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Coronavirus: The Hill and the Headlines – COVID-19 D.C. Update – June 25, 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 Treasury Department, working with the Internal Revenue Service (IRS), mistakenly delivered more than a million stimulus payments worth about $1.4 billion to deceased people, according to a report released Thursday by the Government Accountability Office (GAO).  The report said “The agencies faced difficulties delivering payments to some individuals and faced additional risks related to making improper payments to ineligible individuals, such as decedents, and fraud.”  The Treasury and the IRS did not use the death records maintained by the Social Security Administration to prevent improper payments for the first three batches of payments sent out.  GAO called on the IRS to develop options for getting the payments returned.
  • U.S. health and agricultural officials issued criticism of new demands from China for food-exporting companies to sign documents stating that they comply with safety standards to prevent transmission of COVID-19. On Wednesday, U.S. Agriculture Secretary Sonny Perdue and FDA Commissioner Stephen Hahn issued a joint statement that said “Efforts by some countries to restrict global food exports related to Covid-19 transmission are not consistent with the known science of transmission.”  Experts say that food poses little risk of spreading the coronavirus.  The move is the latest rebuff to China, which has issued warning shots to global exporters dealing with outbreaks among employees.
  • Dozens of Secret Service officers and agents who were on site for President Trump’s rally in Tulsa last week were ordered to self-quarantine after two of their colleagues tested positive coronavirus, part of the fallout from Trump’s insistence on holding the mass gathering over the objections of public health officials.  It is still unknown how the rally may have impacted Tulsa’s count of coronavirus cases, which are rising swiftly.
  • President Trump is planning a massive fireworks display at Mount Rushmore on July 3, despite a decade-long ban on pyrotechnics at the iconic spot because of concerns about public health, environmental, and safety risks.  Neither federal nor state officials have imposed social distancing requirements as part of the gathering.
  • The Centers for Disease Control (CDC) says Nearly 25 million Americans may have contracted the coronavirus, a figure ten times higher than the number of confirmed cases.  During a briefing on Thursday, CDC Director Robert Redfield said surveys of blood samples taken from around the country suggest that millions of Americans may have contracted the virus either without knowing it or with only minimal symptoms. He says that for every one confirmed case, the CDC estimates that ten more people have been infected.
  • The Paycheck Protection Program had more than $100 billion in funding left as of last Saturday, with only days remaining until the SBA stops taking new applications on June 30.  Now, there’s a debate in Congress about what to do with the leftover PPP money, and how to reach those businesses as the economy reopens in the midst of new virus outbreaks across the country.  Senator Ben Cardin (D-MD) said, “there’s strong bipartisan interest in protecting the funds that have been appropriated to develop a second round, but to have it targeted more to those small businesses that really need the help.” 
  • Lawmakers are considering letting companies avoid taxes on canceled debts as they restructure as the pandemic has thrown oil and gas, retail, restaurant, and other sectors into a tailspin. The forgiven portions of the $660 billion in small-business loans provided by the third coronavirus response bill won’t be subject to tax, but many companies that restructure after the crisis are likely to face taxes on what’s known as cancellation of debt income tax. 
  • Sens. Richard Blumenthal (D-CT) and Cory Booker (D-NJ) in a letter yesterday called on the National Collegiate Athletic Association to prohibit schools from “coercing” students to sign liability waivers that would exempt institutions from accountability for the spread of the coronavirus.  A growing number of schools are requiring college athletes to sign the waivers, the lawmakers said in a letter.

In the News:

  • Last week, 1.48 million Americans filed jobless claims for the first time, the Labor Department reported Thursday.  While the weekly numbers remained high and were worse than Wall Street estimates for the second straight week, the total of those receiving benefits fell by 767,000 to 19.52 million.
  • The three most populous U.S. states set records for new coronavirus cases daily and there are fears of “apocalyptic” surges in major Texas cities if the trend continues.  Florida and Texas announced Wednesday that they’d recorded more than 5,000 new cases the prior day, a new daily record. California reported more than 7,000 cases. In Texas, if the current case trajectory continues, Houston could be the hardest-hit city in the US with numbers rivaling those in Brazil. 
  • Texas Gov. Greg Abbott (R) has ordered all licensed hospitals in counties that include major cities such as San Antonio, Dallas, Houston, and Austin to postpone elective procedures in order to protect hospital capacity for coronavirus patients.
  • China appears set to eclipse the U.S. to become the world’s biggest economy within the decade as it powers out of its coronavirus slump.  The International Monetary Fund (IMF) forecasts China’s economy will slow to 1 percent this year and then surge 8.2 percent in 2021. The U.S. economy is forecasted to contract 8.0 percent in 2020 before a more 4.5 percent acceleration in 2021, according to the IMF. 
  • The IMF has slashed its global economic forecasts for 2020, saying the coronavirus pandemic is causing a much steeper recession and a slower recovery than initially expected. The organization said Wednesday that it thinks global GDP will contract by 4.9 percent this year, downgrading its estimate from April, when output was forecast to shrink by 3 percent.
  • Apple will re-close seven U.S. retail stores in the Houston, Texas area as COVID-19 cases spike across the state, according to the company’s website.  Last week, Apple re-closed stores in Florida, North Carolina, South Carolina, and Arizona for similar reasons.
  • Vitamin and herbal supplement retailer GNC has filed for bankruptcy, with plans to close at least 800 to 1,200 locations and possibly sell itself.

Department of Defense Lists Chinese Companies, with Chinese Military Ties, Operating in the United States

On 24 June 2020, the United States Department of Defense made public a list of Chinese companies operating in the U.S. that are associated with the Chinese military.

The Department of Defense has been legally required to maintain such a list under Section 1237 of the 1999 National Defense Authorization Act. The Act requires the Department of Defense to “make a determination of those persons operating directly or indirectly in the United Sates or any of its territories and possessions that are Communist Chinese military companies.”

Within the last year, some members of Congress publicly requested the list.

