Emerging Technologies Washington Update

April 11, 2019

Pardon Our Dust

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This Week: Opposition to European digital taxes mounts in Congress and the administration, Senate Judiciary Subcommittee holds hearing on free speech and technological censorship, Senator Markey introduces bill to improve children’s Internet safety, Senate and House legislators reintroduce Vehicle Innovation Act, House lawmakers pass net neutrality bill.

Week in Review

Following his decision to rescind Ronald Vitiello’s nomination to serve as Director of Immigrations and Customs Enforcement (ICE), the President announced on Sunday evening that Secretary of Homeland Security Kirstjen Nielsen would resign and that Customs and Border Protection Commissioner Kevin McAleenan would step in as Acting Secretary. Secret Service Director Randolph ‘Tex’ Alles, who reports to the Secretary of Homeland Security, was also removed from his position. Career USSS officer James Murray will take over next month. Upon the news, Senate Minority Leader Chuck Schumer (D-NY) called on Alles to testify before Congress about security vulnerabilities at Mar-a-Lago after a Chinese national arrested with counterintelligence equipment. Later in the week, outgoing Secretary Nielsen said that Acting Deputy Secretary of Homeland Security Claire Grady had also sent the President a resignation letter, effective Wednesday. TSA Administrator David Pekoske will temporarily step into that role, with Deputy Administrator Patricia Cogswell managing TSA’s day-to-day operations.

Elsewhere, the President attended a credentialing ceremony for new ambassadors on Monday. The administration also took steps this week to rollback an Obama-era policy under which the Cuban Baseball Federation was considered separate from the Cuban government, enabling Cubans to play Major League Baseball in the United States.

The Senate considered a number of nominations on the floor this week, including David Bernhardt’s nomination to serve as Secretary of the Interior. Senators voted 56-41 today to confirm Bernