Public Affairs & Government Relations

Oversight & Investigations Informer – 3.29.21

NOTABLE DEVELOPMENTS

What We Are Watching:

ALL EYES ON NEXT ECONOMIC PACKAGE: President Joe Biden will begin unveiling his next economic package in a speech in Pittsburgh on Wednesday. The proposal is likely to consist of as much as $4 trillion in new spending, and $3 trillion in tax increases. The plan will include proposals to repair physical infrastructure in the U.S.- such as bridges, ports, and water infrastructure- as well as an expansion in clean energy infrastructure and new and expanded programs for childcare, early education, and elderly care.

BUTTIGIEG CALL FOR “GENERATIONAL INVESTMENT” IN INFRASTRUCTURE: Last week the House Transportation and Infrastructure Committee held a hearing on revitalizing U.S. infrastructure. Transportation Secretary Pete Buttigieg testified, and cited a trillion dollar backlog of needed repairs, and said the investment would be an opportunity to address climate change, racial injustice, and competition with China.

SCHUMER ATTEMPTS TO ADD RECONCILIATION BILLS: Aides to Senate Majority Leader Chuck Schumer have made arguments to the Senate parliamentarian that legislation to revise this year’s budget resolution should be allowed Senate consideration under reconciliation rules. If the parliamentarian accepts this theory, this will give Democrats additional opportunities to pass legislation with a simple majority in the Senate.

Look Ahead:

The House and Senate are both on recess, with the Senate returning the week of April 5 and the House returning the week of April 12.

KEY INSIGHTS:  

The Biden administration’s next economic package, which includes a reported $3 trillion dollars in tax proposals and large spending increases on social programs, is unlikely to win any support from Republicans in Congress.  And passage with a simple majority under reconciliation isn’t a sure thing either. The successful, and relatively drama-free, passage of Biden’s American Rescue Plan shouldn’t obscure the fact that both Pelosi and Schumer are operating with razor-thin majorities and have no room for dissension in their ranks.

With all these proposals for new spending, the Biden administration and Congress are also scrutinizing how the Trump Administration rapidly distributed $2.4 trillion in relief aid. A new FTI Consulting thought leadership piece examines how the government has embarked on an aggressive multifront effort to investigate and prosecute organizations that took those funds for fraudulent, wasteful or abusive purposes. The House Select Subcommittee on the Coronavirus Crisis under Chairman Jim Clyburn (D-SC) held a hearing last Thursday focusing on this issue.

ENERGY SECTOR

What We Are Watching:

HOUSE OVERSIGHT AIDE PREVIEWS INDUSTRY PROBE: “I can’t think of anyone better to have on staff to lead us into the work of holding corporate polluters accountable,” said Rep. Ro Khanna (D-CA), Chairman of House Oversight Subcommittee on the Environment of his new staff director. Katie Thomas joined Khanna’s subcommittee last week after six years spent advising Sen. Bernie Sanders (I-VT), including a role in drafting the Green New Deal. “I am really excited that I will be working under [Oversight] Chairwoman [Carolyn] Maloney [(D-N.Y.)], who will have the ability to back up what we are doing with the power of subpoena,” Thomas told E&E News. Before her stint with Sanders, Thomas worked as an attorney enforcing the Clean Air Act at the Department of Justice. “All we did was sue power plants,” Thomas said of her time at DOJ.

WHAT TO DO ABOUT TEXAS: The House Energy and Commerce Committee finally got its chance to grill Texas officials over the blackouts last month, peppering outgoing ERCOT CEO Bill Magness with questions on the failure to implement the weatherization recommendations made by FERC and NERC, following another major winter storm in 2011. Meanwhile, a recent Texas Supreme Court decision could upend several lawsuits filed against ERCOT in the wake of last month’s outages. The high court let stand a lower court ruling that says ERCOT is protected from lawsuits targeting actions the agency took in its official capacity.

SEC’S CLIMATE MOVES ATTRACT GOP SCRUTINY: Senate Banking Committee Ranking Member Sen. Pat Toomey (R-PA) sent a letter to SEC Acting Chair Allison Herren requesting a staff briefing by no later than the week of April 5, 2021, following the regulator’s announcement of an enforcement task force focused on climate and environmental, social and governance (ESG) issues, and a 90 day public comment period for climate change disclosures. “The SEC also should not use enforcement actions as a backdoor for imposing new regulations on ESG and climate change issues,” Toomey wrote to the agency last week.

Week Ahead:  

Congress is out this week, but the Washington Post is posting the “Future of Energy” on Tuesday, March 30 at 1 p.m. Speakers include former U.S. Energy Secretary Ernest Moniz and Duke Energy chair, president & CEO Lynn Good.

