Oversight & Investigations Informer – 4/12/21
NOTABLE DEVELOPMENTS
What We Are Watching:
BIDEN OPEN TO NEGOTIATION ON INFRASTRUCTURE PLAN: President Joe Biden said he is open to negotiations on the specifics of his $2 trillion dollar infrastructure proposal. Biden specifically mentioned his proposed corporate tax rate increase from 21% to 28% as an area of where he is willing to make changes- perhaps influenced by Senator Joe Manchin’s (D-WV) statements that he would only support raising the rate to 25%.
CORPORATIONS AVOIDING TAXES: Dozens of America’s largest corporations didn’t pay any income taxes in 2020, according to an analysis by the Institute on Taxation and Economic Policy. The list includes many of the largest and most prominent corporations in America, including Dish networks, Nike, and FedEx.
WHITE HOUSE ISSUES REPORTS ON STATE INFRASTRUCTURE NEEDS: As part of its push for infrastructure legislation, the Biden White House is issuing state-by-state summaries that show areas where investment is urgently needed in roads, bridges, the power grid, and housing availability. The Associated Press reports that President Biden can use this summary to demonstrate to legislators how his plan would help meet the needs of their constituents.
Week Ahead:
Congress is in session this week after a two-week recess. The Senate returns on Monday afternoon and the House returns on Tuesday afternoon.
Key hearings include: Senate Banking on racial discrimination in housing, Tuesday, April 13 at 10 a.m.; Senate Homeland Security and Governmental Affairs on the COVID 19 response and lessons learned, Wednesday, April 14 at 10 a.m.; Senate Environment and Public Works on the long term solvency of the highway trust fund, Wednesday, April 14 at 10 a.m.; House Financial Services on investing in equitable and affordable housing infrastructure, Wednesday, April 14 at 10 a.m.
KEY INSIGHTS:
With Congress back in Washington, the focus on Capitol Hill is turning President Biden’s sweeping infrastructure proposal into legislation that can pass both houses. Democratic leadership has to balance competing interests, including disagreements on corporate tax rate increases, state and local tax write-offs, and fossil fuel subsidies. The final legislative product will also most likely have to conform to Senate reconciliation rules.
ENERGY SECTOR
CLIMATE RISK EXECUTIVE ORDER COMING: President Joe Biden is preparing an Executive Order directing his administration to craft a strategy to reduce the risks posed by climate change to private and public financial assets. National Climate Advisor Gina McCarthy, National Economy Council director Brian Deese, and Treasury Secretary Janet Yellen, who recently said climate change poses an “existential threat” to financial markets, would all have a hand in crafting the policy.
OVERSIGHT REPUBLICANS QUESTION EPA FIRINGS: Reps. James Comer (R-KY-1) and Ralph Norman (R-SC-5), Ranking Members of the Committee on Oversight and Reform and the Subcommittee on Environment respectively, have sent a letter to Environmental Protection Agency Administrator Michael Regan inquiring about his decision to abruptly fire all members of the agency’s Clean Air Scientific Advisory Committee and Science Advisory Board (read about it in last week’s newsletter). The Republicans are requesting communications and documents related to the decision, expressing concern about “a deeply troubling partisan political agenda.
Week Ahead:
The Senate Budget Committee holds a hearing on “The Cost of Inaction on Climate Change” at 11 a.m. on Thursday, April 15.
Key Insights:
Federal Energy Regulatory Commission (FERC) Chairman Richard Glick made two key leadership appointments at the Commission last week: Sarah Venuto as Director of the Office of External Affairs and Kim Smaczniak as a special counsel in the Office of General Counsel.
It is noteworthy that Smaczniak comes to the Commission from Earthjustice, where she led efforts focused on the transition of the power sector to clean energy, and oversaw the program’s litigation strategy at the state and federal level. Prior to that, she served as a climate change negotiator for the U.S. State Department’s Office of Global Change, where she led the U.S. climate change mitigation portfolio, including international engagement and coordination with domestic agencies. Smaczniak previously served as Counsel to the U.S. Senate Environment and Public Works Committee and as a trial attorney for the U.S. Department of Justice. Smaczniak’s appointment is a strong sign that FERC will continue to be a place of interest as climate change pervades the Biden Administration.
