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Coronavirus: The Hill and the Headlines – COVID-19 D.C. Update – June 4, 2020

Your guide to the latest Hill developments, news narratives, and media headlines provided by the Hogan Lovells Government Relations and Public Affairs team.

In Washington:

  • Senate Republicans continue to disagree over unemployment benefits amid a recession.  Forty million Americans are unemployed and the $600 additional weekly benefit expires at the end of next month.  Some argue that Congress can’t just cut off that relief money cold turkey while others say that the extra money simply makes it less enticing for Americans to go back to work.  Sen. Pat Toomey (R-PA) said “it might” need to go back to the normal state unemployment benefits, and Sen. Rand Paul (R-KY) said the additional funds were a “terrible idea [that] never should have passed in the first place.”  Senate Majority Whip John Thune (R-SD) said, “the unemployment rate is still going to be pretty high, maybe for some time. Even as the economy starts to open up and expand again, it will take a while for some of the jobs to come back. So I suspect the program will be needed for a while. We’ll have to come up [with] some sort of solution.”  Senate Republicans are discussing a proposal from Sen. Rob Portman (R-OH) to provide workers extra money when they go back to work or a gradual decrease of the $600 weekly benefit over time.  Others like Sens. Josh Hawley (R-MO.) and Cory Gardner (R-CO) have proposed subsidizing payrolls as a way of decreasing unemployment but keeping workers’ salaries.  The Senate will hold a hearing next week on unemployment benefits.
  • Yesterday, the Senate passed the Paycheck Protection Program Flexibility Act (H.R. 7010) which eases restrictions sending the first major overhaul of the program to President Donald Trump for his signature.  Senators gave unanimous consent (UC) for the legislation hours after Sen. Ron Johnson (R-WI) first raised objections to an attempt from Senate Minority Leader Chuck Schumer (D-NY) to swiftly pass the measure.  Johnson objected to language that a drafting error could be misinterpreted about the length of the loan application period.  Johnson agreed to a UC after Senate Majority Leader Mitch McConnell and the leaders of the House and Senate Small Business Committees signed a “letter of intent” clarifying that the application was not intended to be extended to Dec. 31, 2020. The bill also relaxes rules giving borrowers more time to spend the money and use it on a broader set of expenses while still qualifying to have the loans forgiven, a key feature offered in exchange for employers maintaining payrolls.
  • Projections from the Center for Budget and Policy Priorities have found state revenue shortfalls combined with new costs from the coronavirus have created a need in excess of $300 billion for schools.  Over 100 House Democrats signed a letter to congressional leaders this week asking for at least $305 billion in additional funds for K-12 public schools in new coronavirus relief legislation.  The HEROES Act (H.R. 6800) passed by the House last month, carried $58 billion for public schools.
  • The White House is working with Johnson & Johnson, Merck & Co., Pfizer Inc., the Cambridge, Massachusetts-based biotech Moderna Inc., and the University of Oxford in collaboration with AstraZeneca Plc, as well as two other firms, as part of its “Warp Speed” coronavirus vaccine program, including a bet on a rapid-but-unproven genetic technology.  Drug companies and university researchers are investigating more than 130 experimental inoculations, according to the World Health Organization, though fewer than a dozen candidates are currently being assessed in human trials.
  • Brett Giroir, a top official at the Department of Health and Human Services who has overseen the administration’s efforts to ramp up testing, said yesterday that the country did about 12 million tests last month. They almost reached their goal of doing about 12.9 million tests in May.  Around 70 U.S. coronavirus testing sites were closed temporarily “due to the threats of violence,” Giroir said.
  • CDC Director Robert Redfield apologized for the “inadequate” response in reporting racial disparities in coronavirus patients when testifying before the House Appropriations Committee today.  Congress required the agency to publish racial data in the last COVID Relief package due to the lack of information hindering the public health directives in communities of color.  Members berated the administration and the four-page report released last week saying it was insufficient and not fulfilling the request from Congress.  The CDC blamed poor reporting on some states not reporting such data.

In the News:

  • U.S. trade in goods and services plunged in April to the lowest level in almost a decade.  Exports declined from the prior month by 20.5 percent, the biggest drop since 1992, to $151.3 billion.  Imports decreased 13.7 percent, also the most since 1992, to $200.7 billion. Combined, the value of U.S. exports and imports decreased to $352 billion, the lowest since May 2010, Commerce Department data released Thursday showed.
  • Stocks slipped Thursday as a new batch of weekly jobless claims briefly interrupted a steady rally for Wall Street.  The dip came an hour after the Department of Labor reported that 1.9 million Americans filed new claims for jobless benefits in the final week of May, lower than previous weeks but higher than economists had expected.  More than a quarter of the U.S. labor force, 42.6 million people have claimed unemployment benefits since the pandemic began.
  • The IRS is facing a handful of obstacles in its efforts to deliver the final batch of coronavirus relief checks.  Tax experts said the IRS faces a tough road ahead in getting payments to everyone who hasn’t received theirs yet, especially for low-income individuals who don’t make enough money to have to file tax returns and also don’t receive certain federal benefits.
  • The World Health Organization will restart its trial of hydroxychloroquine after getting the all-clear from a safety review. A safety monitoring committee looked at death rates in both the WHO’s Solidarity trial and the U.K.’s Recovery trial, which is also studying hydroxychloroquine, to see if they were different among patients taking that drug. The safety committee “recommended that there are no reasons to modify the trial protocol.”
  • More than half, or 56 percent, of college students, say they can no longer afford their tuition tab, according to a survey by OneClass, which polled more than 10,000 current freshmen, sophomores, and juniors from 200-plus colleges and universities across the country.
  • Florida Gov. Ron DeSantis (R) made his pitch for the Republican National Convention to move it’s event to Florida this summer, saying it would be a “mistake” to scrap the physical staging of the event over concerns regarding the coronavirus.  President Trump announced Tuesday that the GOP would move the event out of North Carolina in an attempt to accommodate a fuller, in-person conference.  North Carolina Gov. Roy Cooper (D) had rejected plans for a full convention, saying only a smaller event that followed health protocols due to COVID-10 would be possible.

Coronavirus: The Hill and the Headlines – COVID-19 D.C. Update – June 3, 2020

Your guide to the latest Hill developments, news narratives, and media headlines provided by the Hogan Lovells Government Relations and Public Affairs team.