It remains to be seen whether the Administration will take action against any of these companies. If it decides to take action, the Administration could issue an Executive Order under the International Emergency Economic Powers Act (IEEPA) setting forth specific prohibitions with respect to targeted companies.

A total of twenty companies were listed:

  • Aviation Industry Corporation of China (AVIC)
  • China Aerospace Science and Technology Corporation (CASC)
  • China Aerospace Science and Industry Corporation (CASIC)
  • China Elections Technology Group Corporation (CETC)
  • China South Industries Group Corporation (CSGC)
  • China Shipbuilding Industry Corporation (CSIC)
  • China State Shipbuilding Corporation (CSSC)
  • China North Industries Group Corporation (Norinco Group)
  • Hangzhou Hikvision Digital Technology Co., Ltd. (Hikvision)
  • Huawei
  • Inspur Group
  • Aero Engine Corporation of China
  • China Railway Construction Corporation (CRCC)
  • CRRC Corp.
  • Panda Electronica Group
  • Dawning Information Industry Co. (Sugon)
  • China Mobile Communications Group
  • China General Nuclear Corp.
  • China National Nuclear Corp.
  • China Telecommunications Corp.

Coronavirus: The Hill and the Headlines – COVID-19 D.C. Update – June 24, 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:

  • Yesterday, Senate Republicans met with Treasury Secretary Steven Mnuchin to discuss the next coronavirus relief bill.  After the meeting, Mnuchin said, “we’re going to take our time and make sure that we’re thoughtful. Whatever we do, it will be much more targeted, much more focused on jobs, bringing back jobs, and making sure we take care of our kids.”  Senate Majority Leader Mitch McConnell (R-KY) has said Republicans will assess economic conditions next month and draft legislation then if necessary.  President Trump has expressed support for another round of stimulus checks and the option could be considered in the next package. However, not everyone is on board, Sen. Mitt Romney (R-UT) said he would rather “extend unemployment insurance, but to do that in a more limited way”; Sen. Jim Inhofe (R-OK) said “it’s too early” to throw his weight behind the idea; Sen. James Lankford (R-OK) said “I’m still trying to figure out if that’s going to be needed”; and Sen. Rob Portman (R-OH) said it depends on the new unemployment numbers.
  • During yesterday’s House Energy and Commerce hearing, Dr. Anthony Fauci said President Trump never told them to slow down testing despite asserting as much at a rally over the weekend.  In fact, Fauci said they will be doing the opposite, “we’re going to be doing more testing, not less.” Fauci and CDC Director Robert Redfield also told the committee that President Trump did not consult with them before moving to withdraw the U.S. from the World Health Organization (WHO).  Both health officials said their agencies continue to work closely with the WHO.  Officials told lawmakers yesterday that they haven’t discussed the COVID-19 pandemic with Trump for more than two weeks, a period in which cases have surged in Texas, California, Florida, and Arizona.  The increase in cases has ignited fear that hospitals could be overwhelmed and that some of the steps states have taken to re-open for business may need to be rolled back.
  • President Trump insisted he was serious when he revealed that he had directed his administration to slow coronavirus testing in the U.S., shattering the defenses of senior White House aides who argued Trump’s remarks were made in jest. He said, “I don’t kid. Let me just tell you. Let me make it clear,” when pressed on whether his comments at a campaign event Saturday in Tulsa, Okla., were intended as a joke.
  • Republican senators say there’s no evidence the U.S. is ready to ease up on the number of daily tests, which they think should be increased until there is a vaccine.  Senate Majority Whip John Thune (R-SD), said “we need tests and we need … millions of them, tens of millions of them, especially when we start opening up this fall.”  Sen. Lamar Alexander (R-TN), chairman of the Senate Health, Education, Labor, and Pensions Committee, told reporters that the country needed to be carrying out testing and would be increasing, not reducing, its testing capacity.  Sen. Mitt Romney (R-UT) added that the country needed “more and more testing,” while Sen. Lisa Murkowski (R-AK) told reporters after a closed-door caucus lunch that “we need as much testing as we can get.”
  • The Trump administration is planning to end federal support for local coronavirus testing sites across the nation at the end of the month including seven in Texas, where confirmed cases of COVID-19 are spiking.  Texas officials are urging the White House to rethink the move, warning of “catastrophic cascading consequences” of pulling federal support for testing sites, four of which are in Houston and Harris County and administer thousands of tests per day.
  • On Tuesday, Senate Judiciary Chairman Lindsey Graham (R-SC) said he’ll move forward with a plan to let Americans sue the Chinese government over the coronavirus pandemic by amending a law that protects foreign countries from lawsuits in U.S. courts.  “Now the time has come for us to put on the table new tools to deal with an old problem,” Graham, a South Carolina Republican, said.  “I cannot think of a more compelling idea than to allow individual Americans or groups of Americans to bring lawsuits against the culprit Chinese government for the damage done to their family, to our economy and to the psyche of the nation.”  Some lawmakers on the Judiciary panel, including top Democrat Dianne Feinstein (D-CA) voiced skepticism about the proposals, saying the U.S. should focus on its own response to the virus.