Key Insights:

SEC ALLOWS SCOPE 3 SHAREHOLDER VOTES: In a reversal of Trump-era practices, the SEC recently denied requests from ConocoPhillips and Occidental Petroleum Corporation to block shareholder motions directing the companies to establish and publish plans for cutting “Scope 3” emissions generated by their customers. The companies had argued that the resolutions were attempts to micro-manage their operations. While the decision is partly a return to normal, the types of demands and level of shareholder support have changed in recent years, so the SEC’s move could signals a new environment for companies in the evolving shareholder proposal and proxy advisory debate.

FINANCIAL SERVICES SECTOR

What We Are Watching:

ADEYEMO CONFIRMED: The Senate confirmed Wally Adeyemo on the 25th as deputy Treasury secretary, after the Finance Committee unanimously approved his nomination. Adeyemo will become the first Black deputy Treasury secretary, helping Treasury Secretary Janet Yellen, the first woman to hold that role amid crucial challenges for the department.

SEC EYEING SPACS: The SEC has sent letters to Wall Street banks seeking information on their SPAC dealings. The letters were sent by the SEC’s enforcement division, signaling they could be a precursor to a formal investigation.

BLACKROCK: Treasury Secretary Janet Yellen signaled she may oppose designating Blackrock for tougher oversight and instead indicated FSOC should focus on risk activities — citing mutual funds that can face fire sales in a panic — rather than individual companies.

GENSLER NOM COMING SOON: Majority Leader Chuck Schumer (D-NY) has filed a cloture on Gary Gensler to lead SEC for the Senate to consider once Congress returns mid-April. 

Week Ahead

Treasury’s FSOC will hold its first meeting in the new administration with a meeting on March 31.  Treasury Secretary Yellen has put climate change and activities of hedge funds and open-end mutual funds as the focus of the meeting.

Key Insights:

Biden’s agencies and Congress continue to prioritize different policies as Congress has largely ignored climate change legislation while the agencies and agency heads focus more on climate change.

HEALTHCARE SECTOR

What We Are Watching:

OVERSIGHT SUBCOMMITTEE HEARING ON PRIVATE EQUITY’S ROLE IN HEALTH CARE:

On Thursday, the House Ways and Means Oversight Subcommittee held the hearing “Examining Private Equity’s Expanded Role in the U.S. Health System”. The hearing primarily focused on the role of Private Equity in long-term care facilities. During the hearing, Chairman Bill Pascrell cited that a need to drive profits could have hurt quality of care during the pandemic. Over the last year, Rep. Pascrell’s home state of New Jersey faced a significant amount of nursing home deaths due to COVID-19.

PRESIDENT BIDEN ALLOCATES $10 BILLION TO ADDRESS COVID-19 VACCINE HEALTH DISPARITIES:

On Thursday, President Joe Biden outlined his Administration’s plan to commit $10 billion to address inequities in COVID-19 vaccine coverage based on race, income, and geography. The funding will be deployed largely from the pandemic aid plan that cleared Congress this month, with more than $6 billion going to 1,400 community health centers across the country. Additionally, states and other jurisdictions will gain access to $3 billion for efforts aimed at boosting vaccine confidence in communities hit hardest by the pandemic. The Administration is also targeting dialysis treatment centers in its plan to expand vaccine coverage as kidney disease disproportionately affects racial and ethnic minorities.

NIH PANEL SAYS ASTRAZENECA EMBELLISHED COVID-19 VACCINE DATA: On Monday, following AstraZeneca’s announcement that its COVID-19 vaccine was 79 percent effective in its large U.S. clinical trial, a group of independent monitors from the National Institute of Health (NIH) notified National Institute of Allergy and Infectious Diseases (NIAID), Biomedical Advanced Research and Development Authority (BARDA), and AstraZeneca that it was concerned by the data released and suggested that the pharmaceutical company may have included outdated information that provided an incomplete view of the efficacy data. On Tuesday, the NIH released a statement outlining their concerns and urged AstraZeneca to work with the monitoring board to review the efficacy data and ensure the most accurate, up-to-date efficacy data be made public as quickly as possible.

Week Ahead:

On Tuesday, the Biden Administration reported it has only received 4 million doses of Johnson and Johnson’s COVID-19 vaccine to allocate to states next week, leaving federal government officials to question if the company will be able to meet its target of producing 20 million vaccines by the end of the month. If the company is unable to deliver on its commitment, the Biden Administration may struggle to make vaccines available to all American adults by May.

A group of academic and patient advocates are putting pressure on the National Institutes of Health (NIH) to share its COVID-19 vaccine patent with foreign manufacturers. The move would require the NIH to compel Moderna, with whom they jointly developed the mRNA vaccine, to relinquish some if its Intellectual Property (IP) rights on manufacturing. Many lawmakers have been supportive of this idea, but vaccine manufacturers, including Moderna, Pfizer and J&J, have said they will not share manufacturing patents for their vaccines.