In Washington

  • Senate lawmakers are now saying they won’t pass another coronavirus relief package before the August recess. Previously, members said they were aiming to have something finalized for the 4 July recess but the Senate hasn’t even started putting together a proposal. Republican lawmakers are skeptical about passing another round of US$1,200 rebate checks and are focused on reforming the Small Business Administration’s Paycheck Protection Program (PPP), providing more money for state and local governments, boosting benefits for Social Security recipients and fixing other elements of COVID-19 relief bills passed earlier this year.
  • Senate Republicans have been divided on how to move forward procedurally with the House-passed Paycheck Protection Program Flexibility Act (H.R. 7010) while also making some legislative changes.  Rather than fast-tracking the measure, Senators are expected to have a roll call vote today after modifying the bill’s language. Doing so will require the House to return next week to approve the Senate changes. Currently, the House is not scheduled to be in session until the end of June. The measure would give business owners more time and flexibility to use the loans they received under the PPP program.
  • According to Bloomberg, Congress required employers to offer two weeks of paid sick leave and 10 weeks of partially paid Family and Medical Leave Act in the Families First Coronavirus Response Act (Public Law 116-127). But public colleges weren’t eligible for a refundable tax credit included in the law. Colleges face a huge unfunded mandate unless Congress makes them eligible for a tax credit to cover the cost of the benefit.
  • Transportation Secretary Elaine Chao told POLITICO during a live video interview Wednesday that she wants to wait until most of the CARES Act money is distributed before giving more money to airlines. She said, “the need for additional cash will not come until September, October.” On the possibility of a federal mandate for airline passengers to wear face masks, she said management and labor mutually agreed passengers and flight crews should wear face masks but added that “I think it is better to be resolved between parties of mutual concerns because when the federal government gets involved, we tend to be much more heavy-handed.”

In the News

  • On Tuesday President Donald Trump tweeted that the GOP will be “forced” to find a new state to host their convention as North Carolina Gov. Roy Cooper (D) stands firm in his call for party leaders to provide him with plans for a scaled-down event amid coronavirus concerns.
  • U.S. stocks surged for a fourth straight day on Wednesday as protests and riots that gripped America over the past week showed signs of slowing and investors received better-than-expected news on the jobs front. The Dow Jones Industrial Average climbed 400 points, or 1.55 percent, while the S&P 500 and the Nasdaq Composite gained 1.17 percent and 0.7 percent.
  • Today, Italy opens its borders to all European Union tourists. Other European countries are being less than welcoming in return, effectively blacklisting states badly affected by the coronavirus pandemic, including Italy. A patchwork of agreements for the reinstatement of post-pandemic cross-border travel this summer is undermining the EU’s attempts to create an atmosphere of unity and solidarity.
  • Hospitals and other health-care providers will use a US$250 million grant from the CARES Act to provide workforce training, expand telemedicine offerings, and purchase protective gear and equipment to help fight COVID-19.
  • The Trump administration is banning Chinese passenger airlines from flying to the U.S. starting later this month, a move that comes as Beijing bans U.S. airlines from resuming flights there. The order takes effect on 16 June, but it could be moved up. It comes as Delta Air Lines and United Airlines have been pushing to return to China after pausing service because of the coronavirus pandemic earlier this year.
  • Companies cut another 2.76 million workers in May, a much smaller drop than feared, according to an ADP report. Job losses were especially deep in large businesses, which reported a decline of more than 1.6 million. Manufacturing took one of the biggest hits as the sector lost 719,000 workers. The reported total was well below the 8.75 million estimates from economists and could be a sign that the worst of the coronavirus-related layoffs are over.

Coronavirus: The Hill and the Headlines – COVID-19 D.C. Update – June 2, 2020

Your guide to the latest Hill developments, news narratives, and media headlines provided by the Hogan Lovells Government Relations and Public Affairs team.

In Washington:

  • The Senate is expected to pass the bipartisan fix, The Paycheck Protection Program Flexibility Act  (H.R. 7010), to provide more flexibility to the small business loan program soon.  Senate Majority Leader Mitch McConnell (R-KY) said “I hope and anticipate the Senate will soon take up and pass legislation that just passed the House by an overwhelming vote of 417-1.”  The bill expands the time for borrowers to use loans and adjusts the payroll ratio requirement from 75 percent to 60 percent.
  • The House Energy and Commerce Oversight and Investigations held a virtual hearing today featuring three governors including Colorado Gov. Jared Polis (D), Michigan Gov. Gretchen Whitmer (D) and Arkansas Gov. Asa Hutchinson (R) to discuss their local coronavirus testing strategies and what’s still needed from the federal government.
  • The Senate Banking Committee held a hearing Tuesday previewing the coming debate on the economic effects that COVID-19 has had on the U.S. and the implementation of Federal Reserve lending facilities and the Main Street Lending Program established by the CARES Act. The hearing focused also on state and local governments’ recovery, with Democrats and some Republicans called on bailing out those whose budgets have been devastated by coronavirus crisis. Ranking Member Bob Menendez (D-NJ) and Bill Cassidy (R-LA) are floating draft legislation that would provide state and local governments $500 billion.
  • The Small Business Administration (SBA) released a report on Monday of the Paycheck Protection Program (PPP) totals through May 30 with loan approvals by the industry for the first time since the first round of funding ended on April 16. That report showed construction, professional, scientific and technical services, manufacturing, and health care as the top-funded industries.  Small businesses in the U.S. health-care and social-assistance industry have emerged as the top recipients of federal coronavirus relief loans.
  • The Senate will likely confirm, along party lines, Brian Miller as a special inspector general for pandemic recovery today.  He will be charged with overseeing billions of dollars in aid to American businesses grappling with the economic fallout of coronavirus.  Democrats are concerned that President Trump’s attorney won’t sufficiently challenge the administration when necessary.  Nevertheless, Mr. Miller has some bipartisan support in Senator Doug Jones (D-AL) who said as an inspector general under both Presidents Bush and Obama “demonstrated his independence” and that “his experience made him qualified.”
  • Senate Finance Chairman Chuck Grassley (R-IA) said he intends to push for a vote this year on S.2543, the “Prescription Drug Pricing Reduction Act of 2019” would limit price hikes of drugs.  He cited a need to prepare for future pandemics and to keep “bad actors” in the drug industry “from hiking prices astronomically” in the next health crisis.  If the measure fails to pass, Grassley said he’s worried drugmakers will charge “whatever they want to” for COVID-19 drugs. “It will be the Wild West.”
  • Sens. Maria Cantwell (D-WA), Amy Klobuchar (D-MN), and Bill Cassidy (R-LA) introduced a bipartisan bill aimed at protecting consumers’ privacy on contact-tracing smartphone apps.  The “Exposure Notification Privacy Act” would prohibit any automated exposure notification service that is not operated by or used in collaboration with a public health authority. It would also require consumers to give consent and be allowed to request data deletion at any time.
  • The Centers for Medicare and Medicaid Services said in a news release there were 60,000 confirmed COVID-19 cases in nursing homes and 26,000 of these residents died because of the virus.  This is the first nationwide tally of a population especially hard hit by the illness.  The agency also outlined plans to bring enforcement actions against homes that don’t take sufficient steps to control and prevent infections.
  • A court hearing has been scheduled for July 24, for the House Republican lawsuit challenging Speaker Nancy Pelosi’s (D-CA) new proxy voting system.  Democrats have until June 19 to file their response to the lawsuit.  The case is being overseen by Judge Rudy Contreras.