In the News:

  • The governors of New York, New Jersey and Connecticut issued a travel advisory Wednesday that requires people arriving from states with high coronavirus rates to quarantine for 14 days.  The advisory, which goes into place at midnight, applies to anyone coming from a state with a transmission rate above 10 per 100,000 people on a seven-day rolling average or 10 percent of the total population testing positive on a seven-day rolling average.  As of Wednesday, the advisory applies to Alabama, Arkansas, Arizona, Florida, North Carolina, South Carolina, Washington, Utah and Texas.
  • New coronavirus cases spiked in several states, with Arizona, Texas, and California reporting new daily records of infections Tuesday, prompting elected officials to tighten rules on gatherings and strongly urge people to stay home and follow social-distancing guidelines.  The total number of confirmed coronavirus cases worldwide surpassed 9.1 million, with more than 2.3 million cases in the U.S., as the nation’s death toll reached more than 121,000, according to data from Johns Hopkins University.
  • The National Association of Manufacturers is launching an ad campaign to encourage mask-wearing among the public as businesses and states begin to re-open. The ad spot which will run in states with a large manufacturing sector including Wisconsin, Michigan, and Ohio comes amid the increasing politicization of mask-wearing, with Trump supporters often hostile to them.
  • As COVID-19 cases surge in Florida, more than 7,000 people have signed an online petition urging Disney and government officials to reconsider the opening of Disney World next Month. The petition, which was posted on MoveOn.org on Sunday, states. “Having our theme parks remain closed until cases are steadily decreasing would keep our guests, our employees and their families safe. Re-opening the theme parks is only putting our guests, employees, and families at higher risk for contracting COVID-19.”
  • Health and Human Services Secretary Alex Azar’s refusal to open a special enrollment period for people to buy health insurance on federally operated health exchanges during the COVID-19 pandemic is dangerous, 14 attorneys general told a federal court.  In an  amicus brief filed on Monday, the coalition argues that there is both a critical need for and a legal obligation to create a special enrollment period on HealthCare.Gov to help the millions of individuals that have lost coverage as a result of the pandemic.
  • Travelers from the U.S. and Brazil could be prevented from entering the EU when the bloc’s external borders are reopened. EU ambassadors will on Wednesday meet to discuss criteria for countries to be allowed to restart travel to Europe. That’s expected to include a requirement that countries must have an infection rate below the EU’s average to be on the list.

Coronavirus: The Hill and the Headlines – COVID-19 D.C. Update – June 23, 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:

  • President Trump asserted Tuesday that the U.S. would record fewer cases of coronavirus with less testing after stirring controversy by saying over the weekend he asked aides to slow down testing. He tweeted, “cases are going up in the U.S. because we are testing far more than any other country, and ever-expanding. With smaller testing, we would show fewer cases!” 
  • President Trump signaled Monday that he’s open to a second stimulus check for Americans still reeling financially from the coronavirus pandemic and the related economic lockdown.  During an interview he was asked whether he plans to give another cash payment to some Americans, Trump said: “Yeah we are. We are.” He added, “we will be doing another stimulus package. It’ll be very good, it’ll be very generous.” Treasury Secretary Steven Mnuchin, while testifying before the Senate Committee on Small Business and Entrepreneurship, suggested the administration is exploring sending another check to some Americans.  At the time, he said, “I think we’re going to seriously look at whether we want to do more direct money to stimulate the economy.”
  • According to Politico, House Majority Whip Jim Clyburn (D-SC), the chairman of the select oversight panel on coronavirus, sent a six-page letter to the Trump administration asking for details about any efforts to suppress coronavirus testing by the White House.  Senate Minority Leader Chuck Schumer (D-NY) and Sen. Patty Murray (D-WA) sent a letter to HHS Secretary Alex Azar, obtained by the Washington Post, asking the administration to immediately spend the money that Congress allocated for testing and contact tracing. “While it has been months since these funds were first appropriated, the Administration has failed to disburse significant amounts of this funding, leaving communities without the resources they need to address the significant challenges presented by the virus,” they wrote.
  • Vice President Mike Pence told governors yesterday that federal government health experts were worried that more young people are testing positive for the coronavirus around the country.  Pence’s comments echoed concerns voiced by Texas Gov. Greg Abbott (R), who signaled he may halt or reverse the state’s economic reopening if the virus continues to expand at what he called an “unacceptable rate.”  New York Gov. Andrew Cuomo (D) said he is “seriously considering” implementing a quarantine for out-state-visitors to New York as the number of cases drops there while elsewhere cases are spiking.
  • Dr. Anthony Fauci, Brett Giroir, Stephen Hahn, and Robert Redfield testified before the House Energy and Commerce Committee on the coronavirus today.   Fauci told lawmakers that parts of the U.S. are beginning to see a “disturbing surge” in coronavirus infections and also said he expects a vaccine will be ready by early next year.
  • House Financial Services Chairwoman Maxine Waters (D-CA) announced that she will hold a hearing on coronavirus oversight next week with Treasury Secretary Steven Mnuchin and Federal Reserve Chairman Jerome Powell. 
  • Trump administration aides have discussed launching an in-depth evaluation of the Centers for Disease Control and Prevention (CDC) to chart what they view as its missteps in responding to the pandemic.  Part of that audit would include examining more closely the state-by-state death toll tally only the Americans who died directly of COVID-19 rather than other factors.  Additionally, they are considering narrowing the mission of the agency, trying to embed more political appointees within it, and make the CDC nimble and more responsive.
  • The Treasury Department estimates that an additional 30 million to 35 million Americans are still waiting on their payments.  Financial aid meant to assist Americans during the COVID-19 pandemic has been slow to reach the most vulnerable, who are often disconnected from the banking system.  Sen. Sherrod Brown (D-OH)  introduced a bill in March that would allow individuals to open free bank accounts with the Federal Reserve, avoiding the fees and minimum-balance requirements that often block the poorest from traditional banking.

In the News:

  • Florida officials expressed new concern on Monday that the tactics used to slow the spread of the coronavirus are falling short and may not be enough to stop a resurgence of positive cases.  Officials urged businesses and residents particularly young people to stay vigilant about social distancing. 
  • The University of Michigan is canceling its commitment to host one of three scheduled presidential debates between President Trump and former Vice President Joe Biden, citing health concerns. 
  • Nearly a third of mental health and addiction treatment centers haven’t received any of the $175 billion HHS is giving to hospitals and other health providers on the front lines of the coronavirus response. Centers and counselors have been overwhelmed with work and many are struggling to stay afloat and now, they’re appealing to the government for help.
  • The University of California, San Diego, plans to test its students, faculty, and staff regularly for COVID-19 beginning in the fall.
  • The nation is entering a new and uncertain phase of the COVID-19 pandemic.  New coronavirus clusters have been found in bars, churches and casinos.  In Baton Rouge, LA, at least 100 people tested positive for the virus after visiting bars in the Tigerland nightlife district.  At a Christian summer camp near Colorado Springs, at least 11 employees fell ill just before the season’s opening.  It comes as new known virus cases were on the rise in 23 states on Monday as the outlook worsened across much of the nation’s South and West.
  • The European Union may block Americans from entering its member countries as the bloc plans to reopen its borders on July 1 and the U.S. infection rate remains high, the New York Times reported on Tuesday.  
  • More than 700 U.S. cities plan to delay or cancel infrastructure projects after their responses to the coronavirus outbreak left budgets with unplugged holes, according to a National League of Cities survey released Tuesday.  The survey, which collected data from over 1,100 municipalities in all 50 states, found that most cities will delay or cancel equipment purchases. 

