Oversight and Investigations Informer – February 15, 2022

What We Are Watching:

UTILITIES FINED FOR ADVOCACY: Two utilities were issued steep fines last week for misallocating funds towards lobbying. Southern California Gas Co. was found to have improperly spent ratepayer money on advocacy around building code, while a FERC audit found FirstEnergy Corp. in Ohio improperly recorded nearly $11 million in lobbying expenses as utility operating expenses. FirstEnergy is under numerous investigations related to what prosecutors are calling “the largest bribery and money-laundering case” in the state’s history.

ADVOCATES PRESSURE FINANCIAL REGULATORS ON CLIMATE: Democrats are lashing out at the U.S. Securities and Exchange Commission as it struggles to promulgate a new climate disclosure rule. The attacks come as Democrats have so far failed to pass any meaningful climate legislation ahead of a midterm election that could hand Congress back to Republicans. The SEC’s delay is said to stem from the difficult task of crafting a rule that is progressive enough to satisfy climate advocates, yet restrained enough to withstand an inevitable court challenge.

Week Ahead:  

• The House Natural Resources Committee will hold a hearing on Tuesday, February 15 at 10 a.m. to consider the H.R. 2021 Environmental Justice For All Act.
• The Senate Committee on Banking, Housing, and Urban Affairs will hold a hearing on Thursday, February 3 at 10:00 a.m. to consider the nomination of the Honorable Sarah Bloom Raskin to be Vice Chairman for Supervision and a Member of the Board of Governors of the Federal Reserve System. Ms. Raskin has advocated for more aggressive financial regulation to help combat climate change, leading energy producers to suggest “she is a strong advocate for debanking the very industry that powers America.”

Key Insights:

CORPORATE NET-ZERO PLANS SCRUTINIZED: The House Oversight Committee’s probe of four oil and gas companies continued last week with a panel of outsiders who criticized the companies’ net-zero plans. Professor Michael Mann, of “hockey stick graph” fame, was the only scientist to testify. The probe is scheduled to continue at a hearing next month where board members from the companies are expected to testify. The hearing was preceded by an analysis conducted by the NewClimate Institute, which found that most corporate net-zero pledges, including those outside the energy industry, do not stand up to scrutiny. The Biden administration has set a goal for the United States to reach net-zero emissions by 2050, but the details on how to achieve that goal are similarly lacking. Corporations can expect mounting pressure from shareholders, plaintiffs’ attorneys, activists, and Congress to set steep emissions reductions goals and show concrete progress.

What We Are Watching: 

STABLECOIN HEARINGS: Last week, Under Secretary of the Treasury for Domestic Finance, Nellie Liang appeared before the House Committee on Financial Services to speak about the President’s Working Group report on stablecoins. She stressed the need for stablecoin legislation and that technology companies, such as Meta, should not be issuing stablecoins. The committee members seemed hesitant to require stablecoin issuers to have deposit insurance. The Senate Banking Committee will convene a hearing on the same report with Liang next week.

Week Ahead:  

The Senate Banking Committee will convene two hearings this week:

• A full committee hearing titled, “Examining the President’s Working Group on Financial Markets Report on Stablecoins” on Tuesday, February 15.
• A full committee hearing titled, “The State of the American Economy: A Year of Unprecedented Economic Growth and Future Plans” on Thursday, February 17.

The House Committee on Financial Services will convene three hearings this week:

• A virtual, full committee hearing titled, “An Unprecedented Investment for Historic Results: How Federal Support for MDIs and CDFIs Have Launched a New Era for Disadvantaged Communities” on Wednesday, February 16.
• The Subcommittee on National Security, International Development, and Monetary Policy virtual hearing titled, “The Role of the International Monetary Fund in a Changing Global Landscape” on Thursday, February 17.
• The Subcommittee on Consumer Protection and Financial Institutions virtual hearing titled, “Small Businesses, Big Impact: Ensuring Small and Minority-Owned Businesses Share in the Economic Recovery” on Thursday, February 17.

Key Insights:  

Commodity Futures Trading Commission (CFTC) Chairman, Rostin Behnam, testified before the Senate Agricultural Committee last week and advocated for more CFTC control over the digital assets and cryptocurrency space. The hearing comes as Benham and Securities and Exchange Commission (SEC) Chairman, Gary Gensler, engage in a turf war over regulatory power. The industry also has been calling for more clarity on regulatory oversight. Benham received strong support for the CFTC taking a larger role in digital asset regulation from the committee and an influential member of the crypto industry, Sam Bankman-Fried, CEO of FTX.

What We Are Watching: 

HOUSE REPUBLICANS URGE CMS TO RESCIND PROPOSAL FOR MEDICARE TO COVER BIOGEN’S ADUHELM FOR CLINICAL TRIAL PARTICIPANTS: On Wednesday, February 8, 2022, 78 Republican Members of the U.S. House of Representatives sent a letter to Department of Health and Human Services (HHS) Secretary Xavier Becerra, asking for the health agency to “to abandon and re-propose” a proposed National Coverage Determination (NCD) decision memorandum that would restrict Medicare coverage of Biogen’s controversial Alzheimer’s disease drug Aduhelm for only people in clinical trials. The NCD was released by the Centers from Medicare & Medicaid Services (CMS) last month and seeks to restrict the use of anti-amyloid Alzheimer’s medication to clinical trials until their benefits are fully established. According to the Republican Members—led by Ranking Member of the House Energy & Commerce Committee Cathy McMorris Rodger (R-WA)—the policy will stunt Alzheimer’s research and development, restrict access to innovative new drugs, and ultimately lead to wider implications, including setting a “new precedent for restricting coverage” even if drugs are FDA approved. A final decision by CMS on the matter is expected in April.

