Washington Update
June 5, 2020 Washington Update
This Week In Congress
Senate – The Senate passed the Paycheck Protection Program (PPP) Flexibility Act (H.R. 7010) and the President signed the bill into law. The Senate confirmed the nominations of Victor Mercado to be Assistant Secretary of Defense, Brian Miller to be Special Inspector General for Pandemic Recovery, and James Anderson to be Deputy Under Secretary of Defense, as well as several judicial nominations.
House – The House met in pro forma session.
Next Week In Congress
Senate – The Senate is expected to consider H.R. 1957, which is the legislative vehicle for the Great American Outdoors Act (S. 3422). The Senate may continue its consideration of pending nominations.
House – The House will be in recess but will meet in pro forma session.
TAX loans more accessible under the program by making its terms of use more flexible. Congress Passes the Paycheck Protection Program Flexibility Act The PPP changes in the bill include:
Key Points: • Extending the expense forgiveness . The Senate passed the Paycheck Protection period from eight weeks to twenty-four Flexibility Act Wednesday and President weeks; Trump signed the bill into law Friday morning. • Reducing the 75 percent payroll ratio . The PPP Flexibility Act would extend the requirement; expense forgiveness period to 24 weeks, reduce • Eliminating 2-year loan repayment the 75 percent payroll ratio requirement, and restrictions for future borrowers; eliminate the 2-year loan repayment restrictions.
On June 3, the Senate passed the Paycheck Table of Contents Protection Program (PPP) Flexibility Act (H.R. Tax 1 Financial Services 3 7010) by unanimous consent. The bill, Energy & Environment 7 introduced by Representatives Phillips (D-MN) and Roy (R-TX), passed the House last week by Health 9 a vote of 417-1. The bill is intended to make Trade 12
______©2020 Williams & Jensen, PLLC 1201 Pennsylvania Avenue, N.W. Suite 800 Washington, D.C. 20004 Telephone: (202) 659-8201 Fax: (202) 659-5249 www.williamsandjensen.com Williams & Jensen – Washington Update June 5, 2020
• Allowing payroll tax deferment for PPP . Other topics to be discussed include the recipients; and Employee Retention Tax Credit and • Extending the June 30 rehiring deadline. Economic Relief Payments.
President Trump signed the bill into law on June House Ways and Means Committee Chairman 5. Neal (D-MA) and Treasury Secretary Mnuchin will meet Friday to discuss infrastructure. Senator Heinrich and Representative Tonko Chairman Neal said this week that he would lay Join Over 50 Congressional Democrats in out Democrats’ plans to pursue a major Letter to Push for Flexibility for Clean infrastructure spending package and hopes to Energy Tax Credits as Part of Economic reach an accord with the Trump administration. Recovery Efforts He said he conferred with House Democratic leaders to determine what infrastructure policies Key Point: should be pitched to the White House, but it . Senate Democrats plan to push extending remains unclear whether Secretary Mnuchin will flexibility for clean energy tax credits and want to include an infrastructure plan in the next federal investment in clean energy as a part of round of coronavirus legislation. Chairman Neal the economic recovery. suggested he would raise Build America Bonds, and various tax credits like the New Markets Tax Senate Democrats led by Senator Heinrich (D- Credit and Low-Income Housing Tax Credit. NM) and House Democrats led by Congressman Tonko (D-NY) have urged On Wednesday, Democratic leaders of the Congressional leadership to assist the renewable House Transportation and Infrastructure energy sector as part of any COVID-19 Committee introduced the Investing in a New economic recovery effort. The group of over Vision for the Environment and Surface fifty Senators and Representatives wrote a letter, Transportation in America (INVEST in seeking to extend and offer “additional America) Act (H.R. 7095), one part of a $760 flexibility” for clean energy tax credits as a part billion infrastructure spending plan to repair the of the federal economic recovery effort. The country’s roads, bridges, railways, airports and push comes as the clean energy sector has lost harbors that Democrats released earlier this over 600,000 jobs since the COVID-19 year. The legislation would increase funding for outbreak. Democratic lawmakers are also urging federal surface and rail transportation programs federal investment in various clean energy by 46% over current levels to help fund repairs technologies as part of the economic recovery. and improvements for the next five years, according to a fact sheet. Chairman Neal and Secretary Mnuchin Will Meet to Discuss Infrastructure Proposals Other issues likely to be discussed between from House Democrats Chairman Neal and Secretary Mnuchin include: (1) the Employee Retention Tax Credit; (2) Key Points: Unemployment Insurance; and (3) Economic . Chairman Neal and Secretary Mnuchin are Impact Payments. Infrastructure has long been scheduled to meet Friday to discuss the next an area of bipartisan cooperation in Washington round of COVID-19 relief legislation. and has been on the administration’s radar for over a year. Neal stated while he would address the issue of infrastructure with Secretary
