Week in Review

IN THE NEWS

• The Federal Communications Commission (FCC) proposed a rule that would require cell service providers to block unwanted or illegal text messages. The rule would require U.S.-based originating providers to block the disallowed texts so as to prevent unlawful messages before FCC sends any notice. FCC conteded that the rule will protect consumers from harassing or fraudulent text messages. FCC seeks comment on the text-blocking strategy, including how long the block should last.
• The Internal Revenue Service (IRS) began piloting a new program that will allow some taxpayers to file their taxes for free. The program, called Direct File, will initially be open to federal and state employees in a limited number of states. The pilot is not yet available to individuals who itemize their deductions, earn business income, or claim certain tax credits. In announcing the program’s launch,the IRS explained that it is “starting small to get it right,” and that it will expand the pilot if initial results are satisfactory.
• New York state legislators introduced a package of bills aimed at curbing the use of illegal mopeds. The new legislation requires that mopeds, such as electric scooters and bicycles, are registered at the point of sale. In addition, the legislation specifies that accidents involving a moped must be reported. The package also includes a bill which increases the criminal penalty for fleeing the scene of a crash involving an electric bicycle or scooter.
• The Office of Personnel Management (OPM) issued a final rule prohibiting federal agencies from factoring in a candidate’s salary history when setting the pay for new employees. In its rule, the OPM stated that salary history may not be indicative of “worker value, experience, and expertise, and it also may contain or exacerbate biases.” The rule also builds on the Biden Administration’s efforts to address pay inequity and promote equal pay.
• The U.S. Department of Commerce proposed regulations that would administer two executive orders, issued in 2021 and 2023, directing the Commerce Department to regulate Infrastructure as a Service (IaaS), or cloud computing, providers in their dealings with foreign customers. The regulations would require providers to verify the identity of foreign customers, set a process for IaaS providers to report any transaction that could enable a foreign customer to train a large AI model with malicious capabilities, and define several key terms.
• The U.S. Office of the Comptroller of the Currency invited public comments on its proposed rule to increase transparency in its process of reviewing mergers that involve national banks and federal savings associations. The proposed rule would eliminate the agency’s current policy, which approves mergers 15 days after the close of a comment period. In addition, the proposed rule would replace streamlined reviews of mergers with the review process outlined in the Interagency Bank Merger Act Application, which requires more explanation and information from applicants.
• The U.S. Department of Energy finalized its updated energy efficiency standards for electric and gas stovetops and oven ranges. The Energy Department noted that “approximately 97 percent of gas stove models and 77 percent of smooth electric stove models on the market already meet these standards.” The Energy Department estimated that, over 30 years, the new standards will lower utility bills by $1.6 billion and reduce carbon-dioxide emissions by nearly 4 million metric tons.
• FCC proposed a rule that would require pairing compatibility between hearing aids and wireless handset models, such as cordless phones. FCC explained that the rule will increase accessibility for the 37.5 million Americans with hearing loss. FCC concluded that a 100 percent hearing aid compatibility for wireless handset models is achievable, given that 93 percent of available wireless handset models are already compatible.

WHAT WE’RE READING THIS WEEK

• In a recent working paper released by the National Bureau of Economic Research, Gautam Gowrisankaran, an economics professor at Columbia University, Ashley Langer, an economics professor at the University of Arizona, and Mar Reguant, an economics professor at Northwestern University explore how the regulatory structure of public utilities affects the transition away from fossil fuels. Gowrisankaran, Langer, and Reguant explain that regulators limit the revenue of electric utilities to a “fair” rate of return on capital. This model can lead utilities to over-invest in capital, which can make it more difficult for utilities to adjust to changing circumstances. As a solution, the authors recommend that these approaches be accompanied by lump-sum transfers to utilities.
• In a recent article in the Duke Journal of Law and Contemporary Problems, Jodi L. Short, a law professor at UC Law San Francisco, argued that applying business management techniques to regulations—known as regulatory managerialism—fosters anti-administration sentiments and hampers the development of effective regulations. Short explained that business tools and techniques, such as outsourcing and marketing, lose their effect and functionality when applied in the regulatory context. Without acknowledging these differences, regulatory managerialism demands that the government behaves more like a business, which Short contended is a form of “gaslighting.” To combat this gaslighting, Short suggested that agencies need to reaffirm their commitment to public goals over corporate interests and communicate their achievements to the public to combat negative narratives about regulation.
• In a recent Brookings Institution article, Nathan Donley, the Environmental Health Science Director at the Center for Biological Diversity, and Robert Bullard, a professor at Texas Southern University, argued that pesticide regulation continues to disproportionately burden people of color and members of low-income communities. Donley and Bullard explained that these groups are more likely to be exposed to pesticides through their diet, housing, and occupation. Donley and Bullard cited the influence of special interest groups, such as the pesticide industry, as a barrier to effective regulation. To address this problem, Donley and Bullard proposed that the U.S. Environmental Protection Agency take action to reduce pesticide exposure, including by monitoring the effects of approved pesticides and increasing worker protections.

EDITOR’S CHOICE

• In an essay in The Regulatory Review, Stephanie Hunter McMahon, a professor at the University of Cincinnati College of Law, employed an approach developed by University of Texas at Austin School of Law professor Wendy Wagner to explore why federal tax rules are often “incomprehensible” to taxpayers. McMahon explained that there are many “speakers” involved with the tax system on the government side, including the U.S. Congress and the Internal Revenue Service, which serves different and sometimes conflicting roles. Many audiences, including individuals and corporations, participate in the tax process, and vary in sophistication. To make it easier to explain rules in a way that is clear to all audiences, McMahon concluded that the IRS must be able to reconcile audiences that have differing abilities to understand their guidance.