There are a few drug-pricing bills that have been recently introduced in the Senate including the Fair Accountability and Innovation Research (FAIR) Drug Pricing Act and Senator Bernie Sanders’s (I-VT) new legislation aimed at reducing prescription drug prices in the U.S. No timetable has been set on when the bills will be up for consideration in the chamber. The FAIR Drug Pricing act reintroduces drug pricing transparency provisions that Democrats had initially proposed in the 116th Congress in H.R. 3.

Key Insights:

Last week, the Senate confirmed two of President Biden’s appointees for positions in the U.S. Department of Health and Human Services (HHS): Dr. Vivek Murthy as Surgeon General, and Dr. Rachel Levine as the Assistant Secretary of HHS. Dr. Levine is the first transgender federal appointee to be confirmed by the Senate.

The Senate also confirmed Dr. Vivek Murthy, who served as a pandemic adviser during President Biden’s campaign, as surgeon general in a 57-43 vote. President Biden has pledged that Murthy — who advised him in the Obama White House, will have an expanded role in his Administration and be a key public voice in the federal COVID-19 response to restore public trust and faith in science and medicine.

INDUSTRIALS SECTOR

What We Are Watching:

PLASTICS INDUSTRY ADVOCATES AGAINST PROPOSED LEGISLATION: In response to proposed legislation targeting plastic production, industry groups, including the American Chemistry Council, argue that proposed legislation would undermine their recycling efforts and disrupt supply chains. The Break Free from Plastics Pollution Act, sponsored by Senator Jeff Merkley (D-OR) and Representative Alan Lowenthal (D-CA) would ban plastic bags, straws, food containers, and would pause the construction of new plastics production facilities.

DOT NOMINATION: President Biden will nominate Victoria Wassmer as assistant secretary for budget and programs and chief financial officer at DOT. She previously served in the White House Office of Management and Budget and worked at consulting firm Ernst and Young.

GLOBAL CHIP SHORTAGE PAIN CONTINUES FOR AUTO INDUSTRY: CNN reports that the global chip shortage is delaying the delivery of U.S. automakers’ most profitable products- full size pickups and SUVs. Since the chip shortage began automakers have been using the chips available to prioritize manufacturing of their most profitable products, but as the shortage continues even the most profitable lines are getting squeezed.

Key Insights:

A new FTI Consulting thought leadership piece looks at how airlines are beginning to use Environmental, Social, and Corporate Governance (ESG) efforts as a key differentiator for both investors and sustainability-conscious travelers.

TECH, MEDIA & TELECOM SECTOR

What We Are Watching: 

DEEPFAKE ACCESSIBILITY: As regulators, legislators, and the general public continue to wrestle with the impact of deepfakes, an iPhone app called Avatarify now allows users to control the face of another person with a single source photo and zero technical expertise. Similar apps, like Wombo and MyHeritage have also caused concerns that the services could become increasingly accurate and lead to malicious and dangerous Similar apps like Wombo and MyHeritage have also caused concerns that the services could become increasingly accurate and lead to malicious and dangerous use.   

GOOGLES INTELLIGENCE UNCOVERS HACKING OP: Google’s security teams recently exposed a nine-month hacking operation by an “expert” hacking group exploiting 11 powerful vulnerabilities to compromise devices running iOS, Android, and Windows. MIT Technology Review reported that the hackers in question were Western government operatives actively conducting a counterterrorism operation, leading to Google’s decision to publicize the attack, raising questions inside the intelligence communities of the United States and its allies. 

 HOSPITALS ENCRYPT PRICING INFO: A recent Wall Street Journal article detailed the effort by hospitals to encrypt now available previously confidential prices to comply with a new federal rule by blocking that information from web searches with special coding embedded on their websites. The new rule, aimed at making the hospital industry more transparent, has led to hospitals using embedded code that prevent Google and other search engines from displaying pages with the price lists. 

Week Ahead:  

Technology’s Role in a Renewed Transatlantic Relationship  

The IBM Policy Lab hosts a discussion on March 30, 2021 on the role of technology in strengthening the transatlantic relationship, how to increase trust in tech and ensuring the US and EU remain global technology leaders and standard-setters in the digital age. Speakers include Chairman of IBM Europe Martin Jetter, Former US Ambassador to the EU Anthony Gardner, Member of The European Parliament Anna-Michelle Asimakopoulou and Frank Heemskerk, Secretary-General European Round Table For Industry. 

Key Insights: 

NET NEUTRALITY UP NEXT? Mozilla is leading the charge to urge the FCC to reinstate net neutrality. With a democratic-led FCC, the net neutrality conversation was never an “if,” it was a “when” – and that time may have come. Companies including Dropbox, Reddit and Wikimedia joined with support in the letter to FCC Acting Chairwoman Jessica Rosenworcel. Further pressure mounts after a recent state net neutrality ruling in California forced AT&T to change its business practices around “sponsored data.” The company called the state-by-state approach to net neutrality “unworkable.” Now is the beginning of a long, drawn-out process – buckle up!  

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