Williams & Jensen, PLLC 1201 Pennsylvania Avenue, N.W. Suite 800 Washington, D.C. 20004 Telephone: (202) 659-8201 Fax: (202) 659-5249 www.williamsandjensen.com
Page 2 of 12 Williams & Jensen – Washington Update June 5, 2020
Mnuchin it still remains an open question if the render them ineffective. He stated on May 11 administration would like to see infrastructure the Federal Reserve updated the terms sheet for addressed in the next round of COVID-19 relief the Municipal Liquidity Facility to lower the legislation. population threshold for cities and counties despite this mandate not being included in the For more information about tax issues you may email or CARES Act. He asserted this move was a step call Christopher Hatcher at 202-659-8201. Josh in the right direction, but it still leaves many Hansma contributed to this section. small jurisdictions without funding. Ranking Member Sherrod Brown (D-OH) stated FINANCIAL SERVICES COVID-19 has highlighted how policy is always tilted to protect the wealthy at the expense of Senate Banking Committee Holds Hearing poorer Americans. He stated the Committee on CARES Act Implementation needs to show Americans the government is on their side and the need to address wealth Key Points: inequality. He noted this Committee continues . Members of both parties raised concerns that to favor the rich and powerful by giving billions mid-sized businesses will be left out of Federal of dollars to companies without requiring them Reserve Section 13(3) facilities due to overly to protect their workers. stringent requirements. . Chairman Mike Crapo (R-ID) expressed Thomas Quaadman (U.S. Chamber, Center for concern that the terms for the Municipal Capital Markets Competitiveness) expressed Liquidity Facility prevent funds from flowing to appreciation to Congress for the 13(3) credit smaller counties. facilities that have been established. He stated Congress’s comprehensive approach has On June 2, the Senate Banking Committee held allowed the economy to jumpstart its recovery. a hearing on the implementation of Title IV of He expressed concern many mid-sized the Coronavirus Aid, Relief, and Economic businesses could be left behind from lending Security (CARES) Act. Chairman Mike Crapo facilities due to their unique size. He urged the (R-ID) stated the CARES Act has been central Committee to take action on mortgage service to the nation’s economic recovery effort. He providers who are extending forbearance to stated the lending facility authorities under homeowners. He noted future events will dictate Section 13(3) of the Federal Reserve Act are if a 13(3) facility is necessary for mortgage central in stabilizing the markets. He added the service providers or utility companies providing Federal Reserve has already announced new and forbearance. Douglas Holtz-Eakin (American expanded lending programs to provide up to Action Forum) noted the Municipal Liquidity $2.3 trillion in loans to the nation’s businesses. Facility has been vital to support state and local He thanked Secretary Mnuchin and Chairman governments during this pandemic. He Powell for unlocking the primary and secondary expressed concern much of the Title IV money market for corporate bonds through Federal has not been released. He noted many mid-sized Reserve facilities amidst this pandemic. He businesses do not have sufficient funds to asserted the Main Street Lending Facility and continue operations and many are being left out Municipal Liquidity Facility (MLF) of lending facilities due to their unique size. He extend lifelines to states, localities and urged Congress to provide support for mid- businesses. He stressed that incorporating sized businesses. Heidi Shierholz (Economic excessive restrictions into these facilities could Policy Institute) stated there is an egregious lack
Williams & Jensen, PLLC 1201 Pennsylvania Avenue, N.W. Suite 800 Washington, D.C. 20004 Telephone: (202) 659-8201 Fax: (202) 659-5249 www.williamsandjensen.com
Page 3 of 12 Williams & Jensen – Washington Update June 5, 2020
