Oversight and Investigations Informer – February 28, 2022

What We Are Watching:

BIPARTISAN MEMBERS OF CONGRESS PROPOSE ENVIRONMENTAL TARRIFFS: Members of Congress are considering imposing border carbon adjustment fees, penalizing foreign imports that are made more cheaply than American products due to weak environmental protections. Sen. Lindsey Graham (R-SC) told Politico that he has been engaging with Democrats on this issue.

EPA IG TO PROBE FEDERAL RESPONSE TO LEAD CONTAMINATION IN MICHIGAN: The Hill reports that the Environmental Protection Agency’s Office of Inspector General will investigate the federal response to reports of lead contamination in the Michigan city of Benton Harbor. A group of residents in the majority Black city in Southwest Michigan filed a lawsuit against city and state officials in 2021, alleging that the government failed to inform them of water contamination issues.

FAA ADMINISTRATOR STEVE DICKSON TO RESIGN: Federal Aviation Administrator Steve Dickson announced last week that he will resign at the end of March, just two years into a five-year appointment. Dickson, a Trump appointee, told reporters that he was not pressured by the White House to resign and that he is leaving for family reasons.

Week Ahead:  

• The Senate Commerce Committee will hold a markup of the Ocean Shipping Reform Act. Thursday, March 3 at 10:00 A.M.

Key Insights:

On Sunday, The Wall Street Journal  published an analysis examining how the war in Ukraine will affect global supply chains, already under strain from the pandemic. Ukrainian ports are important shipping centers for grain, metal, and Russian oil exports, and the conflict has already shutdown factories making parts for German auto manufacturers and Japanese steel manufacturers. Airlines and freighters have warned that disputes between Europe and Russia over commercial airspace rights risks increasing the cost of flying goods between Europe and Asia.

What We Are Watching:

SUPPORT FOR HYDROGEN TO REACH NET-ZERO GOALS: At a recent House Science, Space and Technology committee hearing on the future of hydrogen research, lawmakers unanimously agreed “that the energy source is needed to help the economy reach net-zero goals,” even as they called for greater oversight ahead of significant federal investment in the technology.

TESLA AGGRESSIVE RESPONSE TO INVESTIGATION: In 2018, the U.S. Securities and Exchange Commission (SEC) opened an investigation over Tesla founder Elon Musk’s tweets suggesting he would take the company private, which the agency equated to securities fraud. Following a settlement in that same year, the SEC subpoenaed the company in November 2021 for information related to its compliance with those settlements. Now Musk’s lawyer has told a judge that the SEC has waged an “unrelenting investigation” against the billionaire because of his criticism of the government. Investors have taken note, penning a shareholder resolution demanding the company disclose “the total number and aggregate dollar amount of disputes settled by the company related to abuse, harassment or discrimination,” referencing the many racial discrimination lawsuits filed against the automaker.

Week Ahead:   

• The Senate Committee on Energy & Natural Resources will hold a hearing “To Review FERC’s Recent Guidance on Natural Gas Pipelines” on Thursday, March 3 at 10 a.m.

Key Insights:  

SCOTUS PICK HAS BALANCED RECORD ON ENVIRONMENT: President Biden’s pick to replace Supreme Court Justice Stephen Breyer, Judge Ketanji Brown Jackson, “comes to cases with an open mind,” according to an attorney for the Center for Biological Diversity, whom Jackson ruled against in a 2017 decision related to the Deepwater Horizon oil spill. Ideology appears to have played little role in Jackson’s judicial record on energy as she has doled out victories both for and against environmentalists and industry. In 2018, Jackson imposed a compromise deadline on the EPA’s over-due updates to air pollution standards, finding that the environmentalists’ requested deadline of two years was “impossibly compressed,” while also reducing the Trump administration’s seven-year extension to three-and-a-half years. Jackson is expected to be confirmed this Spring.

What We Are Watching: 

SECOND CHANCE: The Senate Banking Committee is once again attempting to advance the five Federal Reserve nominees to the Senate floor for a confirmation vote. Republicans on the Committee did not attend the first gathering due to their concerns over Sarah Bloom Raskin’s lobbying for a fintech firm. Ranking Member of the Committee, Sen. Pat. Toomey (R-PA) still insists on gathering more information on this and her background, but there is no solid word on whether he will boycott again.

Week Ahead:

• The House Committee on Financial Services will hold a hearing to discuss “Monetary Policy and the State of the Economy” on Wednesday, March 2. Jerome “Jay” Powell, Chair Pro Tempore, Board of Governors of the Federal Reserve System, will be a witness.
• The Senate Banking Committee will convene for a hybrid hearing titled, “The Semiannual Monetary Policy Report to the Congress” on Thursday, March 3. Fed Chair Jay Powell will be a witness.

Key Insights:

The Consumer Financial Protection Bureau has called attention to student loans once again to ensure loan servicers are transparent and fair with loan forgiveness. Historically, there has been a misrepresentation of forgiveness eligibility and misleading statements about forgiveness in general. Democratic members of Congress also sent a letter to Education Secretary Miguel Cardona to request more details regarding the administration’s plans to resume student loan payments at the end of May. These actions will put more pressure on President Biden to fulfill his campaign promise of canceling $10,000 in federal student loans per borrower, which is unlikely.

What We Are Watching: 

NO ADS FOR PUTIN: Highlighting the ever increasing political power of the U.S. tech giants, Russian officials have restricted access to Meta and Twitter services, with YouTube pausing monetization capabilities on its site for some Russian users after Sen. Mark Warner (D-VA) wrote to Alphabet and other major tech companies, to make a plea for them to do more to combat Russian influence online.