Coronavirus: The Hill and the Headlines – COVID-19 D.C. Update – June 22, 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:

  • Kayleigh McEnany, President Trump’s Press Secretary, said Friday that the coronavirus task force will no longer brief the public, now that the U.S. is pressing ahead with reopening its economy. McEnany said that she will relay any further information about the coronavirus outbreak, instead.
  • Concerns remain about the price tag of another coronavirus relief bill, but Republicans have acknowledged it is necessary.  Negotiations are set to begin in July and according to the Washington Post, conservatives want President Trump’s chief of staff Mark Meadows and Vice President Mike Pence to play a bigger role.  The lawmakers have complained that the spending bills Treasury Secretary Steven Mnuchin has brokered with House Speaker Nancy Pelosi (D-CA) have been too generous to Democrats and allowed spending and other policy changes that run counter to GOP priorities.  Lawmakers will have to decide whether or not to continue funding the successful Paycheck Protection Program (PPP) and allow businesses to borrow a second loan.  Another idea is to create a more permanent and long-term solution, such as a new government-backed lending program.
  • Dr. Anthony Fauci will testify on Capitol Hill this week.  Over the weekend, at his rally, President Trump said he wanted to “slow” down coronavirus testing to prevent the number of cases from going up.  Democrats were infuriated by the comments, which the White House later said were a joke.  In a statement, Speaker Nancy Pelosi (D-CA) said “the American people are owed answers about why President Trump wants less testing when experts say much more is needed.” 
  • Since April 29, the number of coronavirus cases among construction workers assigned to the Cannon House Office Building renovation project has climbed from 17 to 28, according to Ashley Phelps, spokeswoman for Illinois Republican Rodney Davis, ranking member on the House Administration Committee.  In that same time frame, coronavirus cases among the Capitol Police rose from 12 to 18.
  • Under Congressional pressure, the Treasury Department and Small Business Administration (SBA) said in a statement that they will disclose the names of companies and nonprofits that got loans larger than $150,000 under the Paycheck Protection Program (PPP).  Treasury Secretary Steven Mnuchin said the move represents an agreement with the bipartisan leaders of the Senate Small Business Committee, which is headed by Sens. Marco Rubio (R-FL) and Ben Cardin (D-MD). 
  • According to POLITICO, President Trump is expected to extend through the end of the year foreign-worker restrictions that were initially enacted in April because of the coronavirus pandemic.  The executive order will be expanded and block most people from receiving a permanent residency visa, or green card.  It will encompass skilled workers in specialty occupations, executives, and seasonal workers who work in industries such as landscaping, housekeeping, and construction.  Agricultural workers and students will not be included.
  • Six members of President Trump’s campaign staff, including two Secret Service agents, tested positive for COVID-19 ahead of his Tulsa, OK rally.  The campaign team said in a statement that “quarantine procedures” were immediately initiated and none of the positive staff members or those they had contact with attended the event.  

In the News:

  • Early coronavirus testing data from a handful of U.S. cities and states suggest that recent protests against racial injustices haven’t yet led to a marked uptick in new cases. Public health officials warn that the data is still preliminary, however, and protest-related cases could still rise.
  • Gilead Sciences will begin human trials for an inhaled version of its antiviral drug remdesivir in August, the company said Monday.  Remdesivir, which was granted an emergency use authorization (EUA) from the Food and Drug Administration (FDA) to treat patients hospitalized with COVID-19 is currently administered intravenously. 
  • The U.S reported more than 30,000 new coronavirus cases on Friday and Saturday, the highest daily totals since May 1, according to data compiled by Johns Hopkins University.  New cases are rising in states across the South, West, and Midwest. Seven states hit record cases on Saturday, including Florida and South Carolina, which had their third consecutive day breaking single-day records. 
  • Officials say young people who are ignoring social distancing measures have led to spikes in COVID-19 cases in the South and West. Young people are more likely to have milder outcomes from coronavirus, but they can still infect others who are more at risk.  Dr. Tom Frieden, former director of the US Centers for Disease Control and Prevention (CDC), Tweeted this message on Sunday “With younger age of recent infections in at least some places such as Florida, expect a lower death rate in this wave … until the 20-40-year-olds who are infected today go on to infect others.” 
  • New York City begins Phase Two of its reopening on Monday after shuttering businesses due to COVID-19. For the first time in months, people can eat outdoors at restaurants while barbershops and salons can also open at 50 percent capacity.  The city has hired 3,000 disease detectives and case monitors for its contact-tracing program but the effort so far has gotten off to a slow start.

Next steps towards tighter German Foreign Investment Control rules passed

For M&A transactions in Germany and beyond, Foreign Investment Control screenings have become an indispensable standard element to assess when structuring deals and planning for regulatory review. Similarly to merger control, acquirers and sellers need to consider the impact of the increasing number of jurisdictions that might want to review their proposed transaction. In the last few years, Germany has been at the forefront of the EU member states concerning, in particular, the screening of Chinese investments, although the number of notified acquisitions by US acquirers has also increased. And the regulatory framework continues to evolve quickly:

On 18 June 2020, the German Federal Parliament passed the second of three planned reform steps of German FDI rules. After implementing specific safeguards in the health sector in light of the COVID-19 crisis already on 20 May 2020 (amendment publicly available in German here), the underlying Foreign Trade and Payments Act (Außenwirtschaftsgesetz – AWG, publicly available in German here), has now been amended. The new rules will immediately impact in particular M&A transactions in the field of critical infrastructure, and as of later in the year likely also “critical technology” more broadly.