of conditions in Title IV to require loans to keep state will also be able to designate two people on payroll, which should be corrected. issuers in their jurisdictions whose revenues are generally derived from operating Chairman Crapo and Senators Mark Warner (D- government activities (such as public transit, VA) and Martha McSally (R-AZ) asked what airports, toll facilities, and utilities) to be eligible to directly use the facility. changes could be make to enhance the Main Street Lending Facility. Holtz-Eakin In addition to the expanded terms outlined recommended cutting the minimum loan size of above, the MLF continues to be directly $500,000 in half, extending the term from 4 open to U.S. states, the District of years to 10 years, and amortizing principal over Columbia, U.S. cities with a population of a longer period. Quaadman recommended at least 250,000 residents, U.S. counties extending the term to at least 6 years, adjusting with a population of at least 500,000 the interest rate, and changing the affiliation and residents, and certain multistate entities. risk retention rules. Hester Peirce Nominated for Second Term Chairman Crapo stated the Municipal Liquidity as SEC Commissioner Facility threshold does not cover any county in Idaho. He asked if the way the facility was set up Key Point: would facilitate the flow of funds to small . The White House announced that President counties across the nation. Holtz-Eakin Trump was nominating Peirce for a term responded he expects this program to assist the expiring June 5, 2025. states, but he sees no reason to believe it will assist the smallest counties nationwide. He On June 2, the White House announced that urged Congress to do more to assist these President Trump nominated Securities and smaller municipalities. Exchange Commission (SEC) member Hester Peirce for another term, expiring June 5, 2025. Federal Reserve Announces Modification to Peirce’s first term is scheduled to expire on June the Municipal Liquidity Facility 5, 2020, however members of the Commission are allowed to serve up to 18 months beyond the Key Point: end of their term. The White House has not yet . Under the new terms, each state will be able to sent a nomination to fill the open Democratic have at least two cities or counties eligible to slot at the Commission. directly issue notes to the MLF regardless of population. Senate Banking Committee Holds Hearing on Hong Kong On June 3, the Federal Reserve Board announced it was expanding the number and Key Points: type of entities eligible to directly access the . Senators Pat Toomey (R-PA) and Chris Van Municipal Liquidity Facility. The announcement Hollen (D-MD) expressed support for the noted: Hong Kong Autonomy Act which would impose sanctions related to China’s restrictions Under the new terms, all U.S. states will be on Hong Kong. able to have at least two cities or counties . Democrats criticized President Trump’s actions eligible to directly issue notes to the MLF against protesters in the U.S., suggesting that regardless of population. Governors of each
Williams & Jensen, PLLC 1201 Pennsylvania Avenue, N.W. Suite 800 Washington, D.C. 20004 Telephone: (202) 659-8201 Fax: (202) 659-5249 www.williamsandjensen.com
Page 4 of 12 Williams & Jensen – Washington Update June 5, 2020
China and Russia will use them to justify by the White House on this issue. He noted no repressive actions against their own citizens. agreement would be sufficient without cooperation from the U.K. and E.U. He urged On June 4, the Senate Banking Committee held Congress to ensure China pays an economic a hearing entitled “Crisis in Hong Kong: A price for pushing these new oppressive laws. Review of U.S. Policy Tools.” Senator Pat Toomey (R-PA) stated the Chinese Communist Senator Chris Van Hollen (D-MD) stated it is Party (CCP) has been waging a systematic important Congress deploy all tools on a campaign to eliminate the freedoms of the bipartisan basis to issue sanctions on banks and citizens of Hong Kong. He observed the CCP individuals seeking to subvert human rights in has been working to undermine the freedoms Hong Kong. He stressed the Trump enjoyed by Hong Kong’s people in recent years. Administration has authority to take action He expressed concern over the National immediately. He expressed great dismay over Security bill passed by the CCP which makes it the Administration’s efforts to break up a illegal to harbor dissent against the Chinese peaceful assembly in front of the White House. Government. He touted the Hong Kong He stated the President’s actions undermine his Autonomy Act (HKAA), which he introduced credibility on the issue of human rights. He with Senator Van Hollen (D-MD), designed to urged Congress to pass the HKAA. He asked push back on CCP aggression and hold those how the witnesses view the HKAA. Eric Lorber responsible accountable for their actions. He (Foundation for Defense of Democracies) stated the HKAA works to punish banks responded the HKAA is a well-designed piece seeking to prop up CCP aggression and of legislation that creates a deterrent for the CCP government officials working to subvert the to halt their efforts to undermine the rights of rights of Hong Kong’s people. He highlighted the people of Hong Kong. Peter Harrell (Center the strong bipartisan support for the HKAA. for a New American Security) responded the HKAA fills a gap in existing sanctions laws. Ranking Member Sherrod Brown (D-OH) expressed concern over the President’s recent Upcoming Meetings and Events actions to stop peaceful protests in Washington D.C. He stressed the Committee stands with June 8 peaceful