Oversight and Investigations Informer – 12/18/2020
What We Are Watching:
BIDEN BUILDS OUT TEAM: President-elect Joe Biden continued to announce nominations for key positions, including: Rep. Debra Haaland (D-NM) for Interior Secretary; former South Bend, Indiana mayor Pete Buttigieg for Transportation Secretary; Michael Regan, current head of the North Carolina Department of Environmental Quality, for Environmental Protection Agency administrator. Still to come are nominations for Attorney General, Small Business administrator, and Commerce, Education, and Labor Secretaries.
SPENDING DEAL: Congressional leadership is nearing a deal on the $1.4T appropriations bill for 2021 government funding. While the $1.4T omnibus measure is mostly complete, leadership negotiations continue on a roughly $900 billion COVID aid bill that will be added to the appropriations package. The relief package would include another round of stimulus checks that are reported to range from $600 to $700 for millions of Americans, along with hundreds of billions of dollars in aid to small businesses and unemployed individuals and tens of billions for other priorities such as vaccine distribution and schools.
Congress intends to leave town as soon as it passes the spending package. Both chambers are scheduled to return on January 3rd, but are prepared to come back earlier to override President Trump’s expected veto of the National Defense Authorization Act.
What We Are Watching:
WHITEHOUSE V. WHITE HOUSE: Axios’ Amy Harder reported yesterday that Sen. Sheldon Whitehouse (D-RI) is threatening to stymie President-elect Joe Biden’s nominees if Sen. Whitehouse believes the administration is not acting aggressively on climate change. Sen. Whitehouse is specifically demanding that the Department of Justice investigate think tanks and other groups that have received funding from fossil fuel companies. During his campaign, President-elect Biden said he would move to “hold companies accountable if they knew and misled the public about climate change.”
SPEAKING OF NOMINEES: President-elect Joe Biden announced yesterday that he plans to nominate New Mexico Rep. Deb Haaland for Interior Secretary, and North Carolina Department of Environmental Quality secretary Michael Regan to lead the U.S. Environmental Protection Agency, while former Obama EPA Administrator Gina McCarthy will lead Biden’s White House climate change office. All three picks were cheered by environmental activists, as McCarthy currently serves as President and CEO of the Natural Resources Defense Fund, while Regan spent time at the Environmental Defense Fund. POLITICO notes that “Haaland’s selection positions Biden’s Interior Department to build on the budding alliances between tribes and environmental groups that have been formed in recent years to battle fossil fuel projects like the Dakota Access pipeline.”
WHAT TO EXPECT: California Air Resources Board Chair Mary Nichols, a tough regulator, was believed to be President-elect Joe Biden’s first choice to head the U.S. Environmental Protection Agency until progressives made it known that they thought she was still not tough enough and had turned a blind eye to the concerns of poor and minority communities. The last minute scramble to find a tougher environmental watchdog, paired with the selections of McCarthy and Haaland, suggests industry will be given an exceedingly short leash, with a focus on equity.
FINANCIAL SERVICES SECTOR
What We Are Watching:
FDIC FINALIZED RULE: The Federal Deposit Insurance Corp. finalized rules that will make it easier for nonbanks to get a banking license called an “industrial loan charter”, making it so that Wall Street may have to compete with a potential Amazon or Walmart bank.
SEC VS. ROBINHOOD: The SEC charged Robinhood with a $65 million civil penalty for deceiving customers about how the stock trading app makes money and failing to deliver the promised best execution of trades.
LABOR DEPARTMENT: The Labor Department has finalized new fiduciary exemptions for financial brokers providing investment advice that will allow them to collect commissions and other compensation when offering advice on workplace retirement plans and individual retirement accounts.
GOING GREEN: The Federal Reserve has officially joined the Network for Greening the Financial system. The move signals an increased focus on climate change from the Fed.
Treasury Secretary Steven Mnuchin’s decision this week to back away from Fannie Mae and Freddie Mac privatization decision leaves the fate of the GSEs to a Biden Administration who may use them to as vehicles to expand affordable homeownership.
