Oversight and Investigations Informer – January 24, 2022

What We Are Watching:

OVERSIGHT TARGETS OIL COMPANY BOARDS: The House Oversight Committee announced a follow-up to its October hearing featuring executives of major oil and gas companies. The Committee has asked select members of the companies’ boards to testify in early February, and seemingly targeted board members with experience in climate change and sustainability.

FERC DEMS CHARGE FORWARD ON ENVIRONMENTAL JUSTICE: Federal Energy Regulatory Commission (FERC) held its first open meeting of 2022 last week with its new Democratic majority and a packed agenda touching on cybersecurity, energy prices and pipelines. The change comes at an interesting moment of dwindling confidence among progress Democrats that FERC will enact the spirit of the Biden Administration environmental justice agenda, a key campaign promise. Meanwhile, Republicans in both chambers of Congress have called on FERC to speed up approvals for pipelines while Democrats have pressed the independent agency to factor in EJ concerns more heavily as part of its approvals process.

Key Insights:

CRYPTO ENERGY USAGE UNDER SCRUTINY: Last week the House Energy and Commerce Subcommittee on Oversight and Investigations held a hearing on “Cleaning Up Cryptocurrency: The Energy Impacts of Blockchains,” raising the prospect of potential Congressional action to curtail the nascent industry. Among the main concerns is the energy intensive ‘datamining’ required to solve the complex computations that generate the digital currencies like Bitcoin and Ethereum. Representatives from the cryptocurrency industry pushed back on the concerns expressed by some lawmakers.  Brian Brooks, CEO of BitFury and former Acting Comptroller of the Currency, said in his prepared testimony. “Bitcoin mining last year consumed 188 TWh out of about 155,000 TWh consumed globally for all uses. The energy mix used for bitcoin mining was about 58 percent sustainable under the definition used by the International Energy Agency, as compared to 31 percent for the U.S energy grid as a whole.”  Several countries including China have banned the practice due to energy and environmental concerns. Advocates of crypto mining have increasingly touted its ability to utilize excess production and incentivize renewable installation as environmental groups and lawmakers expressed skepticism.

What We Are Watching: 

FEDERAL RESERVE REPORT RELEASED: The Federal Reserve (Fed) has released its report on a potential central banking digital currency (CBDC). This report did not provide the Fed’s decision on the issuance of a national digital dollar. The report requested feedback from the public on the idea. The Fed said a CBDC would require Congressional approval. The report also acknowledged that a U.S. CBDC would compete against the private financial sector.

INSTITUTIONAL STUDENT LENDING UNDER FIRE: The Consumer Financial Protection Bureau (CFPB) will expand oversight on colleges that make direct education loans to students. The review is the latest in a series of actions taken by the Biden Administration in response to the student loan crisis and reports that borrowers experienced past abuses such as deceptive accelerated repayment plans. The CFPB has been engaged in student loan-related issues for years; in 2017, they filed a lawsuit against loan servicer Navient over the same concerns.

GENSLER EYES CRYPTO EXCHANGES: Securities and Exchange Commissioner (SEC) Chair Gary Gensler said in industry remarks before the Exchequer Club that crypto exchanges would face more scrutiny in 2022. Gensler called for crypto platforms to show they are taking steps to become more regulated by the financial regulators and keep in mind investor protection needs.

Week Ahead:  

• The American Enterprise Institute (AEI) will host “Will digital currencies and fintech shape the financial system of tomorrow?” on Friday, January 28.
• Federal Reserve Chairman Jerome Powell will host a virtual news conference on Wednesday, January 26, after a Federal Open Market Committee meeting.
• The Securities and Exchange Commission (SEC) will host the first Open Commission Meeting of the year on Wednesday, January 26.

Key Insights:  

The House Energy & Commerce Subcommittee on Oversight and Investigations held a hearing on the energy impact of Bitcoin mining on Thursday, January 20. Several members were critical of the high amounts of energy consumed by Bitcoin mining, while also showing interest in banning or restricting its use similar to other countries, such as China and Kosovo. While concerns about Bitcoin mining’s energy consumption will continue, lawmakers acknowledged that some projects supported renewable energy.

What We Are Watching: 

SENATE FINANCE CHAIRMAN LAUNCHES INVESTIGATION INTO POTENTIAL TAX EVASION BY BRISTOL MYERS SQUIBB: On Tuesday, January 18, Senate Finance Chairman Ron Wyden (D-OR) sent a letter to Bristol Myers Squibb requesting information related to a potential tax avoidance strategy where the company allegedly “shifted intellectual property rights for several prescription drugs to a newly created offshore subsidiary to shift untaxed gains and generate amortization deductions.” Chairman Wyden also launched an investigation into AbbVie’s tax practices last June.

SENATE HELP CHAIR REQUESTS PERMANENT WORKPLACE PROTECTIONS FOR HEALTH CARE WORKERS: On Thursday, January 20, Senate Health, Education, Labor and Pensions (HELP) Committee Chair Patty Murray (D-WA) wrote a letter to Marty Walsh, Secretary of the U.S. Department of Labor, insisting that the Occupational Safety and Health Administration (OSHA) take “immediate steps” to create permanent workplace protections for healthcare workers against COVID-19. Although OSHA issued temporary COVID-19 safety standards for healthcare workers in June 2021, the agency announced last month that it would partially withdraw the standards because it was unable to meet the deadline to finalize them.