protesters in Hong Kong who want CFPB Youth Programs: The Consumer representation in their own government, and he Financial Protection Bureau (CFPB), in emphasized the U.S. should be a beacon of light conjunction with the Interagency Working for those all around the world who seek Group on Youth Programs (IWGYP), will host freedom. He noted Moscow and Beijing will use a virtual Youth Financial Education Research the President’s recent actions and words to Convening. justify their own brutality at home. Brown urged the U.S. to improve upon their calibrated June 9 sanctions approach. He noted new broad Housing Regulators: The Senate Banking sanctions on foreign banks may be ineffective Committee will hold a hearing entitled and cause harm to the citizens of Hong Kong. “Oversight of Housing Regulators.” The He stated President Trump could use existing Committee will receive testimony from authorities to protect Hong Kong and Congress Secretary of Housing and Urban Development should urge him to do so. He stated Congress Ben Carson and Federal Housing Finance needs to step in and fill the leadership void left
Williams & Jensen, PLLC 1201 Pennsylvania Avenue, N.W. Suite 800 Washington, D.C. 20004 Telephone: (202) 659-8201 Fax: (202) 659-5249 www.williamsandjensen.com
Page 5 of 12 Williams & Jensen – Washington Update June 5, 2020
Agency (FHFA) Director Mark Anthony Monetary Policy will hold a hearing entitled, Calabria. “Cybercriminals and Fraudsters: How Bad Actors Are Exploiting the Financial System June 10 During the COVID-19 Pandemic.” Rental Assistance: The House Financial Services Committee’s Subcommittee on June 17 Housing, Community Development and Federal Reserve: The House Financial Services Insurance will hold a hearing entitled, “The Rent Committee will hold a hearing on “Monetary Is Still Due: America’s Renters, COVID-19, and Policy and the State of the Economy.” Federal an Unprecedented Eviction Crisis.” Reserve Chairman Jerome Powell is expected to testify at the hearing. CARES Act Title I: The Senate Small Business Committee will hold a hearing entitled, June 18 “Implementation of Title I of the CARES Act.” Small Business Forum: The SEC’s Office of The Committee will receive testimony from the Advocate for Small Business Capital Small Business Administration (SBA) Formation will host the 39th annual Administrator Jovita Carranza and Treasury Government-Business Forum on Small Secretary Steven Mnuchin. Business Capital Formation.
June 11 June 25 Stimulus Payments: The House Financial Capital Markets: The House Financial Services Services Committee’s Task Force on Financial Committee’s Subcommittee on Investor Technology will hold a hearing entitled, Protection, Entrepreneurship and Capital “Inclusive Banking During a Pandemic: Using Markets will convene for a hearing entitled, FedAccounts and Digital Tools to Improve “Capital Markets and Emergency Lending in the Delivery of Stimulus Payments.” COVID-19 Era.”
June 16 June 26 Municipal Securities Disclosures: The Insurance: The House Financial Services Securities and Exchange Commission will hold Committee’s Subcommittee on Housing, a conference via live webcast entitled, “Spotlight Community Development and Insurance will on Transparency: A Discussion of Secondary convene for a hearing entitled, “Insuring Market Municipal Securities Disclosure Against a Pandemic: Challenges and Solutions Practices.” The conference will include for Policyholders and Insurers.” discussion of topics including “voluntary disclosure practices of municipal issuers; buy- July 9 side perspectives of the state of secondary Emerging Markets: The SEC will hold a staff market disclosure; and emerging issues and roundtable on the risks of investing in emerging trends in the municipal securities market and markets, including China. their potential impact on secondary market disclosure practices.” For more information about financial services issues you may email Joel Oswald or Alex Barcham. Cybersecurity: The House Financial Services Committee’s Subcommittee on National Security, International Development and
Williams & Jensen, PLLC 1201 Pennsylvania Avenue, N.W. Suite 800 Washington, D.C. 20004 Telephone: (202) 659-8201 Fax: (202) 659-5249 www.williamsandjensen.com
Page 6 of 12 Williams & Jensen – Washington Update June 5, 2020
