According to the PMBOK Guide, the project manager is responsible for ensuring that the project delivers the expected business value and benefits. If the project manager acquires information that indicates a significant reduction in the business value of the project, they should communicate this information to the project sponsor and other key stakeholders, and recommend a reassessment of the project business case and viability.
The project sponsor is the ultimate authority to decide whether to continue, cancel, or change the project based on the updated information and analysis. Removing items from the backlog, continuing with the defined scope, or canceling the project without consulting the sponsor are not appropriate actions for the project manager to take in this situation. References: = PMBOK Guide, 7th edition, page 23; PMI, Project Management Professional (PMP) Examination Content Outline, 2021, page 6.

When there is a change in government regulations that affects a project, the project manager should first understand the new regulations and evaluate their impact on the project. This involves studying the new regulations with the team and assessing how they affect various project variables such as scope, cost, schedule, and quality. Once the impact is understood, the project manager can then make necessary adjustments to the project plan. References: PMBOKGuide, 6th Edition, Section 4.3: Direct and Manage Project Work, and Section 11.6: Control Risks.

The sprint retrospective is an integral part of the agile approach, providing an opportunity for the project team to inspect and adapt their processes. When the product owner has concerns about the sprint results, it is important to address these in a retrospective meeting. This allows the team to openly discuss what went well, what didn't, and how they can improve in the next sprint. It's a collaborative effort to enhance the quality and effectiveness of the team's output and to ensure alignment with the product owner's expectations12.
References:
Scrum.org resources on Sprint Review3.
PMBOK Guide - Seventh Edition4.
Professional in Business Analysis (PMI-PBA) Reference Materials5.