In the News:

  • Economic activity in the second quarter has been cut by more than half, according to a tracker employed by the Atlanta Federal Reserve.  The GDPNow outlook is now showing a 52.8 percent tumble, following data Monday that U.S. manufacturing remains firmly in decline and will weigh on investment and consumption.
  • Across the nation, the mass protests over the death of George Floyd continue to create new COVID-19 transmission risks, as some testing sites are now shut down and health officials are warning of a likely spike in new cases.  Illinois closed all of it’s 10 free community testing sites, Philadelphia shut nine of its testing sites on Monday, while in Jacksonville, a popular testing site that averaged 400 to 500 tests per day was shuttered due to protests.   The Surgeon General told Politico “Based on the way the disease spreads, there is every reason to expect that we will see new clusters and potentially new outbreaks moving forward.”
  • Remdesivir, Gilead’s treatment for patients infected with the new coronavirus, produced only modest benefits in the early stages of the disease in hospitalized patients who were not critically ill, according to a large clinical trial.
  • North Carolina Governor Roy Cooper (D), rejected the GOP’s plans for a full-fledged convention in Charlotte telling Republican officials in a letter today the only way the convention would move forward is with proper health protocols in place. “The people of North Carolina do not know what the status of COVID-19 will be in August, so planning for a scaled-down convention with fewer people, social distancing and face coverings is a necessity,” Cooper wrote.  President Trump and Republicans want a 50,000-person event.
  • Online retailer and wardrobe styling service Stitch Fix said it would lay off 1,400 stylists in California between now and the end of September, affecting about 18 percent of its workforce. Stitch Fix said Monday that it plans to eventually hire 2,000 stylists in U.S. locations which have a lower cost of living than cities in California – places like Austin, Texas, or Minneapolis.
  • Michigan Gov. Gretchen Whitmer (D) announced on Monday that she lifted her state’s stay-at-home order and said restaurants can reopen for dine-in service next week.  Businesses where close contact is necessary, such as gyms, hair salons, theaters, and amusement parks, will remain closed under a new order.

 

Coronavirus: The Hill and the Headlines – COVID-19 D.C. Update – June 1, 2020

Your guide to the latest Hill developments, news narratives, and media headlines provided by the Hogan Lovells Government Relations and Public Affairs team.

In Washington:

  • Today, the House will meet for a pro forma session and the Senate will resume consideration of John Badalamenti to be United States District Judge for the Middle District of Florida.  The full House will be conducting committee work remotely throughout the month of June.  The House legislative calendar for summer 2020 has been updated and can be found here.
  • As far as the next COVID-19 relief bill, on Friday Senate Majority Leader Mitch McConnell (R-KY) said “we’re taking a careful look at a fourth and final bill. You can anticipate the decision being made on whether to go forward in about a month. It will be narrowly crafted,” McConnell said.  He added, “if there’s another bill, and there may well be, it will be written in the Senate. It will be supported by the administration.  It will not be $3 trillion. So we’ll be discussing the issue of how much and the issue of when.”  At the center of the debate is the $600-a-week unemployment bonus granted in the CARES Act which is set to expire at the end of July.  Republicans don’t want to renew the provision but seem to be willing to negotiate. Sen. Rob Portman (R-OH) has proposed that the federal government give people who stop collecting unemployment and go back to work $450 a week for several weeks.  But this proposal will not cover all of the 40 million Americans who are unemployed.  Senator Mark Warner (D-VA) said there could be “some collaboration” between Portman’s proposal and his own plan to expand the Employee Retention Tax Credit (ERTC) through the Paycheck Security Act.  The bill would provide a refundable payroll tax credit for companies of all sizes that have seen a 15 percent decline in revenues to rehire and pay laid off and furloughed workers up to $90,000 per year.  Senate Minority Leader Chuck Schumer (D-NY) is “eyeing a push to automatically tie unemployment benefits to the condition of the economy,” something supported by Senate Finance Committee Ranking Member Ron Wyden (D-OR) and Democrat economist, despite the hefty price tag. Senator Wyden said direct payments were not a top priority of his for Phase Four, as compared to automatic stabilizers for unemployment benefits and more aid for “the smallest of small businesses.”
  • The Department of Health and Human Services (HHS) announced a $628 million agreement with Emergent Biosolutions to manufacture COVID-19 vaccine candidates. Assistant Secretary for Preparedness and Response Robert Kadlec was a consultant to Emergent before his 2017 appointment.  Six Democrats last month shared concern that Kadlec did not disclose his work with multiple biodefense entities when being nominated and asked him to update his ethics disclosures to reflect this.
  • Anthony Fauci, a member of the White House coronavirus task force, said his meetings with President Trump have “dramatically decreased” in recent weeks.  Fauci told STAT News “I was meeting with him four times a week back, a month or so ago, but as you probably noticed, the task force meetings have not occurred as often lately. And certainly, my meetings with the president have been dramatically decreased.”
  • Over the weekend President Trump delayed the G-7 summit until September after German Chancellor Angela Merkel said she would not attend over COVID-19 concerns.  The meeting was originally scheduled for July.  The president also says he plans to invite additional countries to the summit, including Australia, Russia, South Korea, and India.
  • According to a report by the Congressional Budget Office, the COVID-19 pandemic will reduce the size of economic output by a combined $7.9 trillion over the next decade in real terms, or 3 percent of cumulative GDP.  The report also noted that “recent legislation will, in CBO’s assessment, partially mitigate the deterioration in economic conditions.”