ENERGY & ENVIRONMENT authorities and other authorities to respond to the national emergency and Executive Order Directs Agencies to to facilitate the Nation’s economic Expedite Infrastructure Permitting During recovery.” COVID-19 Emergency . The Secretary of Transportation to “use all relevant emergency and other Key Points: authorities to expedite work on, and . On June 4, the President signed a new completion of, all authorized and Executive Order directing agencies to thoroughly appropriated highway and other utilize provisions of existing laws and infrastructure projects that are within regulations to speed up the review and approval the authority of the Secretary to perform of infrastructure projects. or to advance.” . The Executive Order notes the . The Secretary of the Army “acting Administration’s previous initiatives on through the Assistant Secretary of the regulatory and permitting reform and declares Army for Civil Works, [to] use all that the “need for continued progress in this relevant emergency and other streamlining effort is all the more acute now, due authorities to expedite work on, and to the ongoing economic crisis.” completion of, all authorized and appropriated civil works projects that On Thursday, President Trump issued an are within the authority of the Secretary Executive Order titled, “EO on Accelerating the of the Army to perform or to advance.” Nation’s Economic Recovery from the . Agencies to identify actions that “may COVID-19 Emergency by Expediting be subject to emergency Infrastructure Investments and Other Activities. treatment…pursuant to [the Council on The Order broadly directs agencies to use Environmental Quality’s] NEPA existing emergency authorities to expedite regulations and agencies’ own NEPA review and approval of infrastructure projects to procedures”, as well as other NEPA support economic recovery from the COVID- exceptions and exemptions, and to “use, 19 pandemic. It includes several requirements to the fullest extent possible and for all federal agencies, as well as some consistent with applicable law, provisions targeting specific agencies, to emergency procedures, statutory accelerate reviews, including those under the exemptions, categorical exclusions, National Environmental Policy Act (NEPA) [and] analyses that have already been and the Endangered Species Act (ESA). completed...” . Agencies to “identify planned or The Order cites “existing legal authorities…that potential actions to facilitate the allow for expedited government decisionmaking Nation’s economic recovery that may be in exigent circumstances.” Some provisions in subject to the regulation on the Order cite specific statutes and regulations consultations in emergencies…” under on emergency processes. the ESA. . “[H]eads of all agencies, including the The Executive Order’s provisions include Secretary of the Army, acting through direction to: the Assistant Secretary of the Army for . Federal agencies to “take all appropriate Civil Works… [to] identify planned or steps to use their lawful emergency potential actions to facilitate the
Williams & Jensen, PLLC 1201 Pennsylvania Avenue, N.W. Suite 800 Washington, D.C. 20004 Telephone: (202) 659-8201 Fax: (202) 659-5249 www.williamsandjensen.com
Page 7 of 12 Williams & Jensen – Washington Update June 5, 2020
Nation’s economic recovery that may be Unified Agenda of Regulatory and Deregulatory subject to emergency treatment Actions, the EPA developed the NPRM to pursuant to the regulations and “provide the public with a better understanding nationwide permits…” on how EPA is evaluating benefits and costs . Agencies “to use, to the fullest extent when developing Clean Air Act regulatory possible and consistent with applicable actions…” The NPRM: law, the emergency Army Corps . “provides that the EPA will prepare a permitting provisions, to facilitate the [benefit-cost analysis] BCA for all future Nation’s economic recovery.” significant proposed and final . Agencies, within 30 days, to identify regulations under the” Clean Air Act; provisions of “statutes, regulations, and . provides “that the BCA be developed guidance documents that may provide using the best available scientific for emergency or expedited treatment information and in accordance with best (including waivers, exemptions, or other practices from the economic, streamlining) with regard to agency engineering, physical, and biological actions pertinent to infrastructure, sciences” energy, environmental, or natural . establishes “additional procedural resources matters…[and] identify requirements to increase transparency in planned or potential actions, including the presentation of the BCA results, actions to facilitate the Nation’s while maintaining the standard practices economic recovery, that may be subject of measuring net benefits consistent to emergency or expedited treatment with [Executive Order] 12866.” (including waivers, exemptions, or other streamlining) pursuant to those statutes Comments will be due 45 days following and regulations.” publication of the NPRM in the Federal Register. The Executive Order specifies that it “shall be implemented consistent with applicable law and This action follows up on earlier EPA subject to the availability of appropriations.” development of a proposal on agency-wide reforms to cost-benefit analysis. On June 13, EPA Proposes Changes in Clean Air Act 2018, the EPA published an Advanced Notice Analysis of Proposed Rulemaking (ANPRM) titled “Increasing Consistency and Transparency in Key Point: Considering Costs and Benefits in the . The EPA issued a proposed rule that Rulemaking Process”. The ANPRM solicited would revise how the agency conducts “comment on whether and how EPA should cost benefit analyses for future Clean Air promulgate regulations that provide a consistent Act rulemakings. and transparent interpretation relating to the consideration of weighing costs and benefits in On June 4, the Environmental Protection making regulatory decisions in a manner Agency (EPA) released an Notice of Proposed consistent with applicable authorizing statutes.” Rulemaking (NPRM) titled “Increasing On May 13, 2019, EPA Administrator Andrew Consistency and Transparency in Considering Wheeler issued a memorandum titled Benefits and Costs in the Clean Air Act “Increasing Consistency and Transparency in Rulemaking Process”. As described in the Considering Benefits and Costs in the
