Jul 23, 2020
Emerging Technologies Washington Update
This week: Coronavirus response; G20 finance officials express renewed hope for digital services tax deal this year; App Coalition hosts Section 230 Virtual Summit; FCC kicks off first 5G mid-band spectrum auction.
With the Senate back in session this week, Republican leaders were expected to unveil their Phase 4 coronavirus relief proposal, but Senate Majority Leader McConnell (R-KY) announced this evening that while Republicans have reached “an agreement in principle with the Administration,” he will not bring legislation to the floor until next week. Treasury Secretary Steven Mnuchin and White House Chief of Staff Mark Meadows met with Speaker Pelosi (D-CA) and Senate Minority Leader Schumer (D-NY) yesterday, marking the beginning of what are expected to be contentious negotiations. However, the White House and congressional Republicans and Democrats are united in their goal to pass a Phase 4 bill before Congress leaves for the August recess.
Today, the House began consideration of H.R. 7608, a “minibus” FY21 appropriations package consisting of the State and Foreign Operations, Military Construction and Veterans Affairs, Agriculture and Interior and Environment spending bills. Floor action for the second minibus is scheduled for next week, though leaders are under pressure to pull the Homeland Security bill from the package. This week, the House also passed the $750.5 billion National Defense Authorization Act (H.R. 6395) in a veto-proof 295-125 vote. Today, the Senate approved its version of the National Defense Authorization Act for Fiscal Year 2021 in an 86-14 vote. The President has threatened to veto it if it includes directives to rename military installations named after people associated with the Confederacy, among other provisions.
Both chambers continue to hold hearings examining various COVID-19-related issues, including its impact on certain sectors and communities and the federal government response. This week, committees looked at issues ranging from protecting Americans from COVID-19 scams, efforts to develop a COVID-19 vaccine, a look at racial health disparities, seniors and COVID-19, getting veterans back to work after COVID-19, the State Department’s COVID-19 response, examining the national response to the worsening pandemic:, capital access for small minority businesses, providing for economic recovery from COVID-19, how to safely reopen public schools, and FEMA’s preparedness and response efforts during the pandemic.
Also this week, the Treasury Department published Paycheck Protection Program (PPP) lender application forms for 1) federally insured depository institutions, federally insured credit unions, and farm credit system institutions and 2) non-bank and non-insured depository institution lenders and the Small Business Administration (SBA) updated its summary of Paycheck Protection Program (PPP) Round 2 data.
With text now not expected until Monday at the earliest, there will be a race to find consensus on a Phase 4 COVID-19 relief package that can pass both chambers - and that the President will sign - before Congress aims to leave Washington the first week of August for recess.
In the meantime, Senate and House committees have scheduled a number of COVID-19-related hearings next week on topics including oversight of COVID-19 financial relief packages, a review of private sector telework policies, protecting the reliability of the US medical supply chain, reducing uncertainty and restoring confidence, and kick starting entrepreneurship and main street economic recovery.
Elsewhere, while the House is moving forward with FY21 appropriations, the Senate has not yet begun the process, all but guaranteeing Congress will have just a handful of legislative days in September to avert a government shutdown at the end of the fiscal year.
In Other News
G20 Finance Officials Express Hope for Digital Services Tax Deal this Year
In a virtual meeting held on July 18, finance officials from the Group of 20 committed to “overcome remaining differences” and “reach a global and consensus-based” solution by the end of the year on how to tax technology giants like Google and Facebook. According to a statement issued after the meeting, the Group expects to have blueprints for the digital services tax by the time the Organization for Economic Cooperation and Development (OECD) next convenes in October.
In a June letter to European finance ministers, U.S. Treasury Secretary Steven Mnuchin wrote that OECD discussions on creating a framework for taxing global digital services had reached an “impasse” and that the United States would therefore be hitting the pause button on negotiations. While some countries like France, Spain, Italy, the U.K., Austria, and the Czech Republic have either moved ahead with or considered unilateral action, many are waiting to adopt the OECD’s global tax regime.
France enacted a 3% digital services tax in July 2019 and is set to begin collection in 2021. On July 16, 2020 the Office of the United States Trade Representative (USTR) published a notice in the Federal Register announcing its determination to take retaliatory action in the form of additional duties of 25% on products of France. The tariffs will take effect on January 6, 2021 unless a compromise is reached before then.
App Coalition Hosts Section 230 Virtual Summit
Yesterday, the App Coalition, a new coalition promoting the global app economy, held its first virtual summit, which focused on the role of Section 230 of the Communications Decency Act in the app and internet economy. The event featured remarks by Senator Ron Wyden (D-OR), one of the original authors of Section 230, and Senator Brian Schatz (D-HI), whose Platform Accountability and Consumer Transparency Act (“PACT Act”) will be the subject of a Senate Commerce subcommittee hearing next week. Following their remarks, leading Section 230 experts Eric Goldman, Daphne Keller, and Lisa Dunlap participated in a panel discussion.
In his opening remarks, Senator Wyden stated that Section 230 “is as relevant today as it was in 1996.” He added that reforms to the law must “protect free speech and allow platforms to continue to moderate content without the risk of liability.” Senator Schatz spoke in support of the PACT Act, noting that “like any law that Congress enacts, revisions and updates over time are important to address changes in circumstances.” He added that the bill “is not intended to be punitive...but address shortcomings in the law.”
During the discussion, panelists agreed the Eliminating Abusive and Rampant Neglect of Interactive Technologies Act of 2020 (“EARN IT Act”), is a fundamentally flawed proposal. They lauded efforts by Senator Schatz, but expressed reservations regarding the potential unintended consequences of the PACT Act. Finally, panelists discussed content moderation in app stores, arguing that absent Section 230 protection, app stores would be incentivized to adopt either overly prescriptive moderation practices or abandon all moderation.
On July 28, the Senate Commerce, Science, and Transportation Subcommittee on Communications, Technology, Innovation, and the Internet will hold a hearing entitled, “The PACT Act and Section 230: The Impact of the Law that Helped Create the Internet and an Examination of Proposed Reforms for Today’s Online World.” The hearing will examine the roles of Section 230 in promoting and disseminating online speech and the history and evolution of Section 230’s protections for online platforms.
FCC Kicks off First 5G Mid-Band Spectrum Auction
After years of planning, today the Federal Communications Commission (FCC) began its first ever auction of licenses for prime, mid-band spectrum suitable for 5G. The auction will offer county-based Priority Access Licenses (PAL) in the 3550-3650 MHz band, with the purpose of encouraging the rapid deployment of next-generation wireless networks in the band and freeing up spectrum for the commercial marketplace. The FCC identified 271 applicants qualified to bid in the auction.
The auction will offer seven Priority Access Licenses (PALs) in each county-based license area, for a total of 22,631 PALs nationwide—the largest number of flexible-use spectrum licenses ever made available for bidding in a single auction. Each PAL will consist of a 10-megahertz unpaired channel in the 3.55-3.65 GHz band. The Commission adopted procedures for the auction in a public notice adopted earlier this year.