Public Affairs & Government Relations

Oversight & Investigations Informer – 1.29.21

NOTABLE DEVELOPMENTS

What We Are Watching:

COVID RELIEF PACKAGE: Speaker Nancy Pelosi said the House is planning to bring a coronavirus relief bill to a vote the first week of February. On the Senate side, Majority Leader Chuck Schumer said he aims to secure passage of the next round of COVID relief by mid-March. While the Biden administration says it hopes to gain some Republican support for the proposed package, Pelosi and Schumer are preparing to pass the measure through budget reconciliation, which only requires a 50 vote threshold in the Senate.

SENATE ORGANIZATION: Senate leaders are finalizing an agreement on power sharing that will be based off the 2001 agreement for the last 50-50 Senate. Minority Leader Mitch McConnell had initially insisted that Schumer agree not to abolish the filibuster but dropped that demand after pointing to comments Senator Joe Manchin (D-WV) made to the press that Manchin wouldn’t support abolishing the filibuster.

IMPEACHMENT STALLS: All but five Senate Republicans voted with Senator Rand Paul (R-KY) to declare Donald Trump’s impeachment proceedings unconstitutional, indicating that it’s highly unlikely that there will be 67 senators who will vote to convict the President for inciting the January 6 insurrection at the Capitol.

CONFIRMATIONS: The Senate has so far confirmed Anthony Blinken as Secretary of State, Janet Yellen as Treasury Secretary, Lloyd Austin as Defense Secretary, and Avril Haines as Director of National Intelligence.

Week Ahead:

The House and Senate are both in session next week. Key hearings include:

Senate Agriculture hearing on Thomas Vilsack to be Secretary of Agriculture. Tuesday, February 2 at 10:30 A.M.

House Transportation hearing on protecting transportation workers and passengers from COVID. Thursday, February 4, 11:05 A.M.

KEY INSIGHTS:  

 COMMITTEE ORGANIZATION: It’s worth paying a little more attention than usual to committee organizing meetings this Congress. In the closely divided House, and especially the 50/50 Senate, smooth initial meetings may indicate collaborative working relationships between chairs and ranking members, whereas disagreements or party-line votes likely indicate a committee ready to fight itself.

ENERGY SECTOR

What We Are Watching:

BIDEN BOOSTS ENVIRONMENTAL JUSTICE: The Biden administration unveiled a second slew of environmental executive orders this week, and while the pause of oil and gas leasing on federal lands stole the headlines, the creation of a White House council on environmental justice and office of environmental justice within the DOJ is likely to have a greater and more lasting impact. The move will highlight the environmental and health challenges faced by fence line communities and will “make sure that they receive 40 percent of the benefits of key federal investments in clean energy, clean water and wastewater infrastructure,” President Joe Biden said Wednesday.

SEC CLIMATE CRACKDOWN COMING: President Joe Biden’s selection of Gary Gensler to lead the Securities and Exchange Commission indicates a renewed focus on ESG disclosures. “Observers said they expect the agency to ask companies for additional insights, including into issues such as climate-change risk, workforce diversity and political spending,” the Wall Street Journal reports. “Mr. Biden campaigned on forcing publicly traded businesses to provide more details on environmental risks and greenhouse-gas emissions.”

Week Ahead

The confirmation hearing for Michael Regan to serve as EPA administrator will begin on Wednesday, February 3 at 2 p.m. before the Senate Committee on Environment and Public Works.

Key Insights

MINIMAL DELAY AT EPA: Expect the EPA to pivot pretty quickly and hit the ground running with the new focus on environmental justice. The agency is filled with Obama administration alumni, so action will be much faster than a normal transition as staff won’t need as much time to get up to speed.  Worth noting is the fact that Michael Regan edged out California Air Resources Board Chair Mary Nichols for the post in large part because of his prioritization of environmental justice while he was head of North Carolina’s Department of Environmental Quality.

FINANCIAL SERVICES SECTOR

What We Are Watching:

GAMESTOP AND REDDIT: After the GameStop market volatility largely driven by Reddit, the SEC and other regulators have announced they are monitoring the situation. The volatility has also led to bipartisan concerns in Congress, as well as White House attention.

ROBINHOOD RESTRICTS TRADE: After the GameStop market volatility, Robinhood has restricted trading in GameStop. This is not the first time Robinhood has come up against tension between their business model and user access to investments.

PPP LOANS FACE SNAG: The Small Business Administration has given out about 12 percent of its available funds since restarting Jan. 11, worth $35 billion. This comes as lenders continue to face snags.

DIVERSITY PUSH: Five of the largest U.S. banks publicly committed to mandating a diverse slate of applicants when hiring employees as a part of a larger push to diversify the industry.

TREASURY STAFF: Biden is filling out the Treasury staff with appointing Federal Reserve veteran and financial regulation expert Nellie Lang to the position of undersecretary for domestic finance at the Department.