Williams & Jensen, PLLC 1201 Pennsylvania Avenue, N.W. Suite 800 Washington, D.C. 20004 Telephone: (202) 659-8201 Fax: (202) 659-5249 www.williamsandjensen.com
Page 8 of 12 Williams & Jensen – Washington Update June 5, 2020
Rulemaking Process”. The memorandum stated the emergency conditions caused by COVID-19 that the Administrator “determined that the are having on various segments of the United agency should proceed with benefit-cost States’ energy industry.” The agenda will reforms using a media-specific approach, taking include: “(1) the energy industry’s ongoing and into account the variety of statutory programs.” potential future operational and planning The memorandum directed EPA assistant challenges due to COVID-19 and as the administrators “to develop reforms, including situation evolves…; (2) the potential impacts of notice-and-comment rulemakings, that outline changes in electric demand on operations, how benefit-cost considerations will be applied planning, and infrastructure development; (3) in areas that are in need of greater clarity, the potential impacts of changes in natural gas transparency and consistency.” and oil demand on operations, planning, and infrastructure development; and (4) issues Upcoming Hearings and Events related to access to capital, including credit, liquidity, and return on equity issues.” June 9 Pollution and Pandemics: The House Energy For more information about energy and environment and Commerce Committee’s Subcommittee on issues you may email or call Frank Vlossak at 202- Environment and Climate Change will hold a 659-8201. Updates on energy and environment issues hearing entitled, “Pollution and Pandemics: are also available on twitter. COVID-19’s Disproportionate Impact on Environmental Justice Communities”. HEALTH
June 18 Senate Finance Questions FDA Officials FERC Open Meeting: The Federal Energy about Drug Manufacturing and Foreign Regulatory Commission (FERC) is scheduled to Inspections hold its monthly open meeting. Key Points: June 25 . On Tuesday, the Senate Finance Committee Reliability: The Federal Energy Regulatory held a hearing with officials from the Food and Commission (FERC) will hold a technical Drug Administration (FDA) to discuss the conference on “Reliability of the Bulk Power agency’s processes for overseas inspections, the System”. The conference “will focus on state of the pharmaceutical supply chain, and reliability-related issues for the bulk power the ongoing response to the COVID-19 system, including: (1) the changing resource mix; pandemic. (2) inverter-based resources and inverter- . Senators were particularly interested in FDA’s connected distributed energy resources; and (3) rationale for announced vs. unannounced cybersecurity.” inspections and ways to secure the supply chain for finished dosage drugs and pharmaceutical July 8-9 ingredients. COVID-19 Impacts on the Energy Sector: The Federal Energy Regulatory Commission On June 2, the Senate Finance Committee held (FERC) will hold a technical conference on a hearing entitled, “COVID-19 and Beyond: “Impacts of COVID-19 on the Energy Oversight of the FDA’s Foreign Drug Industry”. The technical conference is intended Manufacturing Inspection Process.” Topics to “to consider the ongoing, serious impacts that discussed in the hearing included: (1) Drug
Williams & Jensen, PLLC 1201 Pennsylvania Avenue, N.W. Suite 800 Washington, D.C. 20004 Telephone: (202) 659-8201 Fax: (202) 659-5249 www.williamsandjensen.com
Page 9 of 12 Williams & Jensen – Washington Update June 5, 2020
