Public & Government Affairs

Oversight & Investigations Informer – June 7, 2021

NOTABLE DEVELOPMENTS

What We Are Watching:

INFRASTRUCTURE NEGOTIATIONS STALL: On Friday, June 4, President Biden rejected the latest proposal from Senate Republicans for a trimmed-down infrastructure package. Senate Committee On Environment and Public Works Ranking Member Shelley Moore Capito (R-WV) pitched the $307 billion proposal to President Biden over the phone. Although the proposal was turned down, President Biden and Ranking Member Capito spoke earlier today to continue negotiations.

Week Ahead:  

Bipartisan negotiations on infrastructure will continue this week but it remains unclear what areas for progress are available to negotiators. The House Transportation and Infrastructure Committee is marking up the House version of an infrastructure package. In the upper chamber, a bipartisan group of senators are expected to introduce an alternative infrastructure package as negotiations among leadership continues to stall.

Key Insights:  

The Senate is back in session this week while the House continues its District Work period. President Biden and Vice President Kamala Harris are both traveling abroad this week on separate diplomatic visits. President Biden will be in Europe to attend a G7 summit in addition to bilateral meetings with the European Union and President of Russia Vladimir Putin.

ENERGY SECTOR

What We Are Watching:

CAN TEXAS PREVENT THE NEXT BLACKOUT?: Texas lawmakers recently passed a slew of measures to prevent future blackouts like the one that crippled the state earlier this year, but some experts are skeptical that it will be enough. New mandates for companies to “winterize” their infrastructure have too many gaps and set the cost of non-compliance too low, critics allege. The legislation also shakes up oversight of ERCOT, which oversees the Texas grid, including eliminating “affiliated industry seats on the ERCOT board.”

SOCIALIZED ENERGY?: “Certain segments of our economy—like water, health care, and energy—are so absolutely essential to people’s lives that we cannot allow profit motives to dictate decision-making,” Representative Jamaal Bowman (D-NY-16) says of their recently introduced resolution that calls for the federal government to acquire all energy utilities and their transmission lines. Proponents of the resolution say it’s necessary to protect low-income households, workers, and communities of color.

WHEN ENVIRONMENTAL JUSTICE CLASHES WITH RENEWABLES: Environmental justice isn’t a challenge just for the fossil fuel industry; it’s also threatening clean energy development, like a proposed 50-MW solar and 12-MW energy storage project in Florida. The clash is indicative of the challenge facing utility companies as they work to meet decarbonization targets while navigating the increased scrutiny of power generation assets and proximity to historically marginalized communities.

Week Ahead:  

Colonial Pipeline CEO Joe Blount will appear this week in front of both the House Homeland Security Committee and the Senate Homeland and Government Affairs Committee in separate hearings, to answer lawmakers questions on the May 7th ransomware incident that exposed ongoing threats to critical infrastructure in the U.S. The Senate hearing is scheduled for the Senate Dirksen Building, SD-342 and via videoconference on Tuesday, June 8 at 10:00 a.m. and the House will convene in a virtual hearing at 12 p.m. on Wednesday, June 9.

Key Insights:

THE END OF VOLUNTARY CYBERSECURITY: The recent slew of cyber and ransomware attacks that have crippled parts of the country’s energy infrastructure, food supply and other critical areas of the economy have shined a light on “how a voluntary, arms-length approach by federal officials over nearly two decades has left key elements of the nation’s critical infrastructure at risk,” as one lengthy examination by the Washington Post puts it. As ransomware attacks continue to derail President Joe Biden’s agenda, companies can expect new cyber regulations from oversight agencies under existing authority, even as Congress ponders new legislation to grant additional oversight to the federal government.

FINANCIAL SERVICES SECTOR

What We Are Watching:

CYBERSECURITY CRYPTO CONCERNS: Following a number of ransomware attacks, the Biden administration is probing crypto use in ransomware attacks and is moving to treat ransomware attacks as a national security threat. This coincides with increased scrutiny from Congress, as the House Financial Services Committee announced two hearings this month on crypto.

CHINA BAN: President Biden signed an executive order on June 3 expanding a Trump administration ban on U.S. investments in Chinese companies. Biden added 59 firms with ties to China’s military, including Huawei technologies.

PROXY RULES: U.S. Securities and Exchange Commission (SEC) Chairman Gary Gensler said the SEC will review the Trump administration’s proxy adviser rules that, among other measures, require proxy advisers to share their voting recommendations with the public as they share them with clients, or before. The SEC also said that it may write a replacement rule.

Week Ahead:  

House Financial Services Committee Chairwoman Maxine Waters (D-CA-43) announced the June schedule last Thursday, which included a hearing this week on June 9 entitled, “Universal Vouchers: Ending Homelessness and Expanding Economic Opportunity in America”.

The Senate Banking Committee is hosting two hearings this week.  The first one June 8 is entitled, “Opportunities and Challenges for Connecting Communities” and the second one on June 9 is entitled, “Building A Stronger Financial System: Opportunities of a Central Bank Digital Currency”.

Key Insights:

Due to recent volatility and involvement in ransomware attacks, cryptocurrencies have become a focus of both the administration and Congress as the government discusses different ways potentially regulate the industry.

HEALTHCARE SECTOR

What We Are Watching:

HHS PROMOTES MANDATORY PAYMENT MODELS: On Wednesday, June 2, Bloomberg Law published an article quoting the Director of the Department of Health and Human Services’ (HHS) Health Innovation Center, Liz Fowler, who said that the incentives driving providers and insurers should be re-examined to encourage the expansion of mandatory payment models.

