other serious accidents. In addition to these measures, Boeing continues to face ongoing safety concerns and the potential of further legal scrutiny, with questions about its regulatory compliance and the effectiveness of the imposed penalties.
• The U.S. Court of Appeals for the Third Circuit rejected the National Collegiate Athletics Association’s argument that the Fair Labor Standards Act (FLSA) cannot apply to college athletes because of their amateur status. The Third Circuit left open the possibility that college athletes might qualify for minimum wage under the FLSA if “the relationship between the athlete and college or NCAA reveal an economic reality that is that of an employee-employer.” The case, Johnson v. NCAA, will return to the Eastern District of Pennsylvania, where the trial court is expected to apply an economic realities analysis.
• The Internal Revenue Service (IRS) published a final rule on how taxpayers report excise taxes imposed on the sale of designated drugs. The rule applies to manufacturers, producers, and importers of specific drugs that are “dispensed, furnished, or administered under the terms of Medicare during certain statutory periods.” Specified milestones in the Medicare Drug Price Negotiation Program, which applies only to specific drugs with high expenditures, determine the statutory periods. The IRS will apply these regulations retroactively, beginning at the start of the fourth calendar quarter of 2023.
• The U.S. Department of Treasury issued a proposed rule that would increase oversight over real estate transactions by foreign persons near U.S. military bases. The new rule would expand the authority of the Committee on Foreign Investment in the United States (CFIUS), which reviews real estate transactions near sensitive U.S. government property, in response to national security concerns about Chinese purchases near U.S. military bases. The proposed rule would widen CFIUS jurisdiction to include transactions within a one-mile radius of 40 U.S. military bases and within a 100-mile radius of 19 other sensitive U.S. government sites.
• The U.S. Department of Justice issued a final rule creating a process for determining whether an individual is an employee of the Public Health Service. The designation grants employees coverage under the Federal Tort Claims Act if sued for medical malpractice. The U.S. Attorney General or a designee may establish that an individual is not an employee if treating that person as such “would expose the Government to an unreasonably high degree of risk of loss.” One or more of five criteria determine the risk of loss: whether the person complied with policies and procedures; whether there is a history of claims filed against the person; whether the individual refused to cooperate when defending against such claims; whether the person provided false work performance information; or whether the individual was the subject of specific disciplinary action.
• The Wisconsin Supreme Court reversed a near-total ban on absentee ballot drop boxes, allowing voters to use them again for the upcoming presidential election. The 4-3 decision overturned the 2022 ruling, which had deemed unsupervised drop boxes outside clerk’s offices illegal due to the Wisconsin Constitution’s silence on the issue. The court’s majority, which is considered to now have a more liberal tilt after Justice Janet Protasiewicz’s election, ruled that the previous ban was wrongly decided. In its new decision, the court found that municipal clerks may use secure drop boxes at their discretion even if not explicitly mentioned in the Wisconsin Constitution. Conservatives argued that overturning the ban close to the presidential election could cause confusion, while liberals emphasized the ruling’s support for voting convenience and reliability. Wisconsin is expected to be a crucial battleground in the upcoming presidential election.
• New York City Mayor Eric Adams and the New York City Department of Sanitation announced the requirement of specific, lid-latching trash bins for properties with one to nine residential units in an attempt to rid the streets of black bags of garbage. Only property owners and building managers in New York City can purchase the “NYC Bin,” which is priced below market average for its size and utility and will be required as of June 2026. By November 2024, however, New York City property owners and building managers must use a bin with a secured lid or face fines. Mayor Adams referred to this regulation as “taking the next step forward in the city’s ‘Trash Revolution.’”
• Germany agreed to ban critical components made by Chinese companies Huawei and ZTE in core parts of its 5G networks starting in 2026. Interior Minister Nancy Faeser announced that by the end of 2026, components from these manufacturers will be barred from 5G core networks, and critical management systems in 5G access and transport networks must be replaced by the end of 2029. The decision aims to protect Germany’s communication infrastructure from security risks such as sabotage and espionage. The United States and other countries have similarly restricted Huawei equipment over fears of cyber espionage and sabotage, allegations which Huawei has denied. The move has been viewed as a concession to the United States, which had attempted to pressure Germany for the past couple years to reduce reliance on Chinese infrastructure.

WHAT WE’RE READING THIS WEEK

• In an article in the Yale Journal on Regulation, Andrew K. Jennings, Associate Professor of Law at Emory University School of Law, discussed the problems created when M&A buyers acquire target firms’ criminal or regulatory offenses. Although contractual terms can manage private successor liability, “non-financial consequences of criminal convictions cannot be neatly managed.” As a result, buyers may be wary of entering into deals, decreasing efficiency of the market. Jennings suggested three prosecutorial policies to prevent this detriment. First, M&A-contingent penalties would “ensure that going concerns do not lose cash flows that would otherwise be used to operate or invest in new projects.” Second, prosecutors could offer buyer amnesty from criminal liability that occurs prior to the close of the deal. Finally, Jennings recommended treating forced sales with “particular sensitivity,” including safeguards such as mandating sign-offs and utilizing M&A and financial experts to assess risk.
• In an article published in the Yale Journal on Regulation, Peter Conti-Brown, Class of 1965 Associate Professor of Financial Regulation at The Wharton School of the University of Pennsylvania and Nonresident Fellow in Economics Studies at the Brookings Institution, and David Skeel, S. Samuel Arsht Professor of Corporate Law at the University of Pennsylvania Carey Law School, proposed a new strategy for the U.S. government to address economic crises. Conti-Brown and Skeel explained that the Federal Reserve tends to focus only on monetary policy until a financial crisis occurs. They argued that the Federal Reserve should adopt a new approach that involves expanded use of the discount window, an existing strategy of lending to depository institutions to maintain stability in the banking system. Conti-Brown and Skeel suggested that this new paradigm would allow for earlier intervention and better address problems such as bailouts and the politicization of crisis responses.
• In an article published in the Vanderbilt Law Review, Laura Dolbow, Sharswood Fellow at the University of Pennsylvania Carey Law School, argued that courts and policymakers should take alternative oversight tools into account when establishing judicial review bars. Dolbow analyzed 190 statutory provisions in the U.S. Code that expressly bar judicial review of agency actions, often targeting internal management decisions, and she found that alternative oversight tools, such as reports to Congress and stakeholder consultations, often exist when judicial review is barred. Dolbow emphasized that these tools promote democratic values of deliberation, inclusiveness, and public accountability. Dolbow concluded that alternative oversight tools can balance efficient implementation and should play a critical role in the future when policymakers are designing oversight structures. Judicial review bars have become a highly contested issue as recent laws, particularly those related to Medicare, immigration, and patents, have increasingly prohibited judicial review.

EDITOR’S CHOICE

• In an essay in The Regulatory Review, Troy A. Paredes, former Commissioner of the U.S. Securities and Exchange Commission (SEC) and founder of Paredes Strategies LLC, argued that the SEC must modernize its regulations to address recent technological advancements such as artificial intelligence, machine learning, and blockchain technology. To facilitate modernization, Paredes suggested that the SEC should hire more technology experts, including computer scientists, data scientists, cryptographers, and engineers, to work alongside its experts in securities regulation and capital markets. Paredes explained that increased expertise would help the SEC identify technological vulnerabilities in its regulations as new financial technologies emerge.