Oversight and Investigators Informer – 1/22/21
NOTABLE DEVELOPMENTS
What We are Watching:
BIDEN’S BLIZZARD OF EO’S: As anticipated, President Biden signed a number of executive orders related to the pandemic, immigration, and climate change—with the goal of turning back a number of policy priorities of the previous administration.
COMMITTEE SEATING CHART: Committees in both the House and Senate are putting the final touches on their rosters and leadership. Of note, both Democrats and Republicans on the House Committee on Energy & Commerce announced their choices, while throughout the Senate the process is still continuing.
FILIBUSTER STANDOFF: As the Senate starts the fraught process of setting the ground rules to govern with a 50-50 split, Republicans are pushing to keep filibuster provisions as they currently are. Progressives are keen to end such requirements in order to more easily pass their agenda. It is expected that negotiations over the power-sharing agreement will continue for at least the next week.
Week Ahead:
CONFIRMATION CENTRAL: As the Biden Administration gets underway, there will be several confirmation hearings (details in the respective sections below) in the weeks ahead. Key hearings are for the Secretaries of the Department of Housing and Urban Development (Jan. 28) and Department of Commerce (Jan. 26). However, the impeachment proceedings threaten to delay the process.
IMPEACHMENT IN PROGRESS: The House of Representatives’ article of impeachment will be delivered to the Senate on Monday. This means, absent an agreement to push the trial back, that the Senate trial is likely to begin on Tuesday at 1pm ET.
Key Insights:
President Biden is facing a daunting task of getting his government underway while the specter of impeachment still looms large. We anticipate that there will be many additional executive orders still to come as he seeks to meet his articulated goals for his first 100 days.
ENERGY SECTOR
What We are Watching:
SHAREHOLDER SUES NIKOLA: Electric truck startup Nikola was targeted by a shareholder lawsuit Tuesday that seeks to probe allegations from a short-seller claiming the company doctored videos and used trick electrical wiring to dupe investors about its hydrogen fuel cell model. The lawsuit follows previous announcements of an investigation by the Securities and Exchange Commission (SEC) and a reduction in the scope of an agreement with GM.
GENSLER TO CHAIR SEC: Speaking of the SEC, President Biden announced Monday that he would pick Gary Gensler to lead the Commission. Former SEC chairwoman Mary Schapiro, who worked closely with Gensler when he led the Commodity Futures Trading Commission, told the New York Times that Gensler would likely prioritize climate disclosures, adding, “this entire administration is prioritizing climate change with respect to what each agency can bring to the table to help us in the fight against climate change – and the SEC has a really critical role in that regard.”
Week Ahead:
The Senate Committee on Energy & Natural Resources will consider the nomination of the Honorable Jennifer Granholm to be the Secretary of Energy, beginning at 9:30 a.m. on Wednesday, January 27.
Key Insights:
GLICK IS BIDEN’S PICK: President Joe Biden picked Richard Glick to serve as Federal Energy Regulatory Commission (FERC) Chairman. Glick said he’d seek “significant progress on the transition to a clean energy future.” Glick has carefully laid out his legal roadmap in his dissents over his tenure at FERC. This means a more holistic and thorough review of greenhouse gas emissions for carbon-based projects, like pipelines. Transmission will be a key priority for him, not only ensuring that transmission incentives work better, but also clamping down on some utility workarounds that exempt projects from competitive solicitation. But really, despite Glick being a Democrat, this will be a return to the center in terms of the politicization of FERC.
FINANCIAL SERVICES SECTOR
What We are Watching:
YELLEN HEARING: During her confirmation hearing, Treasury secretary nominee Janet Yellen vowed to make climate change a focus at the Treasury Department, stating she would install a “climate hub” at the Department. Yellen also said she would consider revisiting China sanctions and the tax provisions implemented in the 2017 bill after the pandemic has eased. The Senate Finance Committee unanimously approved her nomination. The full Senate could consider the nomination soon, though timing is unclear.
FINTECH REGULATOR?: Anchorage Digital Bank’s grant of the first national trust bank charter has started a power struggle between agencies over which is best suited to oversee the financial technology sector.
