Oversight and Investigations Informer – December 4, 2020

What We Are Watching:

PPP SCRUTINY: An analysis by BailoutWatch, Public Citizen and Friends of the Earth has shined a light on the more than 26,000 oil, gas, and coal companies that obtained stimulus aid during the pandemic, primarily through the Paycheck Protection Program. The analysis finds that the industry secured between $10.4 billion and $15.2 billion in economic relief. The report alleges that many of these firms were in financial trouble prior to the pandemic and accuse the government of providing a bailout that “has artificially prolonged the industry’s decline.”

MORE FALLOUT FOR EV COMPANY: General Motors has revised its deal with Nikola months after the EV truck company was hit with allegations that its founder and chairman had made misleading or inaccurate statements. The amended agreement eliminates GM’s equity stake in Nikola and no longer involves GM building Nikola’s Badger pick-up truck. Nikola’s stock took a nose dive following the news and is currently trading at a quarter of the price of its early-summer high.

LEADERSHIP ON KEY ENERGY COMMITTEES SET: Rep. Bruce Westerman (R-AR-4) will become the Republican Ranking Member of the House Natural Resources Committee in the upcoming Congress after being elected by the House Republican Steering Committee on Wednesday. On the House Energy & Commerce Committee, the Steering Committee elected Rep. Cathy McMorris-Rodgers (R-WA-5) as ranking member of the E&C Committee. House E&C is chaired by Rep. Frank Pallone (D-NJ-6), while House ENR is chaired by Rep. Raul Grijalva (D-AZ-3).

FERC PANEL COMPLETE: Two nominees were confirmed to the FERC panel on Monday by voice votes in the Senate. Democrat Allison Clements and Republican Mark Christie will be the newest FERC commissioner and their confirmations bring the Commission up to its full capacity.

Week Ahead:  

• House Committee on Oversight and Reform, Subcommittee on Civil Rights and Civil Liberties: Pipelines Over People: How FERC Tramples Landowner Rights in Natural Gas Projects – 10 a.m., December 9, 2020.
• Energy Futures Initiative: CDR Frontiers: Underexplored Pathways for Carbon Removal – 1:30 p.m., December 10, 2020
• On December 10, Ernest Moniz will kick off a conversation on CDR Frontiers, a new series of reports by Energy Futures Initiative on critical, yet understudied pathways for carbon dioxide removal (CDR). These understudied pathways include technologically-enhanced terrestrial CDR, oceans-based CDR, and carbon mineralization.

Key Insights:

CRUMBLING COALITION: President-Elect Biden cobbled together a coalition of climate progressives and moderates to help him take the White House last month, but the cracks are already starting to show as he tries to assemble his administration. Biden has picked former Obama climate advisor Brian Deese to lead his National Economic Council, but some climate activists argue he failed to achieve adequate progress in the Obama administration and is further tainted by his time at BlackRock, the world’s largest asset manager, because of that firm’s significant holdings in fossil fuel companies. Similar arguments have broken out over California Air Resources Board Chair Mary Nichols, who is on the short-list of candidates to lead the Environmental Protection Agency. Biden was never progressive activists’ first choice, and they’ve vowed to hold his administration to account, but Democrats’ razor-thin margins in Congress don’t give them much leverage to work with.

PUTTING THE R IN FERC: Mark Christie’s appointment means Republicans will lead FERC for the first 6 months of the Biden Administration, unless Neil Chatterjee steps down before then.

What We Are Watching:

ECONOMIC TEAM: President-elect Joe Biden filled out his economic team, including Janet Yellen, as Treasury Secretary, Neera Tanden, as director of OMB, Adewale Adeyemo as deputy Treasury secretary, Brian Deese, as head of National Economic Council, and Cecilia Rouse as head of the Council of Economic Advisers.

CRYPTOCURRENCY CLARIFICATION: Acting OCC Comptroller Brian Brooks said that good things are coming for cryptocurrency in the end of the Trump term and said he would provide more clarity about whether banks can connect directly to blockchains as payments networks. This clarity could be big news for the cryptocurrency world.

