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Jan 30, 2020

Emerging Technologies Washington Update

This Week: House Democrats’ infrastructure principles focus on drones, other new entrants to the airspace; DHS report suggests e-commerce platforms should be more liable for counterfeit goods; AB 5 legal challenges continue in California.

Week in Review

The Senate impeachment trial of President Trump continued this week, with the House managers concluding their argument on Friday. The President’s Counsel presented their defense this week. The duration of the trial remains to be determined as senators consider whether to call witnesses, notably former National Security Advisor John Bolton.

On the other side of the Capitol, House Energy and Commerce Committee Chairman Frank Pallone (D-NJ) and Ranking Member Greg Walden (R-OR) sent a letter to the Government Accountability Office (GAO) last Friday requesting a review of the NTIA’s federal spectrum management processes. Citing what they see as a broken management system, Pallone and Walden asked GAO to study six specific issues ranging from improving coordination between agencies that share spectrum bands to increasing the efficiency of frequency allocation dispute resolutions.

Rep. Jan Schakowsky (D-IL), who chairs the House Consumer Protection Subcommittee, told reporters this week that she is considering introducing legislation to amend Section 230 of the Communications Decency Act. She said her bill would not make a “massive change” to the liability protection, but would reform certain aspects. Rep. Tulsi Gabbard (D-HI) is also expected to soon introduce legislation to repeal Section 230 in its entirety, while Senate Judiciary Committee Chairman Lindsey Graham (R-SC) and Senator Richard Blumenthal (D-CT) have discussed Section 230 reform legislation focused on child exploitation.

House Judiciary Committee Ranking Member Doug Collins (R-GA) launched a primary challenge against Senator Kelly Loeffler (R-GA) this week. Collins is expected to step down at the Committee’s top Republican amid its ongoing investigation into online platforms and market power. House Oversight and Reform Committee Ranking Member Jim Jordan (R-OH) is seen as a potential replacement for Collins.

Lawmakers on both sides of the aisle criticized the UK’s decision this week to allow Huawei to build limited parts of its 5G networks with several Republican members, including Senator Ben Sasse (R-NE) and Reps. Mike Gallagher (R-WI), Jim Banks (R-IN), and Liz Cheney (R-WY) calling into question the US-UK “special relationship.” A key concern among critics is that the UK’s decision might influence other European markets, such as Germany, to follow its lead.

On Monday, President Trump hosted Israeli Prime Minister Benjamin Netanyahu at the White House ahead of unveiling of his Israeli-Palestinian peace proposal on Tuesday. Elsewhere, the President swore in Jovita Carranza as the new administrator of the Small Business Administration (SBA) on Monday and on Wednesday, signed the US-Mexico-Canada (USMCA) trade agreement into law. For the tech community, the agreement shows promise in its attention to global access in digital trade and a free flow of data across borders. Another win for industry is the inclusion of protections extending the United States’ liability shield for online content to Mexico and Canada. Canada still needs to ratify the agreement, which is expected to wrap up by April, and all three countries need to meet their obligations outlined in the deal before it can enter into force.

With a goal of keeping everyone, including France and the United States, at the negotiating table, global digital tax talks continued yesterday and today between about 135 countries at the Organization for Economic Cooperation and Development (OECD). Digital tax discussions began in earnest among the G-20’s leaders in 2013 and there is an expectation that by the end of 2020, the OECD will build support for major reforms. Some countries, like Austria and Italy, which have already passed their own digital tax rules targeting tech firms, have said they could drop national efforts if the countries can collectively can come to a compromise within the framework of the OECD. Although France and the U.S. brokered a temporary truce on digital tax last week in Davos, the future of how these discussions play out is certain to be contentious.

On Thursday, the Federal Communications Commission adopted rules for its Rural Digital Opportunity Fund (RDOF), which is a reverse-auction mechanism that will provide up to $20.4 billion over 10 years in subsidies for broadband deployment in remote parts of the country. The RDOF auction will prioritize networks with higher speeds, greater usage allowances, and lower latency.  FCC Chairman Ajit Pai indicated a desire for the auction to begin later in 2020.