The amendment to the law implements the EU FDI Framework Regulation (EU) 2019/452 that will be applied as of October 2020 and which for the first time sets out requirements at European level for investment screening.

As a very important procedural change, any acquisition subject to reporting requirements will now be subject to a stand-still obligation for the duration of the investment control procedure. “This will prevent those involved in the acquisition from creating faits accomplis during the ongoing procedure and undermining the objectives of investment control,” the Federal Government states. Until today, only transactions in the field of defence could not be closed, which will now apply also to transactions in the field of critical infrastructure such as energy grids or telecommunication networks.

On the substantive side, the focus of the revised German law is on the screening standard: in the future, it is sufficient for the government to find that an acquisition is “likely to affect public order or security in Germany“. Up to now, an “actual threat” has been the applicable standard. As a result of the change, critical infrastructure acquisitions could be examined in a more “forward-looking” manner in the future.

In addition to the effects of an acquisition in Germany, the scope of the examination will in the future also expand to the effects on other EU member states and on EU programs and projects.

The AWG amendment will now be signed by the German President and published in the Federal Gazette to enter into force shortly in the coming weeks.

In a third, later step, the government plans to also amend the German Foreign Trade and Payments Ordinance (Außenwirtschaftsverordnung – AWV). The AWV specifies the provisions of the AWG in practice and sets out to which type of target companies the German FDI rules apply. Importantly for M&A transactions in the technology field, this will primarily involve identifying “critical technologies” to be covered by the German FDI regime. This term has not yet been defined.

However, under the underlying EU Regulation (EU) 2019/452 artificial intelligence, robotics, semiconductors, cybersecurity, aerospace, defence, energy storage, quantum and nuclear technologies, as well as nanotechnologies and biotechnologies are all characterized as critical technology. The challenge for the German legislator will be to define these terms in a way or make them subject to materiality thresholds that not each and every company that only indirectly deals with technological development such as AI or computer chips will be subject to a mandatory review procedure. It is expected that this last step of the German FDI reforms will trigger an intensive debate between the government and industry stakeholders. The AWV amendment is expected to become effective in the third or more likely fourth quarter of 2020.

For an in-depth review of the legislative developments we refer to our earlier blog on the largely similar first draft of the adopted AWG amendment as well as the further intended German FDI reforms.

 

Read our previous blogs on related topics here:

Coronavirus: The Hill and the Headlines – COVID-19 D.C. Update – June 18, 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:

  • Democrats are pushing to add funding in response to the COVID-19 pandemic and policy changes affecting police departments in next year’s appropriations bills, threatening to further push back the already-delayed fiscal 2021 markup process. The committee was expected to begin marking up the dozen spending bills next week, but now that prospect seemed unlikely. “Funding the government is a serious responsibility, and I will not allow the appropriations process to be hijacked and turned into a partisan sideshow,” Senate Appropriations Chairman Richard Shelby (R-AL) said in a statement.
  • President Donald Trump’s plan for a $1 trillion infrastructure spending bill to boost the struggling economy faces strong opposition from Senate Republicans.  GOP senators are warning that the proposal is too “rich” and would be a “heavy lift” in Congress.  Senate Majority Leader Mitch McConnell (R-KY) has expressed concern about the impact of the surging federal deficit.  Sen. John Cornyn (R-TX) said the administration is going about it backward by coming up with a $1 trillion price tag before laying out what it would be spent on.  House Democratic leaders are planning to approve a surface transportation bill with a price tag around $500 billion over five years by the end of this month, which could put pressure on the Senate. Senate Finance Committee Chairman Chuck Grassley (R-IA) said whatever bill Senate Republicans come up with “could be a lot less.”
  • Last night, during a television interview with Fox News President Donald Trump, said “we’re very close to a vaccine and we’re very close to therapeutics, really good therapeutics. but even without that, I don’t even like to talk about that, because it’s fading away, it’s going to fade away, but having a vaccine would be really nice and that’s going to happen.” Trump’s comments come as the U.S. continues to see 20,000 new daily cases from the pandemic.
  • Five Democratic committee and subcommittee chairs sent a letter to the Small Business Administrator Jovita Carranza saying the Government Accountability Office (GAO), Congress’ independent oversight arm, has been rebuffed in its attempts to interview top SBA officials and access key documents about the implementation of the small business program, known as the Paycheck Protection Program (PPP). Lawmakers are asking SBA to “immediately comply” with the GAO requests for information and interviews, calling it a “violation of the law.”.
  • House Democrats unveiled a $1.5 trillion infrastructure plan on Thursday that calls for a huge increase in funding to repair roads and bridges while expanding broadband access in rural areas. The ”Moving Forward Act” is the latest attempt to advance an infrastructure package that has been discussed since the early days of the Trump administration but has failed to gain traction, though lawmakers are more optimistic as Congress considers more spending to help stabilize the economy amid fallout from the coronavirus.  Its largest component is a $500 billion Democrat-led bill from the House Transportation Committee that has sparked complaints from Republicans on the committee, which have nicknamed the legislation the “my way or the highway bill,” airing frustrations that they were excluded from its development.