HOUSE WAYS AND MEANS OVERSIGHT SUBCOMMITTEE CHAIRMAN REQUESTS INVESTIGATION OF PRIVATE EQUITY HOSPITAL OWNERSHIP: On Wednesday, June 2, Ways and Means Oversight Subcommittee Chairman Bill Pascrell (D-NJ-9) wrote to the Government Accountability Office (GAO), asking them to investigate private equity hospital acquisitions. Specifically, he requested information on “how many health care facilities or providers have either filed for bankruptcy or closed following investments from PE firms in the last 10- 15 years.” He also requested research and analysis to determine if there are any geographic trends present with facility closures, and how such closures could disproportionately impact marginalized communities.

SENATE FINANCE CHAIRMAN LAUNCHES INVESTIGATION INTO ABBVIE TAX PRACTICES: On Wednesday, June 2, Senate Finance Committee Chairman Ron Wyden (D-OR) wrote a letter to AbbVie requesting documentation related to the company’s tax practices. He expressed concern they might be exploiting incentives in the Tax Cuts and Jobs Act of 2017 to offshore profits and avoid paying U.S. corporate income taxes.

FDA INVESTIGATES POSSIBILITY OF JOHNSON & JOHNSON AND ASTRAZENECA VACCINE CONTAMINATION: On Wednesday, June 2, Politico reported that the FDA is investigating if Emergent BioSolutions may have contaminated additional Johnson and Johnson and AstraZeneca COVID-19 vaccines. The FDA is expected to announce whether the vaccines produced by Emergent are safe to use within the next few days.

CVS HEALTH ACCUSED OF FUELING THE OPIOID CRISIS IN KENTUCKY: On Wednesday, June 2, Kentucky Attorney General Daniel Cameron (R) filed a lawsuit against CVS for its role in the ongoing opioid epidemic in the state. The lawsuit alleges that CVS’ “unlawful business practices” and failure to “guard against diversion” of opioids have played a significant part in the state’s epidemic. The lawsuit also attacks CVS’s marketing and advertisement of opioids. 

Week Ahead:

On Tuesday, June 8 2021, at 10:00 a.m. ET, the House Ways and Means Committee will hold a hearing on “The President’s Proposed Fiscal Year 2022 Budget with the Department of Health and Human Services Secretary Becerra.”

On Tuesday, June 8, 2021 at 12:00 p.m. ET, the House Committee on Oversight and Reform will hold a hearing entitled “The SACKLER Act and Other Policies to Promote Accountability for the Sackler Family’s Role in the Opioid Epidemic.” The witness list includes: Maura Healey, Attorney General of Massachusetts; Lawrence Wasden, Attorney General of Idaho; and Patrick Radden Keefe, Author of Empire of Pain: The Secret History of the Sackler Dynasty.

On Thursday, June 10, 2021, at 10:00 a.m. ET, the Senate Committee on Finance will hold a hearing on “The President’s FY 2022 HHS Budget.” The Honorable Xavier Becerra, Secretary of the Department of Health and Human Services, will testify.

Key Insights:

On Tuesday, Israel’s Health Ministry announced that it found a probable link between cases of heart inflammation in young men and the COVID-19 vaccine developed by Pfizer and BioNTech. According to data collected by the Israeli government, 275 cases of myocarditis were reported between December 2020 and May 2021 among more than 5 million vaccinated people. The Israeli findings come one month after a CDC advisory group recommended further study of the possibility of a link between myocarditis and mRNA vaccines, including those developed by Pfizer BioNTech and Moderna.

INDUSTRIALS SECTOR

What We Are Watching:

HOUSE INFRASTRUCTURE BILL INCLUDES $5.7B IN EARMARKS: Earlier today the House Transportation & Infrastructure Committee released the latest draft of the House infrastructure proposal which includes a list of earmarked projects totaling $5.7 billion. The authors accepted 1,473 of 2,383 projects submitted. The disbursement of earmarked funds is expected to receive significant scrutiny as watchdog and oversight entities monitor the included programs.

UNITED AIRLINES DRAFTS VAX PLAN WITH UNION: Last week the Association of Flight Attendants (AFA) announced a deal was reached with United Airlines on a voluntary vaccination and record-keeping program for airline flight attendants. In the announcement, AFA argued the agreement would allow United to more efficiently comply with the various vaccination requirements of each country it services.

Week Ahead:

This week the Senate is expected to finalize the U.S. Innovation and Competition Act of 2021. The bill will bolster U.S. competition with China on a broad range of geopolitical fronts including telecommunications, advanced manufacturing, and microelectronics.

TECH, MEDIA & TELECOM SECTOR

Week in Review:

TIKTOK STRUGGLING TO ADDRESS POLITICAL ADS: Though TikTok banned political ads in 2019, analysis finds a dozen influencers who have undisclosed sponsored political messages.

BIDEN EO EXPANDS BAN ON INVESTMENT IN CHINESE FIRMS: A new order from Biden expands the Trump-era ban on investment in Chinese firms linked to surveillance efforts.

DOJ IS TREATING RANSWOMARE ATTACKS LIKE TERRORISM: The DoJ is going to begin treating ransomware attacks similar to terrorism in the wake of the Colonial Pipeline hack.

Week Ahead:  

It’s ransomware week on Capitol Hill. On Tuesday, the Senate Homeland Security and Governmental Affairs Committee will hold a hearing on “Threats to Critical Infrastructure: Examining the Colonial Pipeline Cyber Attack” with CEO Joseph Blount Jr. as a witness. Blount will return on Wednesday for the House Homeland Security Committee for their hearing “Cyber Threats in the Pipeline: Using Lessons from the Colonial Ransomware Attack to Defend Critical Infrastructure.”

Key Insight: 

Broadband remains a hot political topic with expansion funding at the center of infrastructure spending package. A Pew research report last week shows the issue won’t be going away soon and there’s much work to be done: 30% of Americans say they at least sometimes experience problems connecting to internet at home.

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