FINANCIAL SERVICES SECTOR
What We Are Watching:
WALL STREET EXECS CALLED TO HEARING: Both the House Financial Services Committee and Senate Banking Committees will call the CEOs of the 8 largest banks for an oversight hearing in late in May. This marks the first time the Senate will call bank execs to the Hill in years.
MANDATORY DISCLOSURE EXECUTIVE ORDER: Biden is expected to issue an executive order requiring companies to disclose risks related to climate change, according to climate envoy John Kerry.
SPACE SCRUINITY INTENSIFIES: The SEC continues to step up the pressure on SPAC when last week SEC Official John Coates warned about the surge in fundraising by blank-check companies known as special-purpose acquisition companies. Coates said there are “some significant and yet undiscovered issues” with SPACs and warned firms launching SPACs that they can’t evade legal obligations required in a traditional IPO.
Week Ahead
The House Financial Services Committee has several hearings this week. On March 14th, the committee is holding a hearing called, “Build Back Better: Investing in Equitable and Affordable Housing Infrastructure”. On the 15th, the committee is holding a hearing called, “Banking Innovation or Regulatory Evasion? Exploring Trends in Financial Institution Charters” and on the same day one called, “The End of LIBOR: Transitioning to an Alternative Interest Rate Calculation for Mortgages, Student Loans, Business Borrowing, and Other Financial Products”.
The Senate is set to vote on the nomination of Gary Gensler to lead the SEC this week. The Senate Banking Committee also has several hearings this week. On the 13th, the committee will hold a hearing called, “Separate and Unequal: The Legacy of Racial Discrimination in Housing” and on the same day a hearing called, “The Student Debt Burden and Its Impact on Racial Justice, Borrowers, & The Economy.” On the 15th, the committee will hold a hearing called, “21st Century Communities: Public Transportation Infrastructure Investment and FAST Act Reauthorization”.
Key Insights:
SPACs’ growing popularity continues to spur regulatory scrutiny, especially focusing on the deregulatory appeal of them compared to traditional IPOs. While several agencies appear to be gearing up to take on SPACs, it appears that the SEC will take the lead for now.
HEALTHCARE SECTOR
What We Are Watching:
MEDICARE ADVANTAGE PLANS CAN BETTER SAFEGUARD PROGRAM INTEGRITY:
The U.S. Department of Health & Human Services’ (HHS) Office of Inspector General released a briefing that detailed how Medicare Advantage organizations can improve the use of national provider identifiers for those who order or refer high-risk services for beneficiaries. The IG found that nearly half of Medicare Advantage organizations lack ordering national provider identifiers on at least some records. In addition, of those that do collect ordering national provider identifiers, 20 percent do not perform program integrity oversight using these identifiers. Based on the new evaluation, the office recommended that CMS encourage Medicare Advantage organizations to perform integrity oversight using national provider identifiers. Read the full brief here.
WALGREENS ALTERS PFIZER VACCINE DOSING SCHEDULE WITHOUT AUTHORIZATION:
The New York Times reported that Walgreens will start scheduling its Pfizer vaccination doses three weeks apart, following complaints from customers and the CDC that the pharmacy was previously scheduling Pfizer vaccinations four weeks apart. In other news regarding the Pfizer vaccine, an Israeli study found that the South African variant may evade the protection offered by the vaccine.
Week Ahead:
Energy and Commerce Committee Chairman Frank Pallone, Jr. (D-NJ) and Health Subcommittee Chairwoman Anna G. Eshoo (D-CA) announced today that the Health Subcommittee will keep the pressure up on opioids, holding a legislative hearing on Wednesday, April 14, at 10:30 a.m. (EDT), entitled, “An Epidemic within a Pandemic: Understanding Substance Use and Misuse in America” and will focus on the increase in drug overdoses and fatalities over the last year that has contributed to isolation and economic hardships felt from the COVID-19 pandemic – severely exacerbating the pre-existing substance use disorder epidemic in America.
