Emerging Technologies Washington Update

This week: Coronavirus response; countries move ahead with digital service taxes amid stalemate with U.S.; all five FCC Commissioners appear before Senate Commerce Committee; House Energy and Commerce hearing examines spread of disinformation online.

Coronavirus Response

The Latest

A number of House and Senate committees are continuing to hold hearings examining various issues related to COVID-19, including its impact on certain sectors and communities and the federal government response. This week, committees looked at issues ranging from how the pandemic has exposed and widened inequities in education, health, and the workforce and wealth inequity to the child care crisis, healthy air travel, VA telehealth, preparing for the next pandemic, China’s role in the outbreak, the Trump Administration’s response, the Strategic National Stockpile, the impact on mineral supply chains, the Defense Production Act, capital markets and emergency lending, the nursing home crisis, the impact on federal courts, and the frontline federal response.

This week, the Treasury Department and Small Business Administration (SBA) issued a Paycheck Protection Program (PPP) interim final rule on revisions to the loan forgiveness interim final rule and the SBA loan review procedures interim final rule, as well as another interim final rule making additional eligibility revisions to the first interim final rule. The SBA also released an updated PPP Round 2 report and revised the borrower application form and the lender application form.

Elsewhere, the President and federal agencies continue to take additional steps to respond to the outbreak, including:

• The President signed a Proclamation Suspending Entry of Aliens Who Present a Risk to the US Labor Market Following the Coronavirus Outbreak. The Proclamation extends the pause on new immigrant visas through the end of the year and places an additional pause on several nonimmigrant visa programs (including H-1B, H-2B, H-4, L, and J).
• The Vice President met with governors and the White House Coronavirus Task Force to discuss local, state, and federal COVID-19 response and recovery efforts and America’s reopening.
• The Federal Reserve and other federal and state bank and credit union regulators issued examiner guidance to promote consistency and flexibility in the supervision and examination of financial institutions affected by the COVID-19 pandemic.
• The Department of Labor (DOL) announced a new online tool to help workers determine if they qualify for paid sick leave or extended family and medical leave to cover time away from work for reasons related to coronavirus.
• The DOL Unemployment Insurance Weekly Claims Report found that for the week ending June 20, the advance figure for seasonally adjusted initial claims was approximately 1.48 million, a decrease of 60,000 from the previous week’s revised level.
• The Department of Justice (DOJ) filed a statement of interest challenging the constitutionality of Hawaii Governor Ige’s order requiring a 14-day self-quarantine for individuals entering the state.

A complete overview of both congressional and Administrative response efforts is available here and updated daily.

What’s Next

Senate Democrats will move to bring a number of COVID relief bills to the floor next week, according to Minority Leader Schumer (D-NY), but Republicans are expected to object. Majority Leader McConnell (R-KY) and other leaders, including Senator Cornyn (R-TX) continue to work on a Phase 4 package that is expected to focus on liability protections as entities continue to reopen.

Tomorrow, a House Financial Services subcommittee will hold a hearing on challenges for insurers and policyholders amid a pandemic and the House Oversight and Reform Select Subcommittee on the Coronavirus Crisis will hear from the Government Accountability Office on its recommendations to improve the federal response.

Next week, House and Senate committees will look at COVID-related issues including safely getting back to work and school, the impact in the US territories, the 2020 tax filing season, the response in native communities, and the SBA Economic Injury Disaster Loan program. Treasury Secretary Mnuchin and Federal Reserve Chairman Powell will also testify before a House Financial Services Committee pandemic response oversight hearing.

Relevant Resources

• Federal Response Timeline
• New Congressional Research Service (CRS) Reports:
  • Capital Markets, COVID-19, and Federal Government Emergency Facilities
  • Business Use of Tax and Other Provisions in the CARES Act and Other COVID-19 Legislation: Evidence from Surveys
  • Executive Order 13927 on Economic Recovery from the COVID-19 Emergency and the Endangered Species Act
• Centers for Disease Control and Prevention (CDC)
• Johns Hopkins University Coronavirus Live Map
• KFF: State Data and Policy Actions to Address Coronavirus

In Other News

Countries Move Ahead with Digital Service Taxes Amid Stalemate with U.S.