In the News:

  • Many nations are entering a pivotal period this week, giving students, shoppers, and travelers a return to some sense of normalcy after several months of lockdowns. It comes as more than six million people around the world have tested positive for COVID-19 and at least 396,000 have died from the virus.
  • The US death toll for the coronavirus is now topping 104,000 with cases of coronavirus rising in 15 states as this country slowly reopens.
  • The number of protests that are spreading across the U.S. in the wake of George Floyd’s tragic death has increased concerns about the increased spread of the coronavirus.  Atlanta Mayor Keisha Lance Bottoms advised protesters to get COVID tests this week. Mayor Lori Lightfoot said Chicago may postpone its reopening. Washington D.C. Mayor Muriel Bowser said she was concerned the protests could spark another increase in coronavirus cases in a city that started the first phase of its reopening on May 29.
  • Gilead announced on Monday a Phase 3 study that shows hospitalized patients with moderate COVID-19 pneumonia receiving a 5-day dose of remdesivir were 65 percent more likely to show clinical improvement after 10 days.
  • Several leaders from Southern states prone to hurricanes are preparing and rewriting their disaster plans as hurricane, wildfire, and tornado season is beginning.  States and cities have never had to respond to a large-scale natural disaster during a global pandemic.  With support networks and budgets being strained in all states, it will be more difficult to depend on the usual outside support during these types of disasters.
  • Moderna, one of the leading pharmaceutical companies developing a COVID-19 vaccine, said it has started a mid-stage trial and has given doses to the first patients. The 600-person, phase 2 study will give healthy participants one of two doses of the candidate, or a placebo and examine them for potential side effects as well as whether it creates an immune-system response that could protect against the coronavirus.
  • Drug maker Eli Lilly began testing the first COVID-19 antibody drug derived from the blood of a coronavirus survivor.  The testing is starting about a month earlier than expected.  The company will first test the therapy in hospitalized patients to determine whether it could also prevent infections.

Coronavirus: The Hill and the Headlines – COVID-19 D.C. Update – May 29, 2020

Your guide to the latest Hill developments, news narratives, and media headlines provided by the Hogan Lovells Government Relations and Public Affairs team.

In Washington

  • The House will meet for a pro forma session on Monday and the full House is out of session next week. The Senate will reconvene on Monday and resume consideration of John Badalamenti to be United States District Judge for the Middle District of Florida. House Majority Leader Steny Hoyer (D-MD) sent a letter to Members updating them on the House legislative schedule for summer 2020, along with an updated calendar. The House will be in session at some point in June, once the Senate moves on the Heroes Act or other legislation in response to the COVID-19 pandemic. Given the passage of H. Res. 965, the legislation will be considered in committees and on the Floor while ensuring safety. Throughout the month of June, the focus will be on legislative committee work. Must-pass legislation will be considered on the Floor in late June and going through July, including a 2021 National Defense Authorization Act (NDAA); an infrastructure package that includes reauthorization of expiring surface transportation provisions; reauthorization of the Water Resources Development Act (WRDA); legislation to strengthen and expand the Affordable Care; and appropriation bills for Fiscal Year 2021. If the House is able to complete its work on these items by the end of July, no changes will be made to the August District Work Period unless additional measures need to be taken to address the COVID-19 pandemic. Members will be given at least seventy-two-hours’ notice of any Floor action relating to COVID-19 response legislation.
  • Clinical trials of drugs, treatments, and vaccines unrelated to COVID-19 will likely face delays going forward as the Food and Drug Administration (FDA) focuses its resources on addressing the virus, according to the agency’s Commissioner Dr. Scott Gottlieb. In an interview with CNBC Gottlieb said “A lot of drug companies put clinical trials on hold,” adding that some companies didn’t go forward with planned trials and others suspended ongoing trials. “The agency has been keeping up” so far, Gottlieb added. The FDA put out new guidance on 26 May that said the agency might need to prioritize resources moving forward as the staff is stretched thin.
  • The Select Subcommittee on the Coronavirus, chaired by Rep. James Clyburn (D-SC), held a video briefing today with seven mayors to discuss the need for more money for Personal Protective Equipment (PPE). The hearing also focused on the impact of a lack of federal comprehensive testing, tracing and targeted containment plan, and what the government can do to address the economic crisis caused by the coronavirus. The mayors included Bryan Barnett of Rochester Hills, Michigan, Stephen Benjamin of Columbia, South Carolina, Keisha Lance Bottoms of Atlanta, Georgia, Jenny Durkan of Seattle, Washington, Eric Garcetti of Los Angeles, California, Mary Jane Scott of Magnum, Oklahoma and Lenny Curry of Jacksonville, Florida.
  • Sen. Tim Kaine (D-VA) announced that he and his wife Anne tested positive for coronavirus antibodies, meaning it was likely that he was struck with COVID-19 when he experienced flu-like symptoms in April. He said he would continue to wear a mask. Sen. Rand Paul (R-KY), who tested positive for the virus in March, has declined to wear a face mask, pointing to studies suggesting that he has immunity from the virus. Senator Bob Casey (D-PA) has tested positive for COVID-19. House Speaker Nancy Pelosi (D-CA) has not been tested for COVID-19 because she has not had any symptoms. Meanwhile, Trump and Vice President Mike Pence are tested for the virus daily. Some Republican members are refusing to wear masks in the hallways of the Capitol or when chatting with aides and colleagues — even when they’re unable to maintain a social distance.
  • Starting today, Washington D.C. Mayor Muriel Bowser (D) relaxed the stay-at-home order because the city had met its goal of a 14-day decline in community spread of the illness moving into Phase 1. Other metrics for testing capacity, health care system capacity and public system capacity related to testing and tracing have also been reached. However, the move could pose a risk of a resurgence of the virus in Washington, currently one of the worst hot spots in the nation, and could become an equally potent symbol of the downside of Trump’s go-fast approach. Robert Bednarczyk, an assistant professor at the Emory University Rollins School of Public Health said “I’m a little confused about the data D.C. is using. It doesn’t look like they’ve had a big enough decline to justify reopening.”