In the News:

  • The Labor Department says jobless claims totaled 1.5 million last week, higher than the 1.3 million that economists surveyed by Dow Jones had been expecting. The government report’s total was 58,000 lower than the previous week’s 1.566 million, which was revised up by 24,000.  More than 45 million Americans have filed first-time claims since mid-March.
  • Harris County Judge Lina Hidalgo said Houston-area residents should follow stay-at-home guidelines that were discontinued weeks ago to cope with a resurgence in COVID-19 cases and hospitalizations. Texas Governor Greg Abbott has ruled out such measures since reopening the state seven weeks ago.  COVID-19 hospitalizations swelled by 11 percent in Texas to 2,793, the biggest 24-hour increase since June 4, state figures showed yesterday.
  • COVID-19 cases continue to surge throughout the American South and West, leading some state officials to rethink reopening strategies.  Arizona Gov. Doug Ducey issued an executive order yesterday and gave cities and counties the power to require people to wear masks to slow the spread of the coronavirus as cases surge in the state. Leaders across Arizona pleaded in recent days for more authority to address the lax social distancing they have noted since the end of the state’s stay-at-home order on May 15. Florida posted a three-day moving average of 2,384 coronavirus cases on Tuesday, an all-time high, according to data from Johns Hopkins University.  In response, New York Gov. Andrew Cuomo said on Thursday that he’s considering imposing a quarantine on travelers arriving in New York from states like Florida where coronavirus cases have spiked.
  • McDonald’s is reportedly planning to keep salads, bagels, and yogurt parfaits off its menus for the foreseeable future after the coronavirus pandemic led the company to shrink its offerings.  The Wall Street Journal reported Thursday that the fast-food chain told U.S. franchisees that it plans to add back seven items by July, but dozens more will remain off of the menu.
  • India’s number of new coronavirus cases spiked by nearly 13,000 on Thursday, represented India’s largest single-day increase in coronavirus cases.

Coronavirus: The Hill and the Headlines – COVID-19 D.C. Update – June 17, 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 now require masks during committee hearings, per new guidance issued by the Capitol physician last night. Speaker Nancy Pelosi (D-CA) had discussed the idea with Democrats during a conference call on Monday, expressing outrage that some Republicans have refused to wear face coverings in the Capitol.
  • Sen. Joni Ernst (R-IA) announced on Twitter that she will introduce legislation requiring lawmakers to disclose if they or their families have personally benefited from the Paycheck Protection Program (PPP), which Congress created in response to the coronavirus crisis but did not include disclosure requirements.  Most of the loans are expected to be forgiven, effectively turning them into taxpayer-funded grants, if businesses meet conditions such as spending most of the money on payroll. Sen. Marco Rubio (R-FL) also tweeted saying “we will have PPP loan disclosure. No dispute over larger loan recipients being disclosed.  The only issue still being discussed with the administration is how to treat smaller loans to mostly micro-business, sole proprietors & independent contractors.”  On Monday, Treasury Secretary Steven Mnuchin added in a tweet that he would be talking with senators and others “on a bipartisan basis to strike the appropriate balance for proper oversight of #ppploans and appropriate protection of small business information.”
  • Dr. Anthony Fauci, the U.S. government’s top infectious-disease expert, warned the nation risks a resurgence of coronavirus infections should states fail to remain vigilant as they reopen their economies. “When I look at the TV and I see pictures of people congregating at bars when the location they are indicates they shouldn’t be doing that, that’s very risky,” Dr. Fauci said in an interview Tuesday.  He added, “people keep talking about a second wave, we’re still in a first wave.”  The virus continued its steady spread with several states reporting their largest one-day increases in new cases yet. Florida reported 2,783 new cases, Texas 2,622, and Arizona 2,392.
  • On Tuesday, both the House Energy and Commerce and Senate Energy and Natural Resources committees held hearings pertaining to the U.S. energy sector, which has lost 1.3 million jobs in the economic downturn due to the pandemic.  There was a push to include direct payments to wind and solar projects in the next COVID-19 stimulus package.  Sen. Joe Manchin (D-WV), said he backs some “targeted investment” to help the broader energy sector including clean energy but also fossil fuels to put people back to work and “advance our clean energy goals.”
  • The Senate Ethics Committee and the Justice Department have ended their investigations into Sen. Kelly Loeffler’s (R-GA) stock trades.  Deborah Sue Mayer, the Ethics Committee’s chief counsel said in a letter, “based on all the information before it, the Committee did not find evidence that your actions violated federal law, Senate Rules or standards of conduct.”
  • President Trump may soon be welcoming foreign leaders to the White House again after a pause due to the coronavirus pandemic, and his aides are in talks to host the president of Poland, Andrzej Duda.  President Trump plans to announce an increase in the number of U.S. troops stationed in Poland.
  • Federal Reserve Chairman Jerome Powell told lawmakers Wednesday that circulation of physical U.S. coinage slowed to a near halt amid the coronavirus outbreak but that the central bank is working to fix the flow.  The spread of COVID-19 led to a rise in contactless payments and more limited cash circulation as more Americans sheltered in place and shopped online.

In the News:

  • Stocks rose slightly in volatile trading on Wednesday as gains in the major tech companies offset a decline in the groups that would benefit the most from an economic reopening.  The Dow Jones Industrial Average traded 41 points higher, or 0.1 percent. The S&P 500 gained 0.3 percent while the Nasdaq Composite advanced 0.8 percent.
  • Google is offering an additional $200 million in advertising grants for nonprofit organizations and is releasing a slew of product updates as its gears up for a reopening of economies hit by the coronavirus pandemic.  It’s also adding new features to its platforms, such as a tool that lets users search and book local services on Google through its Local Services Ads offering.
  • Home construction in the U.S. rebounded by 4.3 percent in May after steep declines due to the COVID-19 pandemic.  The Commerce Department reported Wednesday that the May rise in home construction followed declines in April and March.
  • The third-largest movie theater chain in the U.S., Cinemark, is looking to have all of its more than 500 cinemas reopened by July 17. The company announced on Wednesday a phased reopening plan starting June 19 in Texas. The rest of its locations will open between July 3 and July 17.
  • The World Health Organization (WHO) announced Wednesday it is dropping hydroxychloroquine from its global study looking at potential treatments for the coronavirus.  The decision to end hydroxychloroquine testing in the Solidarity trial came after data from the trial and another study suggested it would not be beneficial, said Ana Maria Henao Restrepo, a WHO medical officer. The announcement is likely to further dampen hopes the drug is helpful against the coronavirus.
  • More than 60 percent of commercial flights in and out of Beijing have been canceled as the Chinese capital raised its alert level Wednesday against a new coronavirus outbreak and other nations confront rising numbers of illnesses and deaths.

