Oversight & Investigations Informer – April 5, 2021
What We Are Watching:
WHITE HOUSE PROPOSES $2 TRILLION INFRASTRUCTURE PLAN: In a speech last Wednesday in Pittsburgh, the White House unveiled the details of its infrastructure package. The proposal includes massive funding for transit, broadband, clean drinking water, the power grid, affordable housing, public schools, and electric vehicles. Congressional Democratic leaders now have the task of passing the proposal, which Republican leaders have already criticized as a partisan wish list. Some Democrats have also criticized the plan- Representative Ocasio-Cortez has said it isn’t ambitious enough, and Northeast Democrats have called for re-adding the state and local tax (SALT) exemption to the tax code, which Republicans removed in 2017.
YELLEN CALLS FOR GLOBAL MINIMUM CORPORATE TAX RATE: Treasury Secretary Janet Yellen said in a speech on Monday to the Chicago Council on Global Affairs that she is working with G-20 nations to agree to a global minimum corporate tax rate. President Biden’s infrastructure proposal would raise the U.S. corporate tax rate from 21% to 28% and would increase minimum taxes on U.S. companies’ foreign income.
FORMER OBAMA LAWYER VETTED FOR ANTI-TRUST POSITION: Politico reports that the Biden team is vetting former Obama administration lawyer Jonathan Sallet for a top anti-trust post. One possible position is heading the Department of Justice’s anti-trust division. Sallet currently works for the Colorado attorney general on anti-trust matters.
The House and the Senate are out of session this week and will return next week.
The Brookings Institution will be holding a virtual event “Filibuster 101” with senior fellows Molly E. Reynolds and Sarah A. Binder on Tuesday, April 6 at 2 p.m.
It’s important to remember that the administration’s infrastructure proposal is only a starting point, and Congress will make significant changes in the coming months as the Democratic leadership teams work towards passage. FTI Consulting experts broke down the Biden administration’s infrastructure proposal in this thought leadership piece.
What We Are Watching:
CLEAN SLATE FOR EPA’S SCIENCE ADVISORY BOARDS: U.S. Environmental Protection Agency Administrator Michael Regan booted all members from the agency’s Science Advisory Board and Clean Air Scientific Advisory Committee this week, in what Regan called a “reset” necessary to reestablish scientific integrity. The priorities of the previously low-profile panels, which provide advice and expertise to inform EPA rulemaking decisions, have whipsawed in recent years, reflecting the contrasting priorities of recent agency chiefs. Former EPA Administrator Scott Pruitt banned scientists who had received government grants from serving on the panels in 2017, though the ban was dropped in 2020 after the Trump administration lost a court battle over the policy. Nominations for the panel are open through May 3rd.
The Center for American Progress hosts a discussion with John Podesta and Sen. Ed Markey (D-MA) on “Putting Racial Justice at the Heart of Climate Action: A U.S. and U.K. Perspective” at 10 a.m. on Thursday, April 8.
With Congress out on recess, President Biden was able to take advantage of a slower news week to unveil his massive infrastructure plan and dominate the energy media landscape.
FINANCIAL SERVICES SECTOR
What We Are Watching:
ALL EYES ON SPAC CONTINUE: Last Wednesday, the 31st, the SEC issued a new statement warning of risks in disclosures and governance of SPACs, signaling a move to investigate the popular financing vehicle.
FSOC FOCUS: At the first Financial Security Oversight Council (FSOC) meeting, Treasury Secretary Janet Yellen said that climate change poses an existential threat to financial services, marking the first time the FSOC signaled an interest in climate change. Secretary Yellen also said regulators need to increase scrutiny of hedge funds.
ARCHEGOS TROUBLE: Major global face losing billions of dollars in losses after the hedge fund Archegos Capital was forced to dump shares last week when it got into financial trouble, from its positions in blue-chip companies, including Viacom and Discovery. On Thursday, April 1, Democratic CFTC Commissioner Dan Berkovitz called for more oversight of so-called family offices used to manage wealthy individuals’ money.
Chairwoman Maxine Waters (D-CA-43) released the House Financial Services Committee scheduled for April.
SPACs are the new hot method in the American financial services sector, but the government is beginning to signal its intentions to regulate special-purpose acquisition companies for several reasons including its lack of regulations compared to a typical IPO.
What We Are Watching:
FTC LOOKS TO HALT ILLUMINA’S $7.1 BILLION ACQUISITION OF GRAIL INC.: On Tuesday, March 30, 2021, the Federal Trade Commission (FTC) filed suit against Illumina Inc. in an effort to stop its $7.1 billion acquisition of Grail Inc., a company developing an early-stage cancer detection test. The case is particularly interesting as it concerns a vertical merger, since the companies do not directly compete in the same market. Grail Inc. is currently developing a DNA sequencing early-detection cancer test, while Illumina develops and sells DNA sequencing machines that run these tests. Although the companies are not directly in competition, the FTC complaint alleges that the acquisition would diminish innovation in DNA sequencing multi-cancer early detection tests.