In the News

  • Global cases of coronavirus have reached 5.83 million, while in the U.S. there are more than 1.72 million cases and at least 101,600 deaths, according to Johns Hopkins University.
  • The personal savings rate hit a historic 33 percent in April, according to the U.S. Bureau of Economic Analysis. This rate, how much people save as a percentage of their disposable income, is the highest since tracking started in the 1960s.
  • A series of new studies across the world that are trying to quantify how many people have been infected reveals that we’re likely a long way off from establishing “herd immunity” of the coronavirus. The studies show that the percentage of people who have been infected so far is still in the single digits. The precise herd immunity threshold for the novel coronavirus is not yet clear, but several experts said they believed it would be higher than 60 percent.
  • New York Mayor Bill de Blasio said during a Friday press conference that he is confident his city will begin reopening within the next two weeks. “The subways are the most important piece of the equation,” de Blasio said. New York City is the only one of 10 state regions still on lockdown. The city had met just four of seven metrics required by the state to reopen as of 27 May. It has less than 30 percent of hospital beds and intensive-care beds available and needs more contact tracers.
  • Clay Lacy Aviation of Van Nuys, near Los Angeles, is sharing the benefits of a taxpayer-financed loan with its private jet-owning clients after it won the loan through the federal Paycheck Protection Program. The owners who opted in will get account credits through a formula based on the amount of the loan and the cost each owner incurs to employ crew members.

 

Coronavirus: The Hill and the Headlines – COVID-19 D.C. Update – May 28, 2020

Your guide to the latest Hill developments, news narratives, and media headlines provided by the Hogan Lovells Government Relations and Public Affairs team.

To read our recent client alert “House and Senate considering bills to enhance flexibility for PPP borrowers” click here. This is a revision of the May 22 client alert, which was updated due to new developments. 

In Washington:

  • The House passed (417-1) the Paycheck Protection Program Flexibility Act (H.R. 7010).  The bill extends the ability to use the Small Business Administration (SBA) loans from 8 weeks to 24 weeks and changes the deadline for rehiring workers to June 30.  The bill would also allow businesses to repay any non-forgiven balance over five years, instead of two, reducing the size of each payment. The original bill, H.R. 6886, was slated to remove the requirement that 75 percent of the loan must be spent on payroll, but Treasury Secretary Steven Mnuchin objected to a cut saying that it should stay at 75 percent.  On May 27, House Republicans and Democrats negotiated a new bill language lowering the ratio to 60 percent that would be required to be used for payroll.  With the passage of the House version, it is expected that the House and Senate will be able to reach a deal on how small businesses can use the loan program when the Senate returns.  The House also passed the TRUTH Act (H.R. 6782) in a vote of 269-147  requiring the SBA to publicly publish online a database identifying the businesses and other entities that have received more than $2 million combined from the PPP and Economic Injury Disaster Loan Program (EIDL).  
  • The Select Subcommittee on the Coronavirus, chaired by Rep. James Clyburn (D-SC), will hold a video briefing on Friday with seven mayors to discuss the need for more money for Personal Protective Equipment (PPE).  According to a press release the briefing will “examine what their communities need from the federal government to stabilize local economies, protect the health and well-being of their residents, and safely reopen.” The mayors include Bryan Barnett of Rochester Hills, Michigan, Stephen Benjamin of Columbia, South Carolina, Keisha Lance Bottoms of Atlanta, Georgia, Jenny Durkan of Seattle, Washington, Eric Garcetti of Los Angeles, California, Mary Jane Scott of Magnum, Oklahoma and Lenny Curry of Jacksonville, Florida. 
  • According to POLITICO, as part of the next coronavirus stimulus package, the White House is pushing for an end to “surprise” medical bills.  The draft plan would no longer allow health care providers to put insured patients on the hook for staggering costs of emergency or out-of-network care.  Instead, billing disputes would have to be worked out on a case-by-case basis. House Speaker Nancy Pelosi (D-CA) included this prohibition in the House-passed coronavirus relief bill, “The HEROES Act” (H. R. 6800),  and administration officials now want to pass a blanket prohibition on all hospitals and physicians.
  • Yesterday, Senate Majority Leader Mitch McConnell (R-KY) said that all Americans should wear facial coverings as the country begins returning to normalcy. “There’s no stigma attached to wearing a mask. There’s no stigma attached to staying six feet apart.  You have an obligation to others in case they might be asymptomatic carriers of the virus” he said. 
  • During a virtual hearing of the House Ways and Means Committee Chairman Richard Neal (D-MA) said that minority communities are in “desperate need” of better COVID-19 testing and contact tracing.  James Hildreth, president, and chief executive officer of Meharry Medical College in Nashville, said four schools including his own want to create a consortium of black medical colleges using $5 billion in federal funds that would expand health programs in low-income African American communities, which have seen higher rates of infection and death compared with white communities.
  • In a letter to Education Department Secretary Betsy DeVos, Senators Margaret Wood Hassan (D-MA), Tim Scott (R-SC), Cory Booker (D-NJ), and Kelly Loeffler (R-GA) said more instructions to colleges handling financial aid appeals due to coronavirus was necessary.  Lawmakers said the department should ask about the loss of family income from the pandemic in the application for federal student aid.
  • House and Senate Democrats announced legislation yesterday for a federal stabilization fund for childcare centers at risk of closure because of the coronavirus pandemic. The proposal would award grants to childcare centers that reopen as workers return to jobs outside their homes. The bill would prioritize childcare centers for underserved communities and require that they offer relief on tuition for families struggling with payments.
  • House Oversight and Reform Committee Democrats introduced legislation requested by the Trump administration to delay by four months the reporting of U.S. Census Bureau population totals to Trump until April 30, 2021, and to states for redistricting purposes until July 31, 2021.
  • Yesterday the Centers for Disease Control and Prevention (CDC) issued recommendations on how employers could bring workers back to office buildings more safely.  The guidelines included improving ventilation, spacing workers apart, and reducing shared objects like communal coffee pots.