SENATORS REQUEST INVESTIGATION INTO COVID TEST PRICE GOUGING AND INFORMATION ON HOW COVID TEST PRICES ARE SET: On Wednesday, January 19, Senators Ed Markey (D-MA) and Richard Blumenthal (D-CT) wrote a letter to FTC Chair Lina Khan asking for an investigation into the potential price gouging and scams of at-home COVID-19 tests. Senator Markey also sent letters to numerous COVID-19 test manufacturers asking them to lower their prices and disclose information relating to their manufacturing costs. The Senator also wrote letters to major retailers requesting information related to price setting for COVID-19 tests.

CBO PUBLISHES REPORT ON MAJOR DRIVERS OF HEALTH SPENDING IN THE UNITED STATES: The Congressional Budget Office (CBO) published a report requested by Sen. John Yarmuth (R-KY), Chairman of the House Budget Committee, detailing the drivers of health spending. The CBO also examined potential rationales for why prices paid by commercial health insurers for hospitals and physicians’ services are higher, rise more quickly, and vary more by state than the prices paid by the Medicare fee-for-service program. The statewide average Medicare FFS price ranged from 9 percent lower than the program’s national average price in Mississippi to 11 percent higher than the national average in Washington, DC for a set of 500 common services. The report titled “The Prices That Commercial Health Insurers and Medicare Pay for Hospitals’ and Physicians’ Services,” is the first of two reports that will examine the variation in healthcare prices, costs, and mechanisms in spending increases.

Key Insight:

Senate Democratic leaders signaled support for splitting the domestic climate and social pieces of the Build Back Better Act (BBB) to help win support additional Democratic support in the Senate. During a news conference on Monday, President Biden said he would support breaking up the BBB into smaller “chunks” to quickly pass provisions with existing unanimous support and to secure additional time for Democrats to come to a consensus on other measures. Speaker Pelosi, however, notably took issue with the President’s idea of breaking the package up into smaller pieces, saying she would like to see one “major bill going forward.” Although it remains unclear what provisions may be preserved in a revamped package, it seems likely that Democrats will key in on widely accepted climate change legislation and health policy measures. Regarding the latter, Speaker Pelosi noted that she will focus on health and drug pricing provisions such as giving Medicare power to negotiate drug prices and extending the re-structured ACA tax credits—both of which have backing from Moderate Democratic Senator Joe Manchin (D-WV) who previously stalled progress on BBB in December when he announced he would not vote for the package in its current form.

What We Are Watching: 

FAA ISSUES NEW APPROVALS FOR RADIO ALTIMETERS:  On Thursday, the U.S. Federal Aviation Administration issued new approvals for additional altimeters that allow about 78% of the U.S. commercial air fleet to perform low-visibility landings at airports where 5G C-band wireless is deployed^[1]. The FAA said it anticipated “some altimeters will be too susceptible to 5G interference” and will be prohibited from performing low-visibility landings near 5G deployments.

DEMOCRATS INTRODUCE AIR QUALITY MONITORING BILL: Senator Ed Markey (D-MA) and 11 other Democratic and Independent Senators introduced a bill that would authorize $55 million over 5 years for the EPA to “boost community-scale air monitoring” as a part of the agency’s commitments to environmental justice, InsideEPA reports. The bill – which received endorsements from environmental groups including the Environmental Defense Fund (EDF), American Lung Association, Clean Air Task Force and American Thoracic Society –would require the EPA to perform annual updates to incorporate new technology and data into existing mapping and screening tools.

What We Are Watching:

STATE ATORRNEYS GENERAL (AGs) TO SUE GOOGLE: On Monday, January 24, AGs from District of Columbia, Texas, Washington and Indiana announced plans to sue Google for making misleading promises about its users’ ability to protect their privacy through Google account settings, as well as accusing the company of deploying design tricks utilized to influence user decisions’ to be most advantageous for a business.

RECORD LOBBYING SPENDING FROM TECH INDUSTRY: According to filings submitted to Congress on Thursday, Amazon and Meta spent record amounts of $20.3 million and $20.1 million respectively on lobbying of Congress and the Administration in 2021, increasing their annual spend by approximately 7% from 2020

Week Ahead:  

• The Information Technology and Innovation Foundation holds a virtual discussion, beginning at 12 p.m. on January 27^th, on “Patchwork Penalty: The Hidden Toll of State Privacy Laws,” focusing on data protection.

Key Insight:

As major telecom providers and airlines remain locked in a regulatory battle over 5G rollouts, the fractured relationship between agencies tasked with policing federal airwaves is under a microscope. After an agreement struck last Tuesday, January 18,  to limit the rollout of 5G signals at towers within two miles of major airports, FCC Commissioner Brendan Carr said the Biden administration should have more forcefully backed the FCC over the FAA. This comes as further reporting shows that the NTIA, a third agency of jurisdiction, was sidelined from testing 5G interference on altimeters due to a turf war with the FAA. The turf war over C-band interference started in 2015 has supercharged calls for better federal coordination on spectrum policy.