WHITE HOUSE ANNOUNCES CREATION OF SCIENCE TASK FORCE TO PROBE TRUMP ADMINISTRATION INTERFERENCE: On Monday, March 29, 2021, the White House Office of Science and Technology Policy announced that it will form a task force to investigate possible interference in scientific research by the Trump Administration. The task force will specifically examine whether or not policies instated under the Trump Administration effectively kept politics out of the development of COVID policies.
HOUSE DEMOCRATS URGE FTC TO INVESTIGATE RISING INSULIN PRICES: This month, a group of House Democrats wrote to the Federal Trade Commission (FTC) urging the agency to investigate increasing insulin prices. In a letter to the FTC Acting Chairwoman Rebecca Slaughter, the lawmakers alleged that three drug giants, Eli Lilly, Novo Nordisk, and Sanofi raised prices nearly simultaneously. The letter further contended that there were at least 13 cases involving Sanofi and Novo Nordisk between 2009 and 2019, in which the companies raised prices within mere days of each other, with Eli Lilly following suit soon after.
There are no upcoming O&I hearings for next week.
The Biden Administration revealed last week that it is rethinking its vaccination plan, after data revealed government-run mass vaccination sites are lagging behind administrations by local pharmacies. The vaccination hubs, which are run by the Federal Emergency Management Agency (FEMA) and staffed in part by National Guard troops and other Pentagon personnel, have administered just 1.7 million doses since the beginning of February. By comparison, the federal retail pharmacy program reported March 11 it had administered nearly 1 million doses over a single day.
Also on Thursday, April 1, 2021, President Biden announced his plan to create a network of external health professionals and community leaders to lead community-wide vaccination efforts in hopes that these leaders will build trust in COVID-19 vaccinations as supply becomes increasingly available. The effort, titled COVID-19 Community Corps, will be made up entirely by volunteers to get the government’s vaccine messaging out within their own communities as they lead on-the-ground efforts to address vaccine hesitancy.
What We Are Watching:
INDUSTRY WATCHING FOR EPA ACTION ON PFAS: The Environmental Protection Agency (EPA) is slowly increasing its oversight and regulatory activity related to PFAS chemicals. The EPA announced three water-related regulations in recent weeks that would address PFAS contamination levels and most recently sent a proposal to the White House Office of Management and Budget (OMB) for new data-collection capabilities to increase PFAS monitoring. The EPA is expected to designate all PFAS as hazardous chemicals in the coming months, which could trigger nationwide cleanups under the Superfund and result in millions of dollars of liability for chemical manufacturers and distributors.
FORMALDEHYDE LINKED TO ASTHMA AS EPA REEVALUATES FINDINGS: A new study has linked exposure to formaldehyde to childhood asthma and comes as the U.S. Environmental Protection Agency is restarting its analysis of the chemical, after the Trump administration removed asthma from the cost-benefit analysis supporting a 2016 regulation. Formaldehyde is ubiquitous in homes, as it is used in building materials, furniture, gas stoves, and even clothing. Members of Congress have repeatedly raised concerns around the health impacts of the chemical.
FTA ANNOUNCES AVAILABILITY OF FUNDING FOR PUBLIC TRANSIT: The Federal Transit Administration (FTA) announced last week a total of $30.5 billion in federal funding will be made available to support public transit systems impacted by the COVID-19 pandemic. The funding was originally authorized under the American Rescue Plan. Recipients of the funding are expected to receive closer scrutiny from Congress and the FTA of their management practices throughout the pandemic.
OMB BUDGET COMING: The White House Office of Management and Budget is expected to publish the President’s Budget Request (PBR) later this week. The PBR is a significant messaging doc that reveals the Biden Administration’s policy and funding priorities for each agency. For example, requests at agencies such as the EPA may reveal information on where the Biden Administration will prioritize its requests for extra funding to expand oversight and regulation of toxic chemicals and emissions.
FTI Consulting’s Susan Donofrio and Eli Serota explore how the airline industry is beginning to incorporate ESG programs and initiatives to stand out among investors and sustainability-conscious travelers.
TECH, MEDIA & TELECOM SECTOR
What We Are Watching:
SPY ADS?: Citing national security concerns, a bipartisan group of U.S. senators is asking digital ad auctioneers like Google and AT&T about the inner workings of their digital advertising system and to provide the names of all foreign clients who had access to user data through auctions over the past three years.
LOOKING TO NSA AFTER SOLARWINDS: Administration officials say SolarWinds hackers succeeded in part because NSA is barred from monitoring domestic networks, leading to calls for new surveillance powers for government.
FACIAL RECOGNITION AT WORK: The FBI used license plate readers and facial recognition technology to find and arrest rioters at the Capitol mob – and activists say the practices can infringe on citizen privacy.
The World Economic Forum takes place virtually April 6-7. The event kicks off with a discussion on the outlook for technology governance; speakers include the CEOs of Salesforce and YouTube.
HOW TO REGULATE AN NFT? NFTs, or non-fungible tokens, are unique tokens publicly identified on the blockchain it was created on. The practice of buying and selling NFTs is blowing up – in fact, Jack Dorsey sold his first tweet as an NFT for $2.9 Million. Expect to see more chatter around NTFs on Capitol Hill – whether that’s due to a lawmaker wanting to leverage the trend for a larger discussion on updating technology regulation or compliance with existing law.