In the News: 

  • Another 2.1 million Americans filed for unemployment benefits for the first time last week, the lowest total since the coronavirus crisis began, according to the Labor Department.  That brings the total number to 41 million people who have applied for aid since the coronavirus intensified in March. 
  • The American economy shrank more than expected in the first quarter of the year due to the coronavirus lockdown, according to new data published by the Commerce Department.  Gross domestic product fell at a seasonally adjusted annual rate of 5 percent in the three-month period from January through March.
  • Yesterday, California became the fourth state with at least 100,000 known COVID-19 infections, following Illinois, New York, and New Jersey.
  • American Airlines plans to cut 30 percent of its management and support staff, or about 5,000 jobs due to coronavirus, according to a company memo, CNBC reports.  The airline also started offering buyouts to these employees and plans to offer voluntary leave and buyouts for front-line staff, like flight attendants, in June. 
  • At least 12 states so far have inflated testing numbers or deflated death tolls amid the push to lift stay-at-home orders, Politico reports. Others have shifted their metrics for a “safe” reopening or tried to avoid sharing bad news by shuttering their modeling operations.
  • The National Association of Manufacturing released its second-quarter survey and just 33.9 percent of respondents say they have a positive outlook about their business, the lowest percentage since 2009.  Nevertheless, manufacturers have continued to operate through the crisis 67.1 percent or temporarily halted only part of their operations 31.6 percent. 
  • Epidemiologists are saying that COVID-19 could be an endemic disease like measles, HIV, chickenpox that will never go away even after a vaccine is discovered.  The coronavirus could remain for decades to come, circulating among the world’s population.

China Entity List designations

On Friday, May 22, 2020, the US Department of Commerce, Bureau of Industry and Security (BIS) announced in two separate press releases that it would be adding a number of companies and governmental entities to the Entity List.

A total of nine companies, as follows, will be added for their involvement in human rights violations in the Xinjiang Uyghur Autonomous Region: Continue Reading

Coronavirus: The Hill and the Headlines – COVID-19 D.C. Update – May 27, 2020

Your guide to the latest Hill developments, news narratives, and media headlines provided by the Hogan Lovells Government Relations and Public Affairs team.

In Washington:

  • COVID-19 has forced lawmakers to think outside the box in how they work remotely during the crisis.  Over 50 Democrats have signaled they plan to use proxy voting to cast a vote on the floor today.  Via this system, one member in the Capitol can cast proxy votes on behalf of as many as 10 members who stayed home.  Late yesterday,  House Republicans filed a lawsuit against Speaker Nancy Pelosi (D-CA) in a bid to block the new system.  Republicans argue proxy voting, which was passed by Democrats with no GOP support, is unconstitutional and that Congress has an obligation to meet in person, despite the risks.  Democrats defended their decision to vote by proxy, saying it was a common-sense move that would minimize the risk to lawmakers and their staff, as well as people they come in contact with while traveling.  GOP leadership has been encouraging House Republicans to not use the proxy voting system and instead submit statements to the Congressional Record if they can’t be in the Capitol and want to register how they would have voted.
  • The Justice Department is closing investigations into Senators Kelly Loeffler (R-GA), James Inhofe(R-OK) and Dianne Feinstein (D-CA) for stock trades made shortly before the COVID-19 outbreak.  All of the lawmakers have denied any impropriety in the trading and said their investment advisers made the trades which they learned of after the fact.  A similar investigation into Senator Richard Burr (R-NC) will continue as he had more direct involvement with the stock trades.
  • Today, D.C. Mayor Muriel Bowser (D) announced that the city will officially enter phase one of reopening on Friday, May 29.  Bowser says the city has sustained a 14-day decline of new COVID-19 cases, and other metrics have been met to safely begin to slowly reopen the city and lift the stay-at-home order effective Friday.  Hospitals have been running below their maximum capacity, testing is on the rise and the city is in the process of hiring enough contact tracers to identify and quarantine residents exposed to the virus.  However, District officials have changed their approach to calculating the spread of the virus and are no longer mentioning other reopening metrics they laid out last month, including a declining rate in people testing positive and a decrease in flu-like illnesses among residents who might not have been tested.
  • Last week, Federal Reserve Chairman Jerome Powell told the Senate Banking Committee he’s concerned about America’s small and medium-sized firms tipping into bankruptcy and destroying the “work of many families and generations.”  The central bank is tasked with avoiding that outcome through its Main Street lending program approved by Congress, but it’s still not operational.
  • The Centers for Disease Control and Prevention issued new guidance for COVID-19 antibody tests saying “test results should not be used to make decisions about returning persons to the workplace” as they are not accurate enough to make important policy decisions.
  • Last month, Anthony Fauci, said that a second wave of COVID-19 was indeed unavoidable.  Yesterday, he said that a second wave of coronavirus infections is “not inevitable” if people are vigilant about proper mitigation efforts.
  • The USDA began taking applications Tuesday for $16 billion in direct payments to farmers and ranchers adversely affected by disruptions to the economy related to the pandemic.  The National Potato Council urged its members to apply this week for COVID-19 aid while it works to increase Agriculture Department payments to potato growers and tries to sell Congress on a plan to buy $300 million of surplus spuds.
  • The National Air Carrier Association sent a letter to Transportation Secretary Elaine Chao today asking her to “oppose any federal regulatory efforts to impose arbitrary capacity limitations on aircraft, including restricting the use of the ‘middle seat’ to create social distancing.”

In the News:

  • John Hopkins University COVID-19 tracker is currently at nearly 99,000 U.S. deaths as the death toll due to coronavirus is expected to reach 100,000 today.
  • The stock market was up 2 percent Tuesday and is pointed up again today as investors have cheered economies reopening, as well as a potential COVID-19 vaccine
  • Amtrak is preparing to cut up to 20 percent of its workforce in the next fiscal year as the company continues to suffer a decline in ridership due to COVID-19.
  • The European Commission unveiled a 750 billion euros ($826 billion) recovery stimulus plan to jumpstart the economy of the eurozone.  The proposal would be funded by raising capital from financial markets which would then be made available as grants and loans to countries in the eurozone.
  • Disney World in Florida, one of the world’s largest tourist sites with roughly 50 million visitors annually, will reopen to visitors on a limited basis in mid-July.
  • As Mexico’s health-care system has strained under the coronavirus, small community hospitals in Southern California have been flooded with dual citizens, Americans working in Mexico, or visiting families who have fallen ill and crossed the border.
  • Boeing will lay off nearly 7,000 employees this week in an effort to slash costs as COVID-19 continues to devastate the air travel and aerospace industries.  The aircraft manufacturer previously said it is seeking to decrease its headcount by 10 percent through voluntary and involuntary separations from the company.
  • The World Health Organization (WHO) said Wednesday that it remains unclear whether people who have been infected with the coronavirus are at risk of becoming infected again. “The jury is still very much out on that,” Dr. Mike Ryan, executive director of the WHO’s emergencies program, said during a press conference at the agency’s Geneva headquarters.