HEARING: The House and Senate held hearings on pandemic stimulus, where Mnuchin and Powell expressed support for some type of fiscal stimulus to be passed.

CONFIRMATION: The Senate voted 50-45 to advance the nomination of Christopher Waller as a Federal Reserve governor, but it appears increasingly unlikely that Judy Shelton, Trump’s other nominee to the Fed, will move any further toward confirmation.

FINANCIAL CRIMES: A sweeping financial crimes bill to combat the use of shell companies by criminals and foreign adversaries is hitching a ride on the annual defense authorization bill, the NDAA , poised for passage before the end of the year.

HOUSE FOREIGN COMPANIES ACCOUNTABLE ACT: The bill passed the House this week, approved by the Republican-controlled Senate in May, could bar many Chinese companies from listing shares on U.S. exchanges or otherwise raising money from American investors. SEC is also looking into this issue.

Week Ahead:  

• The Brookings Institution will hold an event titled, “Economic recovery in American cities: Building Black businesses and wealth” on Wednesday December 9^th.

Key Insights:

President-elect Joe Biden’s economic team is largely filled with Obama White House veterans and long-time Biden aids and Biden does not appear to be caving on progressives on nominees.

President-elect Joe Biden’s announcement of much of his economic team was meet with limited push-back, except his pick from OMB Director, Neera Tandem, who has been meet with opposition by a number of top Republicans who would be involved in her confirmation.

Brian Brooks’ announcement regarding cryptocurrency shows Trump’s administration will continue to get through policy during the lame duck period.

What We Are Watching:

LAWMAKERS FIND UNDERREPORTING IN BEHAVIORAL HEALTH FACILITIES: On Tuesday, Senator Elizabeth Warren (D-MA), Chairwoman of the Committee on Oversight and Reform, Carolyn B. Maloney (R-NY) and Rep. Katie Porter (D-CA-45) released initial findings from their investigation into the effects of COVID-19 in residential behavioral health and addiction treatment facilities. The investigation revealed that more than half of the facilities had at least one COVID-19 case and one in seven experienced outbreaks. However, the findings also revealed that case reporting and routine testing of staff was insufficient. In addition, some sick patients were unable to receive inpatient care. The lawmakers recommend stronger federal data collection requirements and additional federal funding for the facilities.

DEMOCRATS SLAM NEW TRUMP RULE: In a statement on Tuesday, Democratic leaders from the House Energy and Commerce Committee, House Ways and Means Committee, House Education and Labor Committee, Senate Health, Education, Labor, and Pensions Committee, and the Senate Finance Committee released a statement in opposition to the Trump Administration’s newly proposed rule that will allow states to stop using HealthCare.gov and instead partner with private companies to operate enrollment websites. The Democratic legislators expressed concerns that this change would hinder consumer enrollment in and access to health plans.

INFIGHTING OVER FAILED MERGER: Cigna’s investors filed a lawsuit alleging that Cigna CEO David Cordani and the Cigna Board of Directors intentionally sunk the company’s proposed merger with Anthem, which collapsed in 2017. The investors allege that the board “supported [Cordani’s] sabotage and placed [his] personal interests over the best interest of the company,” further claiming that Cordani sabotaged the merger to protect his position as CEO. Cigna did not comment on the suit.

Key Insights:

GOVERNMENT MAKES PROGRESS ON COVID: Moderna filed for emergency use authorization (EUA) for its vaccine candidate on Monday, following on the heels of an EUA submission by Pfizer and BioNtech several weeks ago and emergency authorization of that vaccine in the UK on Wednesday. As the first authorization approaches, we expect increased Congressional oversight of the process as well as continued attempts from the incoming administration to increase public trust in the candidate.