Shortages; (2) Sourcing of APIs/Raw Materials; has only started to analyze the differences (3) Domestic Manufacturing; (4) Unannounced between domestic and foreign inspections. Inspections; (5) FDA Oversight; (6) Emergency Chairman Grassley contended that FDA should Use Authorizations; (7) Importation Controls; instead reinstate and scale its Indian pilot (8) Fentanyl; (9) Nursing Homes; (10) Racial program, which allowed inspectors to make Disparities; (11) Strategic National Stockpile; unannounced visits to certain facilities. (12) World Health Organization; (13) Independent Drug Analysis; and (14) Multiple senators, including John Cornyn (R- Government Contracts. TX), Bill Cassidy (R-LA), and Sherrod Brown (D-OH), expressed concern about gaps in FDA Chairman Chuck Grassley (R-IA) began the reporting on the production of APIs. Senator hearing by imploring FDA to institute a more Cornyn strongly recommended that Congress rigorous inspection regime with respect to consider ways to redomicile pharmaceutical overseas pharmaceutical manufacturing. He production, to which FDA’s Deputy Director expressed particular concern about the lack of for Regulator Programs Douglas Throckmorton oversight on the production of active agreed and advocated for working to scale pharmaceutical ingredients (APIs). Ranking advanced manufacturing technologies. Member Ron Wyden (D-OR) echoed these Throckmorton explained that these sentiments and specifically advocated for technologies could significantly reduce strengthening domestic manufacturing capacity. production costs and allow U.S. manufactures to Wyden also criticized FDA for issuing an compete with foreign facilities which rely on Emergency Use Authorization (EUA) for cheaper labor. He added that evaluating hydroxychloroquine, arguing there is no additional quality measures in pharmaceuticals scientific evidence to support the drug’s use a could allow U.S. manufacturers to compete on treatment for COVID-19. the superior quality of their products. Throckmorton also acknowledged a concern Member questions predominantly focused on from Senator Brown regarding a gap in issues with the pharmaceutical supply chain and inspecting imported APIs, and he said Congress FDA’s process for conducting inspections of should work to close this loophole. overseas manufacturing facilities. There was bipartisan concern about the 12-week notice Another topic of focus was drug shortages, with that FDA routinely gives these facilities before senators and witnesses both drawing a link conducting in-person inspections. Judith between relaxed foreign oversight with product McMeekin, FDA’s Associate Commissioner for contaminations. David Light, Founder and Regulatory Affairs, explained that FDA issues CEO of Valisure, testified that his pharmacy these warnings in order to coordinate with rejects 10 percent of the medications it tests due facilities on acceptable times for inspections. to the presence of carcinogens. He expressed She suggested that without such coordinate, concern that industry has ignored the findings of FDA inspectors would be inadequately trained independent studies and continued to acquire for visits and might waste time visiting facilities and distribute dangerous drugs, but he that were not fully operational on the chosen expressed tepid optimism about the role of date for an unannounced inspection. She also FDA’s citizen petition process in driving noted that FDA does not issue significantly product recalls. Ranking Member Wyden more Official Action Indicated findings for expressed interest in an ongoing initiative overseas facilities, while recognizing that FDA through which the Biomedical Advanced
Williams & Jensen, PLLC 1201 Pennsylvania Avenue, N.W. Suite 800 Washington, D.C. 20004 Telephone: (202) 659-8201 Fax: (202) 659-5249 www.williamsandjensen.com
Page 10 of 12 Williams & Jensen – Washington Update June 5, 2020
Research and Development Authority In the letter, the committee leaders note (BARDA) is contracting CivicaRx to Medicaid providers are serving the most domestically manufacture the APIs and vulnerable and also often operate on the chemical compounds for COVID-19 drugs. thinnest margins. They request HHS provide information on the timeline for releasing funds Committee Leaders Question CARES Act to Medicaid providers; the level of funding Funding for Medicaid Providers expected for Medicaid providers; why HHS waited until May 1 to collect data from the states Key Points: on providers; and what other factors have prevented a timely release of funds. . This week leaders of the House Energy and Commerce Committee and Senate Finance Read the full letter here. Committee sent a letter to the Department of Health and Human Services seeking further Upcoming Hearings and Meetings details on the distribution of funds to Medicaid providers under the CARES Act. June 9 . The $175 billion provided in CARES Act and supplemental legislation to assist providers COVID-19: The Senate Homeland Security and as thus far been targeted mainly at Medicare Governmental Affairs Committee will hold a providers. hearing on “Evaluating the Federal Government’s Procurement and Distribution On June 3, both the Chairmen and Rankings Strategies in Response to the COVID-19 Members of the House Energy and Commerce Pandemic.” Committee and Senate Finance Committee sent a letter to Department of Health and Human June 11 Services (HHS) Secretary Alex Azar seeking further details on the timeline for HHS COVID-19: The Senate Aging Committee will distribution of CARES Act funding to Medicaid hold a hearing on “Combating Social Isolation Providers. The letter requests a response by June and Loneliness During the COVID-19 10. Pandemic.”