Despite DOL’s announcement, a lengthy effective date combined with an incoming Biden Administration will make its staying power temporary.
In response to the new finalized FDIC rule, some bank and consumer groups issued a statement asking Congress to change FDIC’s ILC authority. The bill will be an uphill battle.
What We Are Watching:
STATES PUT THE HEAT ON PHARMA: On Monday, a group of more than two dozen state Attorneys General sent a letter to U.S. Department of Health and Human Services (HHS) Secretary Alex Azar and Health Resources and Services Administration (HRSA) Administrator Thomas Engels arguing that HHS should use its authority to force drug manufacturers to follow 340B statute and provide hospitals with discounts through contract pharmacies. The letter was led by President-elect Biden’s nominee to lead HHS, California Attorney General Xavier Becerra.
HHS HERD IMMUNITY STRATEGY?: On Wednesday, Rep. James E. Clyburn (D-SC-06), Chairman of the Select Subcommittee on the Coronavirus Crisis, released a memo detailing what he described as “[a] pernicious pattern of political interference by Administration officials” into the work of career staff at the Centers for Disease Control and Prevention (CDC). The memo asserts that these documents show that HHS political appointees conspired to blame virus spread on career scientists and had strategized about a “herd immunity” approach while privately acknowledging that the Administration’s policies would cause cases to rise.
VACCINE PROCURMENT: On Wednesday, Chairman Clyburn and all of the Democratic Members of the Select Subcommittee on the Coronavirus Crisis sent a letter to HHS Secretary Alex Azar and Acting Defense Secretary Christopher Miller requesting information on the Administration’s coronavirus vaccine acquisition and distribution efforts. The letter expressed concerns about the Administration’s ability to procure enough doses, and points to recent reporting that the Administration turned down additional supply of the Pfizer vaccine over the summer, before it had been approved. The letter states that this “raises questions about whether HHS and DOD will be able to deploy vaccinations to all who need them” and that there is little clarity regarding “how or when sufficient doses will be available to most Americans.”
SENATE FINANCE QUANTIFIES OPOID ADVOCACY: On Wednesday, Senate Finance Committee leaders, Chairman Chuck Grassley (R-IA) and Ranking Member, Ron Wyden (D-OR), released a report detailing opioid manufacturers’ funding of nonprofit pain medication advocacy groups. The report identifies $65 million in spending to “tax-exempt entities,” which lawmakers say manufacturers use as “helpful extensions of their sales and marketing efforts.”
Lawmakers struck a deal banning “surprise” medical bills late last week but the deal is not supported by everyone in the industry. Some provider groups, such as the American Medical Association, are still concerned that the hallmark of the bill, requiring the use of arbitration to settle disputes, would still be unfair to smaller providers. While House Speaker Nancy Pelosi (D-CA) said the measure should be included in a year-end funding package, it is still unclear if Senate Majority Leader Mitch McConnell (R-KY) agrees.
The push for COVID-19 vaccine authorization and deployment continues. On Friday, a federal vaccine-advisory committee voted to recommend that the Food and Drug Administration (FDA) grant emergency-use authorization for Moderna’s vaccine candidate. This creates new dynamics in the COVID-19 vaccines trials currently underway, for example, Pfizer has announced that it will unblind its study and administer the vaccine to participants in its placebo group. Furthermore, given the promise of this new emergency authorization, HHS Secretary Azar said that he expects most Americans to have access to the vaccine by late February or March. To instill public confidence, government leaders, will have their vaccine administered before television cameras. This includes Vice President Mike Pence who received his vaccine on Friday, and President-Elect Joe Biden who will receive his on Monday.
Finally, Congress continues discussions over a COVID-19 stimulus package. Earlier this week, a group of bipartisan Senators proposed a package that would total up to $748 billion and would provide funds for unemployment benefits, PPP loans, and state/local governances, led by Sens. Bill Cassidy (R-LA), Maggie Hassan (D-NH), Lamar Alexander (R-TN) and Patty Murray (D-WA). Congressional leaders in both parties are working on a more limited bill that would provide funding for vaccine distribution, a new round of stimulus checks, additional unemployment benefits, more money for the Paycheck Protection Program, and funding to help reopen schools. The package under negotiation does not currently contain additional funding for state and local governments that Democrats sought or the business liability protections that were a priority for Republicans.