 

Coronavirus: The Hill and the Headlines – COVID-19 D.C. Update – May 26, 2020

Your guide to the latest Hill developments, news narratives, and media headlines provided by the Hogan Lovells Government Relations and Public Affairs team.

In Washington

  • The House will be in session on Wednesday and Thursday and is expected to vote on two bills dealing with the Paycheck Protection Program (PPP) giving small businesses more flexibility in the use of the forgivable loans. One will extend the ability to use the loans from 8 weeks to 24 weeks and eliminate 75 percent payroll requirement. The second bill (H.R. 6782) requires SBA to publish an online database identifying the businesses and other entities that have received over US$2 million through PPP and the Economic Injury Disaster Loan Program (EIDL) combined. Lawmakers are also planning to reauthorize the Foreign Intelligence Surveillance Act (FISA) and use proxy voting for the first time on the floor. Leaders of the House Appropriations Committee say they won’t move to mark up its bills until Congress can agree on another federal coronavirus relief measure, which may be weeks down the line. The Senate is not scheduled to be in session this week.
  • While the House plans votes on the Paycheck Protection Program (PPP) this week, the Treasury Department and the U.S. Small Business Administration (SBA) released new PPP guidance Friday night providing clarity on a few loan forgiveness issues. The two new interim final rules issued late Friday build upon the loan forgiveness application and instructions released 15 May. One addresses requirements for loan forgiveness (read rule) and the other outlines PPP loan review procedures and related borrower and lender responsibilities (read rule).
  • There appears to be bipartisan momentum behind certain provisions in the House-passed coronavirus relief bill, “The HEROES Act” (H. R. 6800), including tweaking the employee retention credit to make it more usable, providing further financial assistance through the tax code to help businesses cover fixed costs during shelter-in-place orders, and loosening IRS rules on deductions related to loans issued under the Paycheck Protection Program. Uncertainty remains on whether Republicans would agree to another round of direct payments to Americans, something they viewed as an emergency bridge to increased unemployment benefits.
  • The Administration submitted a new COVID-19 testing strategy to Congress on Sunday, 15 May, holding individual states responsible for planning and carrying out all coronavirus testing. The federal government plans to provide some supplies such as swabs and tubes, needed for the tests. The proposal also says existing testing capacity, if properly targeted, is sufficient to contain the outbreak despite epidemiologists disagreeing and believing the country needs more.
  • The Trump Administration will ban people who have been in Brazil within the past two weeks from traveling into the U.S. effective at midnight, according to a statement from the White House. Brazil is the world’s number two coronavirus hotspot, behind the U.S.
  • Over the weekend, the Department of Health and Human Services submitted a report to Congress on the COVID-19 strategic testing plan. The federal government will maintain a system of “supporting and encouraging” states to expand testing capabilities but doesn’t specifically lay out a nationwide testing goal. House Speaker Nancy Pelosi (D-CA), Senate Democratic Leader Chuck Schumer (D-NY), Rep. Frank Pallone, Jr. (D-NJ), Chairman of the House Energy and Commerce Committee and Senator Patty Murray (D-WA), Ranking Member of the Senate Committee on U.S. Senate Committee on Health, Education, Labor & Pensions said in a statement, “this disappointing report confirms” that Trump’s national testing strategy is to “deny the truth that there aren’t enough tests and supplies, reject responsibility and dump the burden onto the states.”
  • More than 28,000 people have died of COVID-19 in care facilities. The nursing home industry is turning its energies to obtaining nationwide protections from Congress in the upcoming coronavirus relief bill. 20 states have acted to limit legal exposure to the industry which risks huge losses if families of coronavirus victims successfully sue facilities hit by the pandemic.
  • President Trump sent a series of tweets on 25 May, demanding NC Governor Roy Cooper (D) to “give an answer now” whether or not he will allow the Charlotte stadium holding the Republican National Convention to be fully occupied by the August convention date. If not, he says “we will be reluctantly forced to find with all of the jobs and economic development it brings, another Republican National Convention site.” Vice President Mike Pence suggested a few other states for the convention, including Georgia, Texas, and Florida.
  • President Trump said he’s completed his course of treatment with hydroxychloroquine, the anti-malaria drug he’s touted as a therapy for COVID-19 despite concerns from medical professionals about its unproven efficacy and potential side effects. The World Health Organization temporarily halted its tests on hydroxychloroquine in its COVID-19 drug trials pending more data because of safety concerns.
  • Senate Majority Leader Mitch McConnell acknowledged that there would most likely be a Phase 4 coronavirus relief bill. “Many of you are asking, what next? I think there’s likely to be another bill. It will not be the US$3 trillion bill the House passed the other day. But there’s still a likelihood that more will be needed,” McConnell said Tuesday. Meanwhile, New York Governor Andrew Cuomo said he is meeting President Trump Wednesday to discuss infrastructure spending.