COMPTROLLER OF THE OCC: President Biden is expected to nominate Michael Barr to Comptroller of the Currency, the primary bank regulator. Mr. Barr is a former Treasury Department official for the Biden Administration and helped craft the Dodd-Frank Act.
CFPB HEAD: President Biden announced FTC Commissioner Rohit Chopra to head the Consumer Financial Protection Bureau. He helped construct the CFPB with Senator Elizabeth Warren (D-MA). Trump’s CFPB Chair Kathy Kraninger stepped down this week.
OLD WALL STREET FOE: President Biden is expected to nominate Gary Gensler to lead the Securities and Exchange Commission. Despite Gensler’s Wall Street past, he would be one of the Wall Street’s toughest regulators.
ESG REGULATIONS: President Biden has companies bracing for increased regulations, especially in regards to requirements related to diversity, emission levels, and sustainability metrics.
Week Ahead:
President Biden is expected to formally announce his picks for heads of the CFTC, SEC and OCC in the upcoming week.
The Senate Banking Committee will hold nomination hearings on January 28 for Rep. Marcia Fudge (D-OH) to be Secretary of the Department of Housing and Urban Development and Cecilia E. Rouse for Chair of Council of Economic Advisers.
Key Insights:
A Democratic majority in the Senate seems to have emboldened President Biden to nominate more progressive nominees, such as Gensler, Chopra, Barr, all who would have the authority to increase enforcement and rulemaking. Biden is also appointing more progressive staff, such as Nellie Liang to Treasury.
Biden’s agency head picks have conflicting views and experience with financial technology and cryptocurrency, setting up a jurisdictional fight over authority of the sector.
HEALTHCARE SECTOR
What We are Watching:
FIRST CIVIL FALSE CLAIMS ACT SETTLEMENT FROM PPP FRAUD ANNOUNCED: On Tuesday, the U.S. Attorney’s Office for the Eastern District of California announced the first settlement that resolves Paycheck Protection Program (PPP) fraud allegations. The settlement involves claims that bankruptcy debtors, SlideBelts Inc., an internet retail company, and Brigham Taylor, the company’s president and CEO, deceived federally insured banks by stating in application documents that they were not in bankruptcy, when in actuality they were, for approval and receipt of PPP loan funds. SlideBelts and Taylor have agreed to pay the federal government a combined $100,000 in damages and penalties to resolve allegations that they committed fraud. In addition to the assessed penalties, SlideBelts will also be responsible for repayment of the PPP funds it originally received. The landmark settlement addresses confusion over PPP loan eligibility for bankrupt organizations and sets legal precedence for a number of ongoing lawsuits.
LAST MINUTE MEDICAID CHANGES ILLEGAL: On Tuesday, one day before President Biden’s inauguration, Energy and Commerce Committee Chairman Frank Pallone, Jr. (D-NJ-06) and incoming Senate Finance Committee Chairman Ron Wyden (D-OR) sent a letter to former Centers for Medicare and Medicaid Services (CMS) Administrator Seema Verma requesting she rescind letters of agreement sent to states earlier in the month, which would create new procedures for CMS to withdraw approval for state 1115 Medicaid waivers. The Committee leaders said that the new regulations are an “attempt to make it harder for the Biden Administration to end the illegal and harmful Medicaid waivers” and are “impermissible under existing regulations.”
Key Insights:
On Wednesday, the Biden Administration announced the names of acting agency heads as President Biden’s Cabinet selections and other top political appointees await Senate confirmation. Acting healthcare agency heads include Norris Cochran, who will serve as Acting Secretary for the U.S. Department of Health and Human Services (HHS), Janet Woodcock who will serve as acting U.S. Food and Drug Administration (FDA) Commissioner, and Liz Richter who will serve as acting U.S. Centers for Medicare & Medicaid Services (CMS) Administrator. The President also appointed Sean McCluskie, a longtime aide to HHS Secretary Nominee Xavier Becerra, to serve as the HHS Chief of Staff.