What We Are Watching:
BIDEN TAPS MAYOR PETE FOR TRANSPORTATION: President-Elect Joe Biden formally announced his former rival from the Democratic Presidential primary Pete Buttigieg will be his nominee for Secretary of Transportation. The former Mayor of South Bend, Indiana has limited infrastructure credentials but will be a key spokesperson for the Biden Administration’s legislative agenda on infrastructure.
REGAN WILL LEAD EPA UNDER BIDEN: Michael Regan, who currently serves as North Carolina’s Department of Environmental Quality, was selected as President-Elect Joe Biden’s nominee for Administrator of the Environmental Protection Agency (EPA). Regan beat out Mary Nichols, Chairwoman of the California Air Resources Board (CARB), who was considered the frontrunner for the position for weeks. Regan spent several years at the Environmental Defense Fund prior to his current role in public service where he negotiated a multibillion-dollar settlement with Duke Energy over a coal cleanup. Its believed that Regan will champion President-Elect Biden’s policy agenda to address climate change and racial inequality in environmental regulation.
AIRLINE RELIEF COMING: Congress is expected to finalize a COVID-19 relief proposal over the weekend that is expected to include additional relief for the airline industry. The final bill is likely to contain additional funding for the Payroll Support Program that is designed to help passenger and cargo airlines, as well as contractors, stave off lay-offs and furloughs. The bill may also include funding for airports and the Essential Air Service but Congressional leaders have yet to release any text of the final relief bill.
HUAWEI CORNERS CHIP MARKET: Huawei is cornering the chip market contributing to a global chip shortage alongside under-investment in chip manufacturing to meet resurgent demand. Huawei began stockpiling chips in the fall before its suppliers were subjected to new U.S. sanctions barring companies from dealing with the telecommunications giant. This activity inspired Huawei’s
TECH, MEDIA & TELECOM SECTOR
Week in Review:
THIRD SUIT AGAINST GOOGLE: Following recent State and DOJ filings, a bipartisan group of more than 30 state prosecutors said in a lawsuit filed this week that Google downplayed websites that let users search for information in specialized areas like home repair services and travel reviews.
FTC DEMANDS CONSUMER DATA INTELLIGENCE FROM BIG TECH: Early this week the Federal Trade Commission said it is issuing sweeping demands for information about how companies including Amazon, Facebook, Google, TikTok and Youtube collect and use information from users, saying their use of consumer data is “shrouded in secrecy.”
PINTEREST SETTLES WITH FORMER COO: Pinterest agreed on Monday to pay $22.5 million to settle a gender discrimination and retaliation lawsuit from Françoise Brougher, its former chief operating officer, in one of the largest publicly announced individual settlements for gender discrimination. The company did not have to admit any liability as part of the settlement.
FEDERAL PRIVACY LAW UPDATE: In a panel Thursday hosted by FTI and Perkins Coie, government and industry privacy experts agreed comprehensive federal privacy legislation is likely still far off. Jason Van Beek, general counsel in the Office of the Senate Majority Whip, noted “even in the technology space, we’re talking about things like content moderation and broadband deployment and things like that. So where [privacy] falls on the priority list is a little bit up in the air at the moment.”
2021: the year we define a playbook for regulation of Chinese apps? For all the drama the TikTok ban generated, the outcome remains in limbo (a federal judge recently fully blocked the Trump administration’s attempt to ban the app in the U.S). A Biden administration may prioritize a strategy – one that champions Biden’s “tougher on China” mentality – to get ahead of the next Chinese blockbuster consumer app.
The views expressed herein are those of the author(s) and not necessarily the views of FTI Consulting, Inc., its management, its subsidiaries, its affiliates, or its other professionals.