BIDEN DROPS HINTS: President-elect Joe Biden has not chosen a health secretary, but has appointed his transition co-chair and former Obama administration official Jeff Zients as White House Covid-19 coordinator and former U.S. Surgeon General Vivek Murthy as U.S. Surgeon General. Biden’s transition team and his recent appointment of Anthony Fauci as chief medical advisor gives insight into how his Administration might handle the virus, including an emphasis on mask-wearing in the first 100 days of his presidency.

What We Are Watching:

FOREVER LITIGATION: The Orange County Water District and 10 other water districts throughout Orange County, California filed a lawsuit against DuPont, 3M, Chemours, and Corteva over forever chemicals found in groundwater throughout the county. The plaintiffs are suing the chemical manufacturers to cover the costs of decontaminating PFAS chemicals from the environment. The suit is the latest in a series of high-profile legal cases targeting chemical manufacturers that used PFAS chemicals in products for decades.

COVID RELIF OVERSIGHT: The Congressional Oversight Commission released its seventh report, which focuses on the Treasury and the Department of Defense’s $700 million loan to freight shipping company YRC Worldwide, Inc. The report is highly critical of the loan, noting that “the Department of Defense did not even consider whether the services it obtains from YRC could be obtained elsewhere” and that “[t]he Commission is concerned that the Treasury may have put taxpayers in a precarious position.”

GM FLIPS ON EMISSIONS LITIGATION: General Motors CEO Mary Barra announced in a letter on November 23 that GM would drop its support for the Trump Administration in litigation against California over the state’s emissions standards. The announcement is a sign that automakers are shifting their emissions strategies in anticipation of a dramatically new approach to emissions and climate change mitigation under the Biden Administration.

EPA RELEASES INTERIM PFAS STRATEY: Environmental Protection Agency (EPA) Assistant Administrator for the Office of Water David Ross released an “interim strategy” for mitigating industrial discharges of PFAS chemicals. The non-binding document urges EPA officials, when issuing permits to forever chemical manufacturers, to “consider” whether PFAS discharge should be limited. Public health and environmental activists are criticizing the strategy document for failing to include new enforceable standards to regulate PFAS discharges.

What We Are Watching:

DEEP IN THE HEART OF TEXAS: Texas AG Ken Paxton, who has been leading the coalition of state attorneys general investigating Google’s advertising business, stands accused of illegally using his office to interfere with an FBI investigation into a campaign donor. The allegations sent shock waves and are said to have already impacted his office’s case against the Mountain View tech titan.  

SPY SCRUTINY: The Department of Homeland Security’s inspector general said it would open an investigation into the use of mobile-phone surveillance technologies to track Americans that take place without a warrant. The move comes after an October letter from five Democratic Senators to the DHS questioning whether the purchase of commercial cellphone data on Americans for law-enforcement purposes was lawful.  

“REGULATE INTERNET COMPANIES LIKE A UTILITY”: Commissioner Brendan Carr, a Republican on the FCC, says this is the real agenda of many Democrats pushing for the return of net neutrality regulation on internet service providers.   

EU PRIVACY INITIATIVE COLLIDES WITH CHILD SEX ABUSE CONCERNS: The New York Times reports on concerns from child advocate groups and engagement by U.S. members of Congress that an EU “rule scheduled to take effect on Dec. 20 would … restrict the use of software that scans for child sexual abuse imagery and so-called grooming by online predators.” 

Week Ahead:

• Senate Commerce will hold a hearing on Wednesday, December 9 to discuss data flows between the EU and U.S. following the European Court of Justice’s (ECJ) invalidation of the EU-US Privacy Shield Framework. At present, the FTC is charged with investigating and enforcing alleged Privacy Shield violations.

Key Insights:

“MAKE MULTILATERALISM GREAT AGAIN”: EU foreign-policy chief Josep Borrell says this is the goal with the Biden Administration taking office. While the transition certainly opens new opportunities for trans-Atlantic policy agreement and working through difficult issues, specific hopes for a breakthrough agreement on issues like digital taxation that would transfer treasury deposits from coffers in Washington to Brussels and revision of antitrust laws for tech may be setting up an expectations cliff for successful partnership.