Oversight and Investigations Informer – August 8, 2022

What We Are Watching:

E&C SENDS LETTERS TO ENERGY COMPANIES OVER “RECORD PROFITS”: House Energy and Commerce Chair Frank Pallone (D-NJ) sent letters to the chief executives of Exxon Mobil Corp, Chevron Corp, Shell PLC, and BP PLC requesting information about “record profits” as the head of the United Nations slammed what he called the industry’s “grotesque greed,” adding to the political fallout from one of Big Oil’s best-ever financial quarters.

GROUPS FILE LAWSUIT OVER MARKETING PRACTICES: U.S. PIRG Education Fund, Environment America Research and Policy Center, and ClientEarth filed a citizen suit against Washington Gas Light Co. over misleading marketing practices, with consumer protection groups and environmental organizations accusing the Washington, D.C.-based utility of “greenwashing” natural gas as a clean energy source.

Keu Insights:  

While many clean energy advocates are celebrating the Senate’s passage of the Inflation Reduction Act, it’s noteworthy that the bill headed for House approval this Friday includes $10 million for Interior’s Office of the Inspector General. E&E reports that the funding “would help the OIG monitor the department’s share of the bill that, overall, contains $369 billion in climate and energy spending. The OIG funding is similar to a boost that had been provided as part of the Biden administration’s 2021 pandemic relief package. In both cases, lawmakers and auditors alike have wanted to keep a close eye on the flow of dollars.” The bill also contains funding for the Department of Energy and other federal agencies.

What We Are Watching:

EMPLOYMENT DIVERSITY AT CRYPTO FIRMS UNDER INVESTIGATION: Democrats on the House Financial Services Committee led by Chairwoman Maxine Waters (D-CA) and including Rep. Joyce Beatty (D-OH), Rep. Al Green (D-TX), Rep. Bill Foster (D-IL), and Rep. Stephen Lynch (D-MA) sent a letter to major crypto firms asking for data related to employment diversity. Recipients also included prominent venture capital firms such Andreessen Horowitz and Sequoia Capital. Lawmakers wrote that there is a lack of public data on diversity at these firms and that transparency is key to establishing gender and racial equity. The Committee has been exploring this issue recently, releasing related reports in 2020 and 2021 on diversity and inclusion in financial services and holding a hearing in June 2022 on “Combatting Tech Bro Culture.”

FDIC WARNS ABOUT CRYPTO DEPOSIT INSURANCE CLAIMS: The Federal Deposit Insurance Corporation (FDIC) issued an advisory to banks regarding deposit insurance and crypto partners. Specifically, the FDIC said banks need to clarify to customers that deposit insurance only covers insured banks in case of collapse, and that protection does not extend to the failure of any nonbank partners, which can include crypto custodians, exchanges, and wallet providers. Moreover, banks should ensure that any crypto partners do not overstate the extent of deposit insurance. Many crypto firms use custodian bank accounts to hold customer deposits. However, communications regarding how that relationship functions may not have been clear, which the recent turmoil in crypto markets helped reveal. In fact, on July 28, 2022, the FDIC and the Federal Reserve issued a cease and desist order against now-bankrupt crypto firm Voyager Digital, charging the company misled customers to believe funds invested in the brokerage would be covered by deposit insurance.

Key Insights:  

In a recent securities filing, Goldman Sachs revealed that the Consumer Financial Protection Bureau (CFPB) is investigating the bank’s credit card unit. The firm said the CFPB is interested in several areas including advertisements, customer refunds, billing disputes, and reporting to credit rating agencies. Goldman, along with many other previously investment banking focused firms, has been looking to expand its retail and consumer banking offerings in recent years.

The investigation comes amidst increasing scrutiny from federal regulators and Congress over consumer protections. In fact, CEOs of major banks are expected to testify before Congress in September, with a focus on their treatment of consumers.

What We Are Watching:

BIDEN DECLARES MONKEYPOX A PUBLIC HEALTH EMERGENCY: On August 4, the Biden administration declared monkeypox a public health emergency (PHE) with the goal of expanding testing and vaccination efforts. The declaration was made in response to the rapid spread of the virus across the United States and mounting pressure on the federal government to increase access to vaccines, testing, and treatment. The announcement comes soon after the World Health Organization (WHO) declared monkeypox a global health emergency in late July as cases continue to rise worldwide.