 

Coronavirus: The Hill and the Headlines – COVID-19 D.C. Update – June 16, 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 Small Business Administration (SBA)  said it resumed accepting applications yesterday from small businesses for a disaster-aid program, known as the Economic Injury Disaster Loan program.
  • During a phone call with governors Monday, Vice President Mike Pence urged the state leaders to take on the Trump administration’s explanation for rises in cases, that more testing has led to more positive cases.  He advised the states to “encourage people with the news that we are safely reopening the country.”  But data shows that seven-day averages in several states have increased since May 31, and at least 14 states have seen the positive cases overtake the amount of testing conducted, according to the New York Times.
  • Inspectors general are saying the administration informed them it doesn’t view the largest pieces of the CARES Act, including the $670 billion PPP and a $500 billion economic stabilization fund, as subject to the same transparency and disclosure requirements as the rest of the law.  This internal Trump administration legal position would impede their ability to monitor trillions of dollars in coronavirus relief spending unless Congress acts.  So far, it appears there’s bipartisan support shaping up to do so.
  • Global equities have rallied on growing expectations that the U.S. will deploy a new round of stimulus measures to steady the world’s biggest economy. “A report by Bloomberg that the Trump administration is preparing a $1 trillion infrastructure spending package to stimulate economic growth helped to inject an upbeat mood in the markets, said Jim Reid, strategist at Deutsche Bank. ‘The prospect of further stimulus was already known, however the size and timing was more up in the air,’ he said. “Much of the spending would be earmarked for infrastructure such as roads and bridges, but some would also be allocated to improving America’s digital network through improved rural broadband and 5G wireless infrastructure, Bloomberg reported. Still, it remains unclear how the Trump administration would fund the sprawling stimulus measures.”  Senate Republicans have said they would not consider a large-scale infrastructure package.
  • According to Politico, Rep. Roger Williams (R-TX), Rep. Vicky Hartzler (R-MO), Rep. Susie Lee (D-NV), Rep. Debbie Mucarsel Powell (D-FL) have benefited directly from the Paycheck Protection Program (PPP).  Each of the lawmakers who received PPP loans, either directly for their business or indirectly through a spouse, says the loans were acquired through proper channels and part of a desire to help keep Americans employed.  While it is not illegal for lawmakers to apply for or accept the money, it has raised new questions about lawmakers’ potential conflicts of interest as they craft the next coronavirus rescue package.
  • House Speaker Nancy Pelosi (D-CA) sent out a “Dear Colleague” letter Monday urging the Senate to act on the HEROES Act, saying “Republican Senators are turning their backs on the American people. The virus doesn’t pause, unemployment doesn’t pause, hunger doesn’t pause and neither should we.”
  • Rep. Tom Rice (R-SC) became the latest member of Congress to test positive for coronavirus.  Rep. Ilhan Omar’s (D-MN) father has died from complications resulting from coronavirus.
  • Nursing homes are responsible for more than a quarter of the nation’s COVID-19 fatalities.  Medicare and Medicaid chief Seema Verma mandated that states verify that staff are following proper procedures to prevent coronavirus transmission by July 31 or risk losing federal recovery funds.
  • Senate Minority Leader Chuck Schumer (D-NY) and Sen. Sherrod Brown (D-OH), the Banking Committee’s top Democrat, told Brian Miller the new watchdog in charge of overseeing the pandemic corporate bailout fund in a letter that they’re concerned he won’t be independent of his former employer: The White House. They said, “ultimately, your duty is to the American people, not the president.”
  • The Department of Homeland Security (DHS) announced Tuesday that the U.S. borders with Canada and Mexico will remain closed to nonessential travel for at least another month. The three countries have extended their border restrictions in 30-day intervals since March 20.  Previously set to be lifted on Sunday, they will now last until at least July 21.
  • House Energy and Commerce Chairman Frank Pallone (D-NJ) wrote Centers for Medicare and Medicaid Services (CMS) Administrator Seema Verma today to reiterate his request and the CMS’s promise to release demographic claims data concerning the outcomes of COVID-19 based on race, ethnicity.  The CMS had promised the information back in April but has yet to respond.

In the News:

  • Retail sales shattered expectations in May as many coronavirus lockdowns were lifted allowing consumers to begin shopping again.  Retail sales jumped 16.8 percent higher from a month ago. Clothing and accessories stores reported the biggest gain at 188 percent while sporting goods, hobby, musical instruments, and bookstores rose 88.2 percent.
  • Stocks surged Tuesday after the news of May’s positive retail sales.  The Dow Jones Industrial Average traded 679 points higher, or 2.6 percent.  The S&P 500 gained 2.5 percent while the Nasdaq Composite climbed 2.3 percent.
  • A widely-used steroid called dexamethasone could have an “immediate impact” on how doctors treat the most severe cases of COVID-19, potentially reducing the mortality rate of the disease, former Food and Drug Administration Commissioner (FDA) Dr. Scott Gottlieb says.  In one study, the drug cut the risk of death by a third for patients on ventilators and by a fifth for those on supplemental oxygen.
  • COVID-19 cases are spiking in states across the U.S.  According to CovidExitStrategy.org, which tracks the number of coronavirus cases and the percentage of tests that come back positive found that more than half the states are now trending poorly.  Several states including Utah, South Carolina, Alabama, Texas, and Florida have reported significant jumps in cases in recent days.
  • Cobra Biologics on Tuesday said it had signed a supply agreement with AstraZeneca to manufacture its COVID-19 vaccine candidate.  The first delivery of the potential vaccine is expected in Britain in September.
  • Apple will reopen 10 of its stores in New York City this week, but many of them will be “appointment only.”  It’s the first time Apple stores in the city will be open since March when the company shuttered its locations amid the pandemic.
  • The U.S. Open tennis tournament will be held on schedule but without fans in attendance, New York Gov. Andrew Cuomo announced, saying players and staff will be subject to testing, additional cleaning, extra locker room space, and dedicated housing and transportation.  The event will take place August 31 to September 13 in Queens.

