sign in sign up
<<
Home , Blaine Luetkemeyer

COVID-19 Public Policy Group Report US – May 8, 2020

With the economic carnage caused by President has taken an increasing hard line in recent days against what is expected to be the COVID-19 more evident than ever, centerpiece of Speaker Pelosi’s bill: hundreds of billions of illustrated in grim new detail by this dollars in new money for states, territories, counties and municipalities. But as the White House has raised the bar, morning’s new US jobs report, federal a number of Senate Republicans have joined forces policymakers in Washington, DC, are publicly with Democratic colleagues in support of individual consumed by debate about the legislative measures that hint at an eventual consensus approach to the issue. Senators Bill Cassidy (R-LA) and composition of the next bipartisan Bob Menendez (D-NJ) for weeks have championed a coronavirus response legislation. The bipartisan measure that would provide US$500 billion in funds to states and local governments. And on Thursday, tense deliberations are occurring not just four senators unveiled a bipartisan bill that would change between Republicans and Democrats, the original CARES Act retroactively to allow states, but inside the party caucuses territories and local governments to use some federal aid money to address revenue shortfalls. themselves. Bipartisan consensus is likely to be harder to achieve for Beset by intraparty wrangling, House Speaker Nancy COVID-19 legislation sought by Republican leaders that Pelosi (D-CA) has pushed off the unveiling of would shield American individuals and businesses from congressional Democrats’ much-anticipated “CARES 2.0” certain legal liability as the US economy reopens. Senator proposal until at least next week. Senate Minority Leader John Cornyn (R-TX), a senior member of the Senate Chuck Schumer (D-NY), with whom Speaker Pelosi is Committee on the Judiciary, is crafting legislative language coordinating as the plan is being assembled, has to achieve this objective, in close coordination with the described the forthcoming measure as being White House. “Rooseveltian” in its vision and ambition, loaded with Democratic policy priorities for states and communities Treasury Secretary Steven Mnuchin announced Thursday desperate for support from the federal government. But that the US Department of the Treasury will change its some Democrats have taken issue with their leadership’s interpretation of the CARES Act and allow companies that decision to craft the package without Republican input, have furloughed workers but continue to pay their health noting a bill passed by the House solely on the power of benefits to receive an employee retention tax credit. their party’s Democratic majority in the chamber is likely to Treasury’s shift comes after the bipartisan leadership of be “dead on arrival” in the GOP-led Senate. Other House the House and Senate tax-writing committees, responding Democratic members continue to lobby Speaker Pelosi to objections from US employers, notified Secretary and her leadership team for the inclusion of their favored Mnuchin that Treasury’s previous interpretation of the law ideas. ran counter to congressional intent. POLITICO reports: “Speaker is speeding For additional global public policy insights related to to finalize a multi-trillion dollar coronavirus relief COVID-19, please contact us to receive our daily US package, hoping to put the bill on the House floor next Executive Branch Update or COVID-19 US State Policy week — a timeline that even some senior Democrats Report directly in your inbox. See here for the latest dismiss as unlikely. Pelosi had hoped to release the draft editions. bill — which some Democrats worry could cost upwards In the coming weeks, we will unveil a blog dedicated to of [US$2 trillion] – on Friday. But that timeline is slipping global public policy focused content. Follow us on Twitter as members from all corners of the caucus pressure @SPB_CapThinking for the launch announcement. leadership to stuff the ballooning bill with their priorities, many of which were left out of the previous four aid packages negotiated with Republicans. Senior Democratic aides said Pelosi and the committees will be working through the weekend on the package.”