Looking Ahead

The Senate schedule remains in flux pursuant to the impeachment trial. The House is expected to take up a supplemental appropriations bill next week to provide additional funding to Puerto Rico in the aftermath of recent natural disasters. Several committees are also expected to hold hearings on the coronavirus.

President Trump will deliver his State of the Union address next Tuesday evening and plans to release his FY10 budget proposal on February 10. He is expected to visit India for the first time next month to mark a new US-India trade agreement currently under negotiations.

House Democrats’ Infrastructure Principles Focus on Drones, Other New Entrants to the Airspace

House Democratic leadership rolled out a framework for infrastructure investment this week that includes provisions to advance small unmanned aircraft systems (UAS) deployment, as well as to incorporate larger drones and electric vertical takeoff and landing (eVTOL) aircraft into the airspace. Specifically, the proposal envisions advancing small drone deployment to support things like construction of transportation projects, environmental impact assessments, and infrastructure restoration after natural disasters. “This will lead to safer, more efficient operations, reduce project costs, and shorten project timelines,” the framework says.

The proposal also supports planning to integrate large drones and eVTOL aircraft carrying both passengers and cargo into the airspace, as well as to utilize these types of aircraft to accelerate project construction by augmenting critical infrastructure inspection and data collection. It adds that eVTOL aircraft could reduce carbon pollution, congestion, and demand on existing ground infrastructure.

House Transportation and Infrastructure Ranking Member Sam Graves (R-MO) criticized the partisan approach to the proposal, but said in a statement that he hopes to work on infrastructure legislation in a bipartisan manner. Graves also outlined several high-level principles, including incorporating innovative developments in technology to increase efficiency and safety.

DHS Report Suggests E-Commerce Platforms Should be More Liable for Counterfeit Goods

On Friday, January 24, the Department of Homeland Security (DHS) released its report on Combating Trafficking in Counterfeit and Pirated Goods pursuant to President Trump’s April 3, 2019 Memorandum on Combating Trafficking in Counterfeit and Pirated Goods. DHS outlines 11 recommended actions by the U.S. government, as well as 10 best practices for e-commerce platforms and other third parties to combat trafficking in counterfeit and pirated goods. 

Recommended government actions include ensuring entities with financial interests in imports bear responsibility; harsher penalties and injunctive measures for violated imported products and against bad actors, launching a national consumer awareness campaign, and the establishment of a modernized E-Commerce enforcement framework.

The 10 recommended best practices call for a more active role by platforms and third parties in the monitoring, detecting and vetting process through measures such as “rapid notice and takedown procedures,” “limitations on high risk products,” and “pre-sale identification of third party sellers.”

The report cites Organization for Economic Cooperation and Development (OECD) data on counterfeits traded internationally, especially from China. Of note, the China-U.S. trade deal signed earlier this month requires China to strengthen criminal and civil procedures to combat online infringement, pirated, and counterfeit goods.

AB 5 Legal Challenges Continue in California

In a lawsuit filed by the California Trucking Association, U.S. District Court Judge Roger Benitez granted a preliminary injunction on January 16, prohibiting California from enforcing AB 5 as it pertains to drivers for motor carriers. Judge Benitez initially granted a temporary restraining order on December 31, just hours before the law went into effect on January 1, converting thousands of workers from independent contractors to employees.

In granting the preliminary injunction, Judge Benitez found that AB 5 is likely preempted by the federal law that prohibits state and local governments from regulating the price, route, or service of motor carriers. That federal preemption provision was enacted as part of the Federal Aviation Administration Authorization Act of 1994. Yesterday, the California Attorney General appealed this decision to the U.S. Court of Appeals for the 9th Circuit. A hearing date has not been scheduled.


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