 

Coronavirus: The Hill and the Headlines – COVID-19 D.C. Update – June 15, 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:

  • On Saturday, White House trade adviser Peter Navarro said that the White House is targeting a phase four stimulus package focusing on American manufacturing that will be “at least $2 trillion dollars.”  On CNN he said, certain service-oriented industries like entertainment, hospitality, and transportation have especially been hurt because of COVID-19.  “The only way to fully rebuild the economy in the face of those headwinds is to significantly expand and strengthen our manufacturing base. Put simply, we need to create more manufacturing jobs.  They provide good wages but also create more jobs both up- and downstream through multiplier effects.”  Efforts seem to be focused around the President’s two simple rules — Buy American, Hire American — along with incentives for American companies to bring offshored jobs back home.
  • Chairman Jim Clyburn (D-SC) and Democratic members of the House Select Subcommittee on Coronavirus Crisis on Monday sent letters to the Treasury Department, the Small Business Administration (SBA), and the chief executives of eight national banks demanding they hand over information about businesses that obtained loans through the SBA’s Paycheck Protection Program (PPP).  The letters say the committee members are investigating whether PPP “has favored large, well-funded companies over struggling small businesses in underserved communities — contrary to Congress’ clear intent.”  The request came after Treasury Secretary Steven Mnuchin last week said the administration refuses to disclose the recipients of the PPP’s nearly 4.6 million loans––even though the PPP loan application told borrowers their information would be released.   On Monday, Mnuchin tweeted that he will talk with the Senators and others on a “bipartisan basis” about striking a balance between protecting the privacy of recipients of small business loans and ensuring proper oversight of the funds.
  • Federal Reserve Chairman Jerome Powell will deliver a cautionary message about the U.S. economy and COVID-19 when he appears twice on Capitol Hill this week. His remarks are expected to echo the downbeat assessment he gave June 10 highlighting the hardships faced by millions of Americans who’ve lost work.  White House economic director Larry Kudlow, said on CNN on June 15 that “there is a very good chance you are going to get the V-shaped recovery. 2021 is going to be another solid, solid year.”
  • On Friday, House Energy and Commerce Chairman Frank Pallone (D-NJ) and Rep. Mike Doyle (D-PA) sent a letter to FCC Chairman Ajit Pai with concerns over “a lack of transparency” about the agency’s use of funds for its COVID-19 Telehealth Program, pointing to reports that health care providers are facing issues obtaining funds.
  • Public health experts are growing increasingly worried that the White House will pressure regulators to approve the first coronavirus vaccine candidate to show promise without proof that it provides effective, reliable protection against the virus.  Drugmakers and health agencies have already begun rewriting the rules of vaccine research, launching candidates into clinical trials at record speed.  Food and Drug Administration (FDA) Commissioner Stephen Hahn denied that political pressure has influenced his agency’s coronavirus response.  He said, “under no circumstances will the FDA allow political pressure to affect our decision-making and, importantly, that has not occurred on my watch.”
  • U.S. Rep. Tom Rice announced Monday that he, his wife, and son have tested positive for COVID-19.  In a Facebook post, he said he and his family are “on the mend and doing fine.”
  • The Food and Drug Administration (FDA) on Monday withdrew emergency use authorizations for two coronavirus treatments that the President has touted, including hydroxychloroquine and chloroquine in response to a request by the acting director of Biomedical Advanced Research and Development Authority (BARDA), Gary Disbrow.  FDA chief scientist Denise Hinton said in a letter that after reviewing new information from large clinical trials the agency believes that the drugs “are unlikely to produce an antiviral effect.”

In the News:

  • More than 2 million confirmed cases of COVID-19 have been reported in the U.S., and more than 115,000 Americans have died from the disease.  Nearly 800 Americans are still dying each day.
  • Governor Andrew Cuomo warned New Yorkers against triggering a second wave of the coronavirus, singling out bars and restaurants in Manhattan and the Hamptons as the worst offenders among 25,000 complaints filed to the state.  He said he would reimpose shutdowns if businesses failed to comply with current restrictions and people didn’t socially distance.
  • Houston opened to 75 percent capacity on Friday, but it may not last long. Officials are cautioning that they may need to order people back home and open a COVID-19 hospital at NRG Stadium, a football complex, as coronavirus cases surge in the nation’s fourth-largest city.
  • For the first time since tracking began, the number of coronavirus cases in Alabama grew by more than 1,000 in a day.  South Carolina recorded nearly 800 new coronavirus cases on Sunday, raising the state’s seven-day average for the 17th day straight.  Cases in North Carolina continued to climb Sunday at near-record numbers with 1,443 new COVID-19 cases.  Washington State Governor Jay Inslee said the report shows that “cases and deaths will soon increase substantially if COVID-19 continues to spread at the current levels.”  Florida recorded its “second-largest single-day total” in positive tests at 2,016.
  • Stock futures and international indexes fell, as investors questioned whether fresh outbreaks of the new coronavirus could hold back global economic recovery.  S&P 500 stock futures fell about 3 percent and Dow futures lost 3.5 percent.
  • Borders opened up across Europe on Monday after three months of coronavirus closures that began chaotically in March. But many restrictions persist, it’s unclear how keen Europeans will be to travel this summer and the continent is still closed to Americans, Asians and other international tourists.
  • Coronavirus cases are growing faster than ever in Mexico, Chile, and Argentina, while Peru posted its deadliest day yet and a new study showed the virus may be far more widespread in Brazil than official data suggests.