squirepattonboggs.com

Tax and Economic Development facilities that can provide direct lending to colleges, universities, and nonprofit medical institutions.” Separately, Updates the Financial Stability Oversight Council (FSOC) As House Democrats are preparing to unveil CARES 2.0, announced that it has scheduled a meeting for next House Speaker Nancy Pelosi (D-CA) has suggested that Thursday, May 14, during which it will receive an update President Trump’s call for a payroll tax cut is not “urgent,” from its Task Force on Nonbank Mortgage Liquidity, along instead seeming to favor delaying tax issues until a later with updates on various other market developments time. Though it is unclear the extent to which the related to COVID-19. While Secretary Mnuchin has forthcoming COVID-19 package will ultimately address tax previously suggested that there are currently no plans to issues, there remains a number of tax provisions from create a 13(3) facility to address the liquidity needs of the previous legislation still requiring policymakers’ attention. mortgage servicing industry, it will be important to pay Notably, in his reply to a letter from Senate Committee on close attention to the FSOC’s readout following its meeting Finance Chairman Chuck Grassley (R-IA), Treasury to assess whether that position is evolving. Secretary Mnuchin indicated the Treasury will be revising Yesterday, Commerce Secretary Wilbur Ross announced its guidance on the Employee Retention Tax Credit so that that the Economic Development Administration (EDA) is businesses continuing to provide health benefits to now accepting applications for nearly US$1.5 billion in furloughed workers would be eligible for the credit. grant funding made available by the CARES Act. According to Senator Grassley, “[t]his decision will According to the announcement, “[g]rants and cooperative encourage employers to help employees keep their health agreements made under these programs are designed to insurance while temporarily furloughed due to the leverage existing regional assets and support the shutdown.” Secretary Mnuchin has also revealed that the implementation of economic development strategies that Treasury Department is currently reviewing whether to advance new ideas and creative approaches to advance permit businesses to deduct expenses paid using economic prosperity in distressed communities, including Paycheck Protection Program (PPP) loans that are those negatively impacted by changes to the coal forgiven. economy and nuclear power plant closures.” State and While on the topic of the PPP, we are continuing to local governments, institutions of higher education and receive reports that a growing number of lawmakers are nonprofits are among those eligible to apply for this grant looking to make changes to the program in conjunction funding. with any approval of additional PPP funding. For example, Representatives (D-CA) and Health Updates (D-VA) have released a proposal that would House Committee on Energy and Commerce Chairman provide an additional US$660 billion in PPP funding with , Jr. (D-NJ) and House Committee on Ways certain set-asides for small businesses. The proposal and Means Chairman (D-MA) wrote to also includes several changes to the PPP, including: (1) Department of Health and Human Services (HHS) a requirement that lenders make public certain details Secretary Alex Azar and Centers for Medicare & Medicaid about processed loans; (2) a “sliding scale” for loan Services (CMS) Administrator Seema Verma, questioning forgiveness reduction; (3) an extension of the date to the administration’s actions regarding the Provider Relief rehire employees from June 30, 2020, to August 31, Fund and Accelerated and Advance Payments Program. 2020; (4) flexibility to allow businesses to elect to pay the They expressed concern that HHS has not provided eight weeks of payroll over up to a 16-week period additional transparency for the initiatives, and they probed without losing loan forgiveness; and (5) an authorization the methodology HHS is using to distribute the US$175 for businesses to use loan disbursements for payroll billion Congress appropriated to the Fund. Of note, the expenses incurred after March 15, regardless of when lawmakers said CMS has provided no information on the the loan was disbursed. Additionally, the proposal future of the Accelerated and Advance Payments Program includes a provision supported by House Committee on since its announcement in April that it would suspend the Small Business Chair Nydia Velazquez (D-NY), which Advance Payment Program for Part B providers and makes clear that all non-profits – regardless of their type reevaluate new and pending applications for the – are eligible for the PPP. Accelerated Payment Program. Chairman Pallone and As we continue to await additional action by the Federal