On Thursday, April 15, 2021, at 10:00 a.m. ET, Rep. James E. Clyburn, the Chairman of the Select Subcommittee on the Coronavirus Crisis, will hold a hybrid in-person/remote hearing with Centers for Disease Control and Prevention Director Rochelle P. Walensky, National Institute of Allergy and Infectious Diseases Director Anthony S. Fauci, and Chief Science Officer for COVID Response David Kessler. The hearing will examine the Biden Administration’s progress in accelerating vaccine access nationwide and adherence to public health measures such as masks and distancing to slow the spread of COVID-19 in the weeks and months before everyone has access to a vaccine.
Key Insights:
On Monday, both Treasury Secretary Janet Yellen and top Senate Democrats pushed for international tax changes – highlighting the efforts underway to advance President Biden’s plan for using corporate tax increases to pay for a more than $2 trillion spending package that will likely include drug pricing reform.
If Democrats are able to pass President Biden’s infrastructure plan, it is likely that some of the party’s healthcare priorities will be passed under the plan. House Democrats are pushing for Speaker Nancy Pelosi’s (D-CA-12) price negotiation bill, formerly known as H.R. 3, to be resurrected and included in the package as a multibillion fund for the infrastructure plan.
So far, many Senate Democrats are on board with the drug pricing bill, however they’ll still need every vote in their caucus to pass legislation. Other options on the table include restructuring Medicare Part D payments and fining drug makers for price hikes beyond inflation — both parts of a bipartisan plan formulated by Finance Chair Ron Wyden (D-OR) and Chuck Grassley (R-IA), in the previous legislative session.
INDUSTRIALS SECTOR
What We Are Watching:
EPA RELEASES NEW PFAS ASSESSMENT: The Environmental Protection Agency released an updated health assessment for PFAS chemicals after withdrawing the version issued by the Trump administration. The new toxicity assessment will be an important benchmark as regulators consider drinking water limits and other potential regulations.
BIDEN ADMINISTRATION TO PROPOSE TOUGHER TAILPIPE REGULATIONS: Bloomberg News reports that the Biden administration is on track to propose tougher standards on greenhouse gas emissions from automobiles. The EPA is currently re-writing Trump administration regulations that eased limits on automobile emissions through the 2026 model year.
CALIFORNIA ADVANCES BILL BANNING PFAS IN CERTAIN PRODUCTS: Inside EPA reports that the California legislature is advancing bills that ban PFAS in “juvenile products” and would require cookware manufactures to disclose products containing certain chemicals.
Week Ahead:
The Senate Appropriations subcommittee on the Department of Defense will hold a hearing on DoD’s innovation and research. Tuesday, April 13, 10 a.m.
Key Insights:
Now that Biden administration officials are in place at regulatory agencies, they are reversing many Trump era policies and writing their own regulations on topics including chemical regulations and automobile emissions standards, and we should expect more regulatory updates to come.
TECH, MEDIA & TELECOM SECTOR
What We Are Watching:
MORE OVERT OVERSIGHT: In an op-ed for TIME, former FCC chairman Tom Wheeler calls for a new agency to regulate tech companies.
HOUSE OGR JUMPS ON CHILD PRIVACY: Subcommittee Chairman Raja Krishnamoorthi sent a document request to YouTube related to content offerings for children and a previous settlement the company had reached with the FTC.
FTC CHANGES WORKING – FOR BETTER OR WORSE: Recent FTC competition chief says the agency’s Technology Enforcement Division (TED) is adding efficiencies and ensures the agency is in a “very strong position” to continue its scrutiny.
Key Insights:
Despite all the media attention Amazon’s Alabama union vote amassed, only 16% of site employees voted in favor of unionization. This serves as a reminder for how many progressive tech issues may be pushed by a (very) loud minority.