CALLS FOR FTC TO INVESTIGATE STAFFING AGENCIES GROW AS NURSES BLAME HOSPITALS FOR WORKFORCE CRISIS: The American Hospital Association (AHA) and American Health Care Association/National Center for Assisted Living (AHCA/NCAL) have alleged nurse staffing agencies might be violating federal law, by keeping uniformed wages low. Hospitals, nursing homes and lawmakers has called for a Federal Trade Commission (FTC) investigation after the workforce crisis has intensified. There has been correspondence with a White House official to address these concerns in which they said the FTC will independently decide about what to do about their involvement in the ongoing investigation.

Week Ahead:

• On Tuesday, February 15, 2022 at 10 a.m., the Senate Finance Committee will hold a hearing titled: “Protecting Youth Mental Health: Part II – Identifying and Addressing Barriers to Care.” Witnesses will include Tami D. Benton, Psychiatrist-In-Chief, Executive Director and Chair of the  Department of Child and Adolescent Psychiatry and Behavioral Sciences at Children’s Hospital of Philadelphia; Sharon Hoover, Professor of Child and Adolescent Psychiatry and Co-Director of The National Center For School Mental Health at the University of Maryland School of Medicine; Jodie L. Lubarsky, Vice President of Clinical Operations for Youth and Family Services at the Seacoast Mental Health Center; Trace Terrell, Lead Intervention and Outreach Specialist at YouthLine.
• On Thursday, February 17, 2022 at 11:30 a.m., the House Energy & Commerce Committee will hold a hearing titled, “Americans in Need: Responding to the National Mental Health Crisis.” The witness list has not yet been released.

Key Insights:

Last Friday, the attorneys general of 16 states lead by Republican governors located primarily in the South and the Midwest filed a complaint with the U.S. District Court of the Western District of Louisiana seeking to halt enforcement of the Centers for Medicare and Medicaid Services’ (CMS) COVID-19 vaccine mandate for health care workers. The U.S. Supreme Court voted to uphold the mandate last month, but this lawsuit alleges that “the situation has changed” given the rise of the milder Omicron variant. The lawsuit also argues that vaccines are less effective against Omicron than they were against the Delta variant, further reducing the value of a mandate. Additionally, the letter claims that CMS’ vaccine mandate will exacerbate healthcare workforce shortages. Healthcare workers in about two dozen states, including many of the states represented in this lawsuit, will be required to receive their first dose of the vaccine by February 14.

What We Are Watching: 

PILOT’S UNION OPPOSES WIZZ AIR’S ENTRY TO US MARKET: The Airlines Pilot Association has asked the U.S. Department of Transportation to block Hungarian low cost airline Wizz Air’s application to fly in the U.S. The union cited Wizz airline’s anti-union culture and a poor safety record as reasons to block the application.

LOCKHEED ABANDONS ACQUISITION OF AEROJET AFTER FTC SUIT: Lockheed Martin Corporation ended its planned $4.4 billion proposed acquisition of Aerojet Rocketdyne Holdings Inc after the U.S. Federal Trade Commission sued to block the deal. The agency alleged that the deal would harm rival defense contractors and further consolidate markets critical to U.S. security.

Week Ahead:

• The House Science, Space and Technology-Subcommittee on Research and Technology holds a hearing titled: Strengthening the U.S. Microelectronics Workforce. Tuesday, February 15. 10 a.m.

What We Are Watching:

I SPY: In a letter last week to the Central Intelligence Agency, Senators Ron Wyden and Martin Heinrich demanded the CIA provide additional details about a bulk data collection program at the agency that involved the collection of an unknown data set and included the gathering of some records belonging to Americans. The senators’ letter urged the CIA to inform the public about the program, including what kinds of records have been collected.

“DINOBABIES” IN TECH LAWSUIT: In newly released documents from an ongoing ageism suit against IBM in the District Court in the State of New York, internal emails show IBM executives calling older workers “dinobabies” and discussing plans to make them “an extinct species.” The documents were submitted as evidence of IBM’s efforts “to oust older employees from its workforce,” and replace them with millennial workers, the plaintiff has alleged.

ANOTHER CONTENT MODERATION CONTROVERSY: A new investigation in Time featuring documents and interviews with employees at a Facebook-run content moderation facility in Nigeria revealed poor working conditions and employee pay as low as $1.50 an hour. The employees interviewed work for Sama, an “ethical AI” outsourcing company headquartered in California.

Week Ahead:  

• On February 16^th at 10 a.m., The House Energy and Commerce Communications and Technology Subcommittee holds a hearing on “Connecting America: Oversight of NTIA (National Telecommunications and Information Administration).”
• On February 16^th at 2 p.m., The House Administration Committee holds a hearing on “Big Data: Privacy Risks and Needed Reforms in the Public and Private Sectors.” 

Key Insights:

Gigi Sohn’s and Alvaro Bedoya’s respective nominations to the FCC and FTC have stalled in the Senate with Sen. Ben Ray Luján, the potential deciding vote, recovering from a stroke and weeks away from return. With both agencies split 2-2, agency work will have to prioritize items with bipartisan support and controversial items like restoring Title II net neutrality rules will have to wait until after his return and the Senate log jam clears – that could be months from now.