Chairman Neal called the administration’s efforts to Reserve to prop up its Main Street Lending Program so distribute grants through the Fund “at best, a series of that it is operational and can begin assisting the large missteps, and at worst, a disregard for Congress’ intent for number of businesses across the country that are in need the program.” Yesterday, HHS extended the deadline for of liquidity, it is clear that the central bank is continuing to health providers to attest to the receipt of payments and think broadly in terms of its COVID-19 response. In fact, accept the Terms and Conditions for the Fund to 45 days. Philadelphia Fed President Patrick Harker has offered that As we reported yesterday, the administration has begun to “[t]he is thinking carefully about setting up publish a list of Fund aid recipients. The data set currently includes the list of entities that received funding from the squirepattonboggs.com general distribution allocation; those listed have attested enacted legislation on this issue, but not all have done so payments and agreed to the Fund’s Terms and Conditions – leading to a patchwork of liability protection for health as of May 4, 2020. care facilities and professionals. They clarified that the protection should “not apply to situations in which there is Lawmakers continue to evaluate efforts to promote and gross negligence or other misconduct.” increase testing, contact tracing and surveillance of COVID-19 cases. Speaker Pelosi stated that one of three Trade Updates major components of the next relief bill will be funds for testing, and the House Committee on Energy and On Thursday, House Minority Leader Kevin McCarthy (R- Commerce announced it would host a teleconference CA) announced the creation of a China task force with forum today at noon on COVID-19 testing, contact tracing fifteen Republican lawmakers from fourteen different and surveillance. Yesterday, during a Senate Committee congressional committees. House Democrats previously on Health, Education, Labor and Pensions (HELP) planned to join the task force, but reportedly withdrew from Committee hearing on testing, Chairman Lamar Alexander the proposal in February. The task force plans to adopt a (R-TN) said current diagnostic testing capacities are holistic approach to addressing China, merging traditional “impressive, but not nearly enough.” He explained, national security concerns with healthcare, education and “[T]here is no path forward to combat the novel economic issues. The task force will serve as a (so far, coronavirus without adequate testing.” Ranking Member only GOP) clearinghouse to consider Congressional Patty Murray (D-WA) was harsher in her comments, responses to China on a variety of issues, including: the opining that the White House’s testing strategy is origin of COVID-19 and China’s response; China’s alleged inadequate. She noted, “The problem isn’t a lack of influence activities in the US, including through educational innovation – it’s a lack of national leadership and a plan institutions; US export control and foreign investment from the White House. You can innovate the fastest care policy; China’s involvement in international organizations; in the world – it still won’t get you where you’re going and China’s international economic policy. without a good driver and good directions.” Separately, a The task force will be chaired by House Committee on group of nine Democratic senators wrote to Centers for Foreign Affairs Ranking Member Michael McCaul (R-TX) Disease Control and Prevention (CDC) Director Robert and will include senior members of House Republican Redfield and CDC Foundation President Judy Monroe, Leadership, including House Minority Whip requesting the CDC reconsider and broaden the criteria (R-LA) and House Republican Conference Chair Liz required for those applying to contact tracer positions. The Cheney (R-WY), as well as Representatives Mike current criteria requires a bachelor’s degree, and the Gallagher (R-WI), (R-IN), (R- senators believe this requirement “excludes individuals IL), (R-NY), Andy Barr (R-KY), John Curtis who would be well-equipped to excel in such a position (R-UT), Denver Riggleman (R-VA), (R-FL), and may slow down the agency’s efforts to scale up its Chris Stewart (R-UT), Anthony Gonzalez (R-OH), Darin contact tracing force to the levels that are desperately LaHood (R-IL), Jim Jordan (R-OH), Blaine Luetkemeyer needed.” (R-MO), (R-IN), and Mark Green (R-TN). The National Institutes of Health-supported Rare Diseases Also on Thursday, Senate Majority Leader Mitch Clinical Research Network (RDCRN) has launched a new McConnell (R-KY) said during a floor speech that the online survey, which seeks to find out how the coronavirus Senate would soon take up legislation implementing pandemic is affecting individuals with rare diseases. targeted