OCC RULE PULED BACK: The OCC announced it is holding off publishing its “fair access” rule, limiting large banks ability to cut ties with companies involved in politically charged business.

Week Ahead

Both the Senate Banking Committee and the House Financial Services Committee announced they would hold hearings  on the current state of the stock market, specifically on short selling and online trading platforms, in midst of the GameStop market volatility.

Key Insights:

The market volatility spurred by Reddit has become an issue people from both parties, attracting attention from Sen. Ted Cruz (R-TX)  to Rep. Alexandria Ocasio-Cortez (D-NY-14), meaning increased scrutiny for the industry is likely.

The large banks decision to commit to diverse applicants comes as the Biden Administration has made diversity and inclusion a priority and political pressures increase for mandated corporate disclosures on diversity.

HEALTHCARE SECTOR

What We Are Watching:

GAO REPORTS FINDS THAT TRUMP ADMINISTRATION LEFT CRITICAL GAPS IN COVID-19 RESPONSE: On Thursday, House Democrat Majority Whip James E. Clyburn (D-SC 6th District), Chairman of the Select Subcommittee on the Coronavirus Crisis, issued a statement following a new report from the Government Accountability Office (GAO) detailing that the Trump Administration left critical gaps in its response to the COVID-19 pandemic and allegedly caused an exacerbation in deaths and economic harm. Clyburn claimed that the report revealed that even after GAO made various recommendations aimed at improving the response, the Trump Administration ignored them. Majority Leader Clyburn said he looked to the Biden Administration to take an entirely different approach “by leading a strong national response to the coronavirus crisis, consistent with the recommendations of GAO and the Select Subcommittee.”

OVERSIGHT COMMITTEE INVESTIGATES $70 MILLION VENTILATOR CONTRACT: On Wednesday, the House Oversight and Reform Committee launched an investigation into the federal government’s COVID-19 ventilator contracts with Safeguard Medical and AutoMedx amid allegations that the Trump Administration may have wasted $70 million in taxpayer funding, and that AutoMedx had advantageous connections to key government decisionmakers who were involved in the contract. Congressman Raja Krishnamoorthi (D-IL-8), chairman of the House Subcommittee on Economic and Consumer Policy which is in charge of the investigation, sent letters to both companies requesting that they provide documents regarding the purchase of the SAVe II and SAVe II+ ventilators by February 9. Rep. Krishnamoorthi asserted in his letters that reports and independent studies have raised “serious questions about whether their purchase for nearly $70 million constitutes waste, fraud, or abuse.”

HHS ALLEGDY MISUSES MILLIONS IN HEALTH EMERGENCY FUNDING: On Wednesday, Henry Kerner, Special Counsel in the United States Office of Special Counsel (OSC) sent a letter to President Joe Biden regarding a new report by the Office of Inspector General (OIG) at the U.S. Department of Health and Human Services (HHS), that alleged that federal officials at the Office of the Assistant Secretary for Preparedness and Response (ASPR) misappropriated millions in funding that Congress allotted to the Biomedical Advanced Research and Development Authority (BARDA) for the purpose of responding to public health emergencies including outbreaks of Ebola, Zika, and COVID-19. The report contains evidence that ASPR used BARDA’s Advanced Research and Development (ARD) funds to pay for the removal of ASPR office furniture, ASPR administrative expenses and news subscriptions, legal services used by ASPR, ASPR’s internal resource management system, and the salaries of personnel who did not work for BARDA. The report does not include the total amount of funding that was misappropriated, but the investigation details that the misuse of funds spanned across both the Trump and Obama Administrations.

FTC SUES ENDO AND IMPAX ON ANTICOMPETITIVE PRACTICES A SECOND TIME: On Monday, the Federal Trade Commission (FTC) filed a lawsuit against Endo International and Impax Laboratories alleging that a 2017 agreement between the two companies violated antitrust laws by eliminating competition in the market for an oxymorphone emergency room drug. The FTC previously sued Endo and Impax in January 2017 for engaging in similar anticompetitive conduct concerning the same drug product. In the FTC’s statement regarding the lawsuit, Gail Levine, Deputy Director of the Bureau of Competition alleged that “the agreement between Endo and Impax has eliminated the incentive for competition, which drives affordable prices.”

Week Ahead

The Subcommittee on Oversight and Investigations of the House Committee on Energy & Commerce will hold three hearings next week around concerns related directly to the COVID-19 pandemic. Beginning on Tuesday, February 2, 2021, at 11 a.m., the Committee’s first hearing of the 117th Congress, “No Time to Lose: Solutions to Increase COVID-19 Vaccinations in the States” hearing will focus on the urgent need to increase the rate of COVID-19 vaccinations nationwide. On Friday, the Committee released a memo inviting public health officials to testify from several states that have experienced difficulty with vaccine immunization rates such as Illinois, Michigan and Louisiana.