Key Insights:  

The Biden administration’s declaration of monkeypox as a public health emergency (PHE) comes after states like New York, Illinois, and California declared states of emergency to combat the virus. Members of Congress and LGBTQ+ activists have expressed dissatisfaction with the administration’s slow response to the outbreak, demanding better manufacturing and distribution of vaccines and a long-term strategy to protect people from the virus. A member of the Rapid Epidemiologic Study of Prevalence, Networks, and Demographics of Monkeypox Infection team compared the monkeypox response to the COVID-19 response, claiming that the government has failed to use the infrastructure built for distributing COVID-19 vaccines to distribute monkeypox vaccines. He also noted that the government has not applied the lessons it learned on equity for COVID-19 testing, prevention, and treatment to the monkeypox response, as there has been a lack of access to and availability of vaccines and treatments across the United States. Fortunately, the PHE will likely help expand access to monkeypox-related care and resources and will allow the CDC and other federal agencies to enter contracts for treatments, medical supplies and equipment, support emergency hospital services, and expand their ability to share data on the outbreak.

What We Are Watching:

THE COVID-19 MISINFORMATION LONGHAUL: Reps. Adam Schiff (D-CA) and Lori Trahan (D-MA) sent a letter to the Facebook Oversight Board urging the company to not scale back efforts to remove COVID-19 misinformation, stating that “any action to roll back the existing – and notably limited – guardrails that protect Facebook and other Meta users from mis-and-disinformation related to Covid-19 would have immense public health consequences.”

FTC OIG FAULTS KHAN: Bloomberg reports on the FTC Office of Inspector General’s report of audit that “found that the agency had no clear process for recruiting or integrating the unpaid consultants and experts.” The use of unpaid consultants raises risks of undue influence and conflicts of interests.

What We Are Watching:

CLIMATE BILL COULD STREGTHEN EPA REGULATIONS: The Senate Democrats’ climate bill could help EPA defend new rules based on emerging technologies like carbon capture and storage by making them more cost-effective. EPA is expected to propose climate rules for new and existing fossil fuel power plants early next year. While the agency hasn’t said what those rules will look like or how they will incorporate lessons from this year’s Supreme Court decision limiting its regulatory options, experts say the agency could base them on CCS, hydrogen or both. The section of the Clean Air Act used by EPA to regulate greenhouse gases from stationary sources like power plants requires the agency to think about cost. The $369 billion spending package that the Senate passed yesterday and Democrats in the House hope to pass this week before August recess would extend a popular tax credit for CCS and make it more generous.

NEW LAWSUIT OVER ‘FOREVER CHEMICALS’: Efforts by industry groups to challenge EPA advisories for “forever chemicals” are ramping up even as experts sound the alarm over a wide range of health risks posed by the toxic substances. The powerful American Chemistry Council announced that it had filed suit in the U.S. Court of Appeals for the District of Columbia Circuit over EPA’s interim lifetime health advisories for two PFAS. Those advisories, for the notorious cancer-linked chemicals PFOA and PFOS, list dramatically low levels in drinking water as being safe for human consumption. EPA has stated that the advisories will likely change based on expert feedback and are only interim thresholds meant to safeguard the public in the meantime. But ACC asserted that the levels will have “sweeping implications for policies at the state and federal levels,” presenting a major threat for industry members.

Key Insights:

The Inflation Reduction Act recently passed by the U.S. Senate provides the EPA with additional funding to aid in the regulation of greenhouse gas emissions under a provision of the Clean Air Act that was recently challenged in West Virginia v. EPA – the Supreme Court case that reigned in the agency’s ability to regulate emissions. The main provision at issue is Section 111, which authorizes EPA to regulate emissions of non-criteria, non-hazardous air pollutants from stationary sources through identification of the “best system of emission reduction” that is “adequately demonstrated.” The Court in West Virginia, relying upon the ‘major questions doctrine,’ ruled that an agency could not enact rules that have the effect of remaking an entire industry or sector of the U.S. economy, absent a clear statement of authorization from Congress.

Critics of the new bill, chiefly fossil fuel advocates, claim that it seeks to undermine the West Virginia v. EPA decision by codifying a law that could be used as the basis upon which regulatory advocates chip away at the West Virginia decision in future litigation, citing this act of Congress as justification for tightening regulations on fossil fuels. EPA has not yet indicated how it aims to reconcile its goals with the guidance coming out of the Supreme Court and has not issued any new regulations. It is also important to note that the Inflation Reduction Act does not grant EPA with any new regulatory powers.