The letter notes Congress provided $175 billion For more information about healthcare issues you may in funding for health care providers to help them email or call Nicole Ruzinski Bertsch or George Olsen manage the financial toll of the COVID-19 at 202-659-8201. Thomas McGrath contributed to this pandemic. HHS has allocated $50 billion to section. Medicare providers and $4.9 billion for Medicare-enrolled skilled nursing facilities. It has also provided $12 billion to areas that have been heavily impacted by COVID-19 and $10 billion to rural providers. To date, HHS has provided no funds directed towards Medicaid providers nor offered any estimate of when that funding may be made available.
Williams & Jensen, PLLC 1201 Pennsylvania Avenue, N.W. Suite 800 Washington, D.C. 20004 Telephone: (202) 659-8201 Fax: (202) 659-5249 www.williamsandjensen.com
Page 11 of 12 Williams & Jensen – Washington Update June 5, 2020
TRADE structure before France would begin collecting taxes and the U.S. would impose tariffs. USTR Investigating Possible Tariffs In Response To Foreign Digital Services Taxes OECD said they hoped to conclude talks by the end of the year and establish an international Key Points: framework that allows countries to tax . On Tuesday, the Office of the U.S. Trade companies with business operations but no Representative (USTR) announced in the physical presence in tax jurisdictions. The Federal Register that it will start Section 301 framework is expected to supersede individual investigations into digital services taxes being digital services taxes. The EU has threatened to considered by U.S. trading partners. implement an EU-wide digital tax if ongoing . The European Union (EU) has threatened to talks at OECD fail to produce an international implement an EU-wide digital tax if ongoing agreement on how to tax digital services. talks at the Organization for Economic Cooperation and Development (OECD) fail to USMCA Rules of Origin Released, produce an international agreement on how to Including Those Applicable to Autos tax digital services. Key Points: On Tuesday, the Office of the U.S. Trade . The U.S., Mexico, and Canada have released Representative (USTR) announced in a Federal the uniform regulations regarding the United Register notice that it will start Section 301 States–Mexico–Canada Agreement’s investigations into digital services taxes being (USMCA) rules of origin. considered by U.S. trading partners. USTR said . The USMCA is slated for a July 1 entry-into- it was targeting Austria, Brazil, the Czech force. Republic, the European Union (EU), India, Indonesia, Italy, Spain, Turkey, and Britain in its The U.S., Mexico, and Canada have released the investigations. The investigations will determine uniform regulations regarding the United whether digital services taxes are discriminating States–Mexico–Canada Agreement’s (USMCA) against American technology companies like rules of origin. One of the main changes in the Apple, Google, and Amazon. USTR will USMCA is enhanced content requirements for conduct the probes under Section 301 of the automobiles for beneficial trade treatment, and 1974 Trade Act, which gives it authority to these rules offer guidance on exactly how those investigate and respond to a country’s action rules will be applied and can be met. The that may be unfair or discriminatory and uniform regulations will now go through a legal negatively affect U.S. commerce. review and be translated to Spanish and French.
Last year, USTR concluded an investigation into Approval of the rules of origin is another step France’s digital services tax and determined that toward the July 1 USMCA entry-into-force date. it discriminated against U.S. businesses. As a result, USTR said it would consider imposing For more information about trade issues you may email taxes on $2.4 billion worth of French goods. or call Christopher Hatcher at 202-659-8201. Ryan Ultimately, the two parties agreed to give the Sigmon contributed to this section. Organization for Economic Cooperation and Development (OECD) until the end 2020 to This Week in Congress was written by Alex Barcham. conclude talks on a new international tax
Williams & Jensen, PLLC 1201 Pennsylvania Avenue, N.W. Suite 800 Washington, D.C. 20004 Telephone: (202) 659-8201 Fax: (202) 659-5249 www.williamsandjensen.com
Page 12 of 12