On Wednesday, February 3, 2021, at 11 a.m., the Subcommittee on Oversight and Investigations will hold the “Road to Recovery: Ramping Up COVID-19 Vaccines, Testing, and Medical Supply Chain” hearing. The hearing’s accompanying memo and witness list is not yet available.

On Thursday, February 4, 2021, at 12 p.m. the Subcommittee on Oversight and Investigations  will hold the “Safeguarding American Consumers: Fighting Fraud and Scams During the Pandemic” hearing. The hearing’s accompanying memo and witness list is not yet available.

 Key Insights:

President Joe Biden is initially moving forward on much of his health care agenda through Executive Orders. This week, the White House announced several Executive Orders aimed to strengthen the Affordable Care Act (ACA) and Medicaid. Notably, the President announced plans to reopen the ACA marketplace on February 15, which will allow Americans who may have lost their health insurance during the COVID-19 pandemic to register for coverage on the exchange. The President will still need a Congressional package to move some of his larger priority items.

President Joe Biden also announced that COVID-19 vaccines could be available to all Americans by spring this year and that his Administration is working to purchase an additional 200 million doses of the two FDA authorized COVID-19 vaccines. Stakeholders will be watching closely to see how well President Biden’s vaccine rollout is deployed.

On Tuesday Speaker Nancy Pelosi (D-CA-12) announced several new committee appointments, including Democratic Members for the Select Subcommittee on the Coronavirus Crisis. All members but Chairman Andy Kim (D-NJ-3) return to this year’s Subcommittee with the addition of Rep. Raja Krishnamoorthi:

  • Chair Jim Clyburn (S.C.)
  • Rep. Maxine Waters (Calif.)
  • Rep. Carolyn Maloney (N.Y.)
  • Rep. Nydia Velázquez (N.Y.)
  • Rep. Bill Foster (Ill.)
  • Rep. Jamie Raskin (Md.)
  • Rep. Raja Krishnamoorthi (Ill.)

INDUSTRIALS SECTOR

What We Are Watching:

GENERAL MOTORS FLEET WIL BE ELECTRIC BY 2035: As part of an effort to be carbon neutral by 2040, General Motors announced it will ensure its light-duty fleet of vehicles including cars, trucks, and SUVs, will be electric by 2035. Tail-pipe emissions account for 75 percent of GM’s carbon footprint. The automaker also pledged to use 100 percent renewable energy by 2035.

REPUBLICANS ADDED TO HASC: The House Republican Steering Committee announced 9 House Republicans that were recommended to join the roster of the House Armed Services Committee (HASC) in the 117th Congress. Democrats had argued Republicans’ delay in naming the additional members to the roster was impeding committee business, including the cancellation of a planned public hearing with then-Secretary of Defense nominee Retired General Lloyd Austin.

FIAT CHRYSLER FINED FOR UAW PAYMENTS: The U.S. Department of Justice (DOJ) hit Fiat Chrysler with a $30 million fine after the automaker plead guilty to making $3.5 million worth of illegal payments to senior officials of the United Auto Workers (UAW) union. Executives from Fiat Chrysler provided extravagant gifts to union officials from 2009 to 2016 in an attempt to influence negotiations with the union. DOJ found the actions of the automaker were a clear violation of the Taft-Hartley Act.

Week Ahead:

BUTTIGEIG TO BE CONFIRMED ON TUESDAY: The Senate has teed up a confirmation vote for Pete Buttigieg’s nomination to be Secretary of Transportation for Tuesday, January 2. Buttigieg is expected to be confirmed with broad bipartisan support. The Senate Commerce Committee advanced his nomination earlier this week with only three no votes.

TECH, MEDIA & TELECOM SECTOR

What We Are Watching:

X-MODE EXILE: Location broker X-Mode, who is known to sell location data to U.S. military contractors, is under fire this week after a report found that nearly 200 Android apps were continuing to send location data to X-Mode as recently as December, when Apple and Google told developers to remove X-Mode from their apps.

BAD NEWS FOR BIG TECH AT FTC?: Big tech critic and antitrust enforcement advocate Lina Khan is reportedly under consideration to fill one of the commissioner roles as Democrat Rohit Chopra leaves the role to run the Consumer Financial Protection Bureau. Khan helped lead the House Judiciary’s investigation and antitrust report on digital markets.

TROUBLES FOR TELEGRAM?: After being banished from major social media platforms, many conspiracy theorists, racists, and advocates of violent insurrection have joined Telegram. In the days following the capitol riots, twenty-five million new users flooded the app, presenting new scrutiny and challenges for the company.

Week Ahead:

The Senate Commerce Committee is scheduled to organize next week. These organizational meetings pave the way for committees to name subcommittee jurisdictions, chairs, and membership.

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