CABLE CUT OFF TOO?: Federal Communications Commission (FCC) Chairwoman Jessica Rosenworcel announced that the FCC, Department of Justice (DOJ), and Department of Homeland Security (DHS) have launched an internal assessment of media, telecom, and infrastructure companies, including submarine cable operators, wireless providers and foreign telecom services that connect U.S.-international phone calls, with ties to Russia, which will be conducted jointly with the DOJ and DHS. Companies found to be potential security risks to the U.S. could face tougher scrutiny from regulators, including the potential risk of being ejected from the U.S. market.

DILEMMAS PERSIST: As reported by Politico, beginning March 1^st, Netflix may be forced to broadcast pro-Putin content, under new obligations after it was added to a register of “audiovisual services” overseen by the country’s communications regulator, Roskomnadzor, last year. Netflix did not respond to Politico’s request for comment, however, experts cite the company’s commercial interests in the country as evidence that they are unlikely to reject the new rules and cease streaming in Russia, although its services are unavailable in China, Crimea, North Korea and Syria. Analysts have speculated that the conflict could accelerate the fracturing of the internet, with tech companies under pressure from several jurisdictions and regional laws, which may lead to a splintering of services from global tech companies.

Week Ahead:

• The House Energy and Commerce Committee will hold a hearing on “Holding Big Tech Accountable: Legislation to Protect Online Users” on Tuesday, March 1^st.

Key Insights:

After China banned crypto mining in the summer of 2021, many bitcoin miners have moved to the U.S., drawn by political and economic stability, cheap capital, and abundant electricity. Prior to the ban, China accounted for almost half of all bitcoin mining in the world, with the U.S. only accounting for 16%, however, in the time since the ban, U.S. share has risen to more than 35%, with towns across the U.S. feeling the impact of the migration and resulting utility demands. As miners flock to the U.S., policymakers are concerned that electricity grids in towns with rising crypto mining populations could suffer from an energy deficit, as well as the impact on greenhouse gas emissions.

Week In Review:

SSCC EXPANDS INVESTIGATION INTO CADENCE HEALTH OVER COVID-19 MISINFORMATION: On Wednesday, Select Subcommittee on the Coronavirus Crisis (SSCC) Chairman Clyburn (D-SC) sent a letter to Cadence Health requesting additional documentation for its ongoing investigation into misinformation and profit from potentially hazardous COVID-19 treatments. The virtual healthcare service provided a platform for SpeakWithanMD to conduct telehealth consultations and allegedly provided thousands of individuals with off-label prescriptions for COVID-19 treatments. Cadence Health terminated its contract with the telemedicine platform in September 2021 after news of their practices.

DOJ SUE TO BLOCK UNITEDHEALTH GROUP HEALTH TECH DEAL: On Thursday, the U.S. Department of Justice (DOJ) and two states Attorneys General sued to block UnitedHealth Group’s proposed merger for IT health company Change Healthcare’s $13 billion health tech deal. DOJ prosecutors wrote that the merger would give UnitedHealth access to proprietary information into its rivals’ competitor rates and contracts, violating federal antitrust restrictions outlined the Clayton Act. A UnitedHealth Group spokesperson wrote in an email stating it plans to dispute these claims and defend its case in court.

DOJ REVEALS HEALTHCARE RELATED CLAIMS WERE MAJORITY OF FALSE CLAIMS ACT ENFORCEMENT IN 2021: On Tuesday, Acting Assistant Attorney General Brian M. Boynton of DOJ’s Civil Division announced that the U.S. government recovered $5.6 billion in false claims settlements, with most of the claims being healthcare related. In 2021, nearly 90% of the recovery total involved drug and medical device manufacturers, managed care providers, hospitals, pharmacies, hospice organizations, laboratories, and physicians. According to the DOJ, the agency began to pursue increased enforcement against health payers selling Medicare Advantage (MA) plans—also known as Medicare Part C plans—for allegedly documenting increased risk factors for beneficiaries in order to increase the capitated payment rate Medicare would pay a provider.

Week Ahead:  

• On Wednesday March 2, 2022, at 10am EST, the House Ways and Means Committee will hold a hearing entitled: “ Substance Use, Suicide Risk, and the American Health System.” The witness list is forthcoming.
• On Wednesday March 2, 2022, at 10:30am EST the House Committee on Energy & Commerce will hold a hearing entitled: “Lessons From the Frontline: COVID-19’s Impact on American Health Care.” The witness list is forthcoming.
• On Wednesday March 2, 2022, at 2:00pm EST, the House Select Subcommittee on the Coronavirus Crisis will hold a hearing entitled: “COVID Child Care Challenges: Supporting Families and Caregivers.” The witness list is forthcoming.

Key Insights:

On Friday, February 18, a bipartisan coalition of more than 60 Senators, led by Sen. Catherine Cortez-Masto (D-NV), wrote a letter to the Centers for Medicare & Medicaid Services (CMS) Administrator Chiquita Brooks-LaSure requesting that CMS refrain from making cuts to Medicare Advantage (MA) plans in 2023. The Senators also urged Administrator Brooks-LaSure to “maintain stability within Medicare Advantage, including advancing flexible in-plan benefit offerings and promoting care coordination.” The letter is in response to the 2023 MA and Part D Advance Notice CMS released earlier this month, which proposed a nearly 9% increase to MA rates in 2023. A group of 346 House members wrote a similar letter of support for the MA program to Administrator Brooks-LaSure a few weeks ago, demonstrating strong bipartisan, bicameral support for the MA program. CMS is scheduled to release the final rate by April 4. Read the full letter here.