In the News

  • Tyson Foods has transformed its facilities nationwide since its workers started getting sick from COVID-19. To slow the spread they have set up on-site medical clinics, are screening employees for fevers at the beginning of their shifts, requiring the use of face coverings and installed plastic dividers between stations. Despite these efforts more than 7,000 have contracted the coronavirus.
  • The U.S. death toll from COVID-19 is nearing 100,000, more than double that of any other country, while some 1.7 million Americans have tested positive for the virus, according to Johns Hopkins University.
  • The world’s largest developing nations including Brazil, Mexico, India, and Peru are following recent steps by the U.S. and Europe to ease restrictions aimed at slowing the growth of the coronavirus pandemic in order to spare further pain to their battered economies while new infections and deaths are growing, rather than slowing. Health experts say the timing risks an explosive rise in cases and deaths across the world.
  • U.S. consumer confidence unexpectedly rose in May as states slowly started to reopen, according to data released by The Conference Board. The consumer confidence index rose to 86.6 this month from 85.7 in April. Economists expected a decline to 82.3 in May, according to Dow Jones.
  • Stocks rallied Tuesday, propelled by optimism about the continued reopening of the economy and a new potential coronavirus vaccine. The Dow climbed above 25,000 points, a level it hasn’t hit since 10 March. The S&P 500 traded 1.9 percent higher and the Nasdaq Composite was up 1.5 percent
  • Federal Agencies’ approach to returning to work has been uneven with wide variation in safety standards. There are no plans for broad testing or contact-tracing and the haphazard approach has led to confusing and often contradictory messages being sent to more than 2 million federal workers, 85 percent of whom live outside the greater Washington, D.C., region.
  • Dozens of global leaders across government, industry, international and non-governmental organizations and academia signed a letter calling on international governments and the United Nations to help prevent the cyberattacks that have plagued health care and research facilities during the coronavirus crisis.

HCC’s investigations during the lockdown – procedural rights of businesses during a (lock)dawn raid: What to look out for!

Despite the strict confinement measures in Greece, the Hellenic Competition Commission (HCC) has initiated several investigations during the current lockdown. Not only has it sent requests for information to a large number of companies active in the healthcare products market, it has also conducted two dawn raids – one in the food sector and one in the press distribution market. Such unannounced inspections are known for their effectiveness in detecting secret cartels and other unlawful practices. However, due to their intrusive nature, businesses under investigation are normally protected by procedural safeguards guaranteeing the fairness of the process. Ensuring and respecting these rights might be far more challenging during a lockdown situation.

HCC’s actions during the lockdown: A busy period for the Greek enforcers

As mentioned in our previous post, Greek enforcers were among the first to take action against alleged anti-competitive practices following complaints of increased prices and shortages in the masks, gloves and broader healthcare products markets. HCC conducted a wide investigation into healthcare products, a sector immensely affected by the COVID-19 outbreak. HCC sent requests for information to more than 4056 market participants and received approximately 3300 replies.

Unlike the food sector which saw the first dawn raid by the HCC during (and directly linked to) the pandemic, the second inspection in the press sector had no direct link to the COVID-19 outbreak and had reportedly been planned for months. To this end, the HCC conducted an ex officio on-the-spot inspection at the premises of companies operating in the press distribution market. The Greek enforcers decided not to postpone the inspection despite social-distancing obligations in order that the progress of their pre-confinement work would not be impeded.

Dawn raids while tele-working? A risky business for the company’s procedural rights

Under the EU framework, during dawn raids officials have the power to enter any premises (including private domiciles), examine relevant books and records and take copies. When an inspection takes place at business’ premises, competition enforcers may also seal these premises, or part of them, and examine any books or records as well as interview any representative of staff on facts or documents relating to the subject-matter of the inspection.

Competition enforcers enjoy wide investigative powers and companies are expected actively to assist the work of the authorities. Non-compliance by the undertaking (e.g. providing incorrect, incomplete or misleading information) may lead to the imposition of severe fines. Similarly, procedural infringements by the authorities (e.g. not respecting the undertaking’s procedural rights), may lead to the annulment of the investigation process and decision. Thus, pursuing inspections under such exceptional circumstances of a complete lockdown is a challenge for both companies and authorities when it comes to satisfying their respective obligations – maybe slightly more so for the authorities.

Unannounced inspections when most people are working from home can, evidently, be very challenging. The absence of more senior employees who would be responsible for overviewing and assisting during a dawn raid, coupled with the difficulty of obtaining timely legal advice, can raise concerns as to the outcome of the inspection:

  • The risk of unintentionally providing incomplete information is more likely

Typically, employees present at companies’ premises during the lockdown are largely security staff – i.e. not part of the actual running of the business. In turn, such employees may not be in a position to understand the subject-matter of the investigation or be able adequately to address the specific questions of the authority. On this basis, there is the risk that they may provide incomplete or incorrect information. In such a case, it is not clear whether providing rectifications and amendments, as foreseen in the procedural Regulation, would constitute an effective counterbalance given the breadth of the potentially required rectifications.

  • Reconciling the duty of cooperation with confinement requirements will be difficult

Authorities should be expected to keep to a minimum any requests for staff working from home to be physically present. However, it may be crucial for the authority to speak to specific senior employees. In such a scenario, would an employee’s refusal to be physically present at the company’s premises due to the potential health risk amount to non-cooperation? Would (or should) there be a possibility for the employee to speak to the authority by video conference?

  • Concerns about the authorities embarking on ‘fishing expeditions’ are increased

Authorities are evidently bound by the subject-matter of the investigation as set out in the inspection authorization decision. However, it is not inconceivable that given the absence of senior, more knowledgeable employees, concerns regarding ‘fishing expeditions’ (as opposed to coincidental findings) may be raised.

Overall, observing procedural rights during dawn raids in this period presents significant challenges for both authorities and parties concerned. Companies should be aware and demand respect for their procedural rights as would be the case (or expected) during normal times. Not only the outcome of the investigation is at stake but also the companies’ reputation if it is, for example, reported that they provided misleading information.

Surviving a (lock)dawn raid – a high-level checklist:

  • Inform staff present at the business premises of the possibility of a dawn raid and briefly explain their obligations and powers of the authority.
  • Provide employees with the legal department email address to which they should send a copy of the inspection authorization decision immediately in the event of a dawn raid. At a second stage, they should also send a summary of inspection-day and copies of the documents the authority looked at, copied, etc.
  • If external lawyers cannot be present at the business’ premises due to COVID-19 restrictions, explore (together with the authority) the possibility of them being present via videoconference when company employees are being interviewed.
  • Do not invoke COVID-19 as a reason for not providing immediate access to laptops or documents of employees working from home, but rather be cooperative and try to find solutions together with the authority. Such solutions may include requesting employees working from home to have interviews via videoconference, send specific files over to the authority or even grant remote access to their laptops to the authority in order for it to perform the relevant searches. In the latter case, there could also be an arrangement for an external lawyer to “shadow” the process as is the case under normal circumstances.