I'm not sure how exactly they are making these calculations but I just don't see it. Both Reflect and SpaceX are targeting SSO orbits where they are only reflecting for an hour or two at sunset. That isn't true of Starlink, but that constellation is already up there and if its fine right now, I don't see it getting much worse as the materials on it get refined to be less problematic.

More regulations would just have the result of cementing a monopoly for Spacex.