sanctions on Chinese officials responsible for RDCRN says the “[r]esults will help the rare disease alleged human rights abuses against the Uighur ethnic research community shed light on the needs of people minority in Xinjiang Province. The legislation, the Uighur with rare diseases during the COVID-19 pandemic and Intervention and Global Humanitarian Unified Response other potential health crises, in addition to informing future Act of 2019, or the UIGHUR Act of 2019, would also target research efforts.” The survey is seeking responses from at the export of goods that facilitate such abuses. The House least 5,000 individuals with a rare disease or caregivers for advanced a version of the UIGHUR Act in late 2019, but it those with a rare disease, and RDCRN will distribute the remains to be seen whether the Senate will take up the survey online to participants. House-passed bill or advance a measure with further Prominent hospital organizations – including America’s changes. Essential Hospitals, the American Hospital Association, the Association of American Medical Colleges and the Oversight Updates Federation of American Hospitals – asked House and After saying initially that Republican lawmakers might not Senate leadership to take a federal approach “to shield participate in such a “purely political” undertaking, House front-line providers from the legal exposure that results Minority Leader McCarthy relented and appointed five from actions and decisions undertaken in responding to an members to the Select Subcommittee on the Coronavirus unprecedented public health emergency.” The groups note Crisis. The House voted on April 23 to establish this new some state leaders have issued Executive Orders or investigative 12-member panel within the Committee on squirepattonboggs.com

Oversight and Reform. House Speaker Pelosi appointed Contacts Democratic members on April 29. After yesterday’s announcement, the subcommittee’s members are Representatives James Clyburn (D-SC) (Chair), Maxine David B. Stewart Waters (D-CA), (D-NY), Nydia Principal, Washington DC Velázquez (D-NY), (D-IL), (D- T +1 202 457 6054 MD), (D-NJ), Steve Scalise (R-LA), Jim Jordan E [email protected] (R-OH), Blaine Luetkemeyer (R-MO), Jackie Walorski (R- IN) and Mark Green (R-TN). For an analysis of this new David Schnittger subcommittee, see our Client Alert, What to Expect From Principal, Washington DC the New Congressional Coronavirus Subcommittee. T +1 202 457 6514 E [email protected] Reuters reports that 41 large public companies that received PPP loans had enough cash to sustain their Beth L. Goldstein operations for months, even if their revenues dropped to Senior Associate, Washington DC zero. Several companies were upbeat in their public T +1 202 457 5129 statements about their prospects at the time they certified E [email protected] in their PPP applications that “current economic uncertainty” made the loans “necessary to support the Brandon C. Roman ongoing operations.” Some of these companies have since Senior Associate, Washington DC returned the loans or are planning to do so in light of T +1 202 457 5330 Treasury/Small Business Administration updated guidance E [email protected] and in reliance on the safe harbor provision in place through May 14, under which companies that return their Kristina V. Arianina PPP loans will be deemed to have made the required Senior Associate, Washington DC certifications in good faith. Per Treasury Secretary T +1 202 457 5139 Mnuchin, all loans of US$2 million or more will be subject E [email protected] to full audits before they are forgiven. Also: Ludmilla L. Kasulke Senior Associate, Washington DC  Earlier this week, Sandra D. Bruce, the T +1 202 457 5125 Department of Education’s Acting Inspector E [email protected] General, announced her priorities for CARES Act oversight, including auditing the Department’s and grantees’ management and spending of the funds; examining the effectiveness of the relief programs; and investigating misuse, theft, and other criminal activity related to these funds. Under the CARES Act, the IG has an allocated US$7 million to do this work. The Act also designated the IG as a member of the Pandemic Response Accountability Committee (PRAC), the Council of existing IGs charged with oversight that cuts across agency and program boundaries.  Yesterday, Senator Elizabeth Warren (D-MA) and eight other Senators asked Amazon to provide information on its whistleblower policies and practices, following reports of its firing employees after they publicly raised concerns about safety conditions at Amazon warehouses.  Maryland is imposing a daily US$10,000 penalty on a nursing home for health and safety-related violations. The penalty will continue to accrue until the facility is in substantial compliance with state regulations.

squirepattonboggs.com