President Biden also signed a number of Executive Orders on Wednesday to immediately begin implementing pieces of his COVID-19 response plan. These orders range from increased vaccine production to a mask mandate on federal property and transportation. Despite these first steps, for President Biden to realize his full COVID-19 relief plan he will need Congress to pass legislation, and it remains to be seen how quickly they will take action, as Congress must also approve many of President Biden’s political nominations, begin to take steps to consider his other legislative priorities and continue with the next phase of the impeachment proceedings for former President Trump.
In the coming weeks, President Biden is also expected to rollback more Trump-era healthcare regulations while Democrats in Congress will seek to align themselves with the President’s legislative priorities while potentially gearing up for additional hearings on the COVID-19 pandemic with a focus on building a case for additional stimulus.
INDUSTRIALS SECTOR
What We are Watching:
MASK UP: President Biden signed an Executive Order this week requiring domestic travelers to wear masks while using public transportation. The order allows agency heads to implement “categorical or case-by-case” exceptions as needed. The same order also requires international travelers to present proof of a recent negative COVID-19 test upon arrival to the U.S.
AUSTIN CONFIRMED: On Friday, the Senate voted overwhelmingly to confirm Retired General Lloyd Austin to serve as the next Secretary of Defense. As a result of the historic confirmation, Austin will be the first person of color to head the U.S. Department of Defense (DOD). Austin was demure in his confirmation hearing earlier this week and revealed little about his proposed policy agenda for DOD. He did concede during an exchange with Senator Martin Heinrich (D-NM) that PFAS remediation would be a priority for the department during his tenure as Secretary.
LAST MINUTE EPA ACTION ON PFAS: In the waning hours of the Trump Administration the Environmental Protection Agency (EPA) initiated the process of regulating two of the most well-known PFAS forever chemicals, PFOA and PFOS, under the Safe Drinking Water act. The EPA stopped short of designating the forever chemicals as hazardous under the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA), however, the agency did leave CERCLA designations open as a potential next step in its regulation of the substances. Lastly, the EPA also proposed that utilities test for 29 PFAS chemicals in a nationwide testing initiative scheduled between 2023 and 2025.
Week Ahead:
RAIMONDO CONFIRMATION: The Senate Commerce Committee is scheduled to consider the nomination of Rhode Island Governor Gina Raimondo (D) to serve as Secretary of Commerce on Tuesday, January 26th. In light of an announcement from Senate Majority Leader Chuck Schumer (D-NY) earlier today that the House will send articles of impeachment to the Senate on Monday, January 27th, the date of Governor Raimondo’s confirmation hearing is expected to push for several days.
TECH, MEDIA & TELECOM SECTOR
What We are Watching:
HOUSE OVERSIGHT LAUNCHES PARLER INVESTIGATION, CALLS FBI FOR HELP: House Oversight Chair Carolyn Maloney (D-NY), told The Washington Post, “I am going to get to the bottom of who owns and funds social media platform like Parler that condone and create violence,” Maloney said of her committee’s investigation and letter to FBI Director Christopher Wray requesting help in determining what role the platform may have played in January 6 violence at the Capitol.
NEW (TEMPORARY?) REGULATORY COPS ON THE BEAT: The Biden Administration named FCC Commissioner Jessica Rosenworcel and FTC Commissioner Rebecca Slaughter as the acting chairs of their respective agencies. Both are potential candidates to fill the positions as nominees to lead their agencies.
WORKPLACE WATCH: EU privacy regulators are beginning to scrutinize how employers monitor workers, including video surveillance or key logger technologies. A German electronics retailer is the latest company fined by EU privacy regulators for GDPR violations, paying $12.6 million for using video surveillance cameras to monitor employees.
Key Insights:
Tech firms are offering help to the public sector on Covid-related logistics as President Biden takes office. Amazon and Lyft have both reached out to offer assistance with transportation and delivery logistics, while other services like Eventbrite are now offering major cities assistance with vaccination scheduling for seniors. We’re watching to see how the Administration responds and what these offers of assistance may lead to.