Last week, the Trump Administration confirmed the United States’ withdrawal from Organization for Economic Cooperation and Development (OECD) negotiations to create a framework for taxing global digital services at a rate of at least 2 percent. Treasury Secretary Steven Mnuchin wrote in a letter to European finance commissioners that discussions had reached an “impasse” and that the U.S. remains firmly opposed to the digital services taxes (DSTs). In congressional hearings last week, however, U.S. Trade Representative Robert Lighthizer indicated the United States’ departure from the talks did not signify “the end of a process to work out a solution.” The Treasury Department public affairs office similarly described the move as a “pause,” rather than a firm “exit.”

In response, the United Kingdom and other European countries have indicated they plan to press forward on seeking a solution to taxing digital technology giants. European Commission Executive Vice President Margrethe Vestager condemned the U.S. decision to step away from negotiations and expressed concern that growing fissures in the EU-U.S. relationship chipped away at common values and made them vulnerable to division by China and others with competing visions of the future. In hearings in both the House and Senate, USTR Lighthizer warned that the U.S. could move forward with retaliatory tariffs against European countries should they move forward on the digital services taxes unilaterally.

The United States is currently conducting investigations into existing or proposed digital services taxes under Section 301 of the 1974 Trade Act. A Section 301 investigation gives the USTR broad authority to investigate and respond to a foreign country’s action which may be unfair or discriminatory and negatively affect U.S. commerce. The ten countries currently under investigation are Austria, India, Indonesia, Italy and Turkey, Brazil, the Czech Republic, Spain, the U.K., and the European Union. After the public comment period concludes July 15, the next step is for USTR to make a determination on discriminatory practices. It has up to one year to do so.

All Five FCC Commissioners Appear Before Senate Commerce Committee

On Wednesday, the Senate Commerce Committee held a hearing on oversight of the Federal Communications Commission (FCC). Senators probed the FCC Commissioners on the tradeoff between speed and accuracy in the implementation of the Rural Digital Opportunity Fund (RDOF), the need to expand broadband service to low-income individuals impacted by the COVID-19 pandemic, and disputes over Section 230 of the Communications Decency Act. In relation to Section 230, all five Commissioners stated that the law is in need of reform. Republicans criticized social media companies’ perceived anti-conservative bias and Democrats derided President Trump’s recent Executive Order targeting the controversial law.

The Committee also examined the importance of giving internet access to individuals in rural areas and debated how the FCC can provide technology to students participating in distance learning. Due to disputes over whether the definition of “classroom” includes the digital classroom, Commissioners disagreed on whether the FCC can use funds to provide technology to students who are distance learning. Finally, the Committee examined issues related to America’s 5G infrastructure and stressed the importance of streamlining regulatory processes to incentivize investment in internet infrastructure.

House Energy and Commerce Hearing Examines Spread of Disinformation Online

The House Energy and Commerce Committee Subcommittee on Communications and Technology and Subcommittee on Consumer Protection held a joint hearing on Wednesday entitled, “A Country in Crisis: How Disinformation Online is Dividing the Nation.” Representatives questioned witnesses on the spread of disinformation and harmful material on social media, as well as the possibility of amending Section 230 of the Communications Decency Act.

In his opening statement, Subcommittee on Communications and Technology Chairman Doyle (D-PA) spoke on the current divisions in the United States that are exacerbated by social media and mentioned the possibility of amending or even repealing Section 230. Subcommittee Ranking Member Latta (R-OH) said that he does not believe that repealing Section 230 is prudent, but did acknowledge that some platforms are taking advantage of it to avoid holding themselves accountable, and called for more oversight. Other Committee members, both Republican and Democrat, asserted that social media companies benefit from the spread of disinformation online and said that current law disincentivises content curation. Looking at areas to reform the law, panelists suggested changing platforms’ business models, altering specific sections of the law, and creating better incentives for content curation.

In addition to discussions around Section 230, members also questioned witnesses on topics such as digital advertising, misinformation targeted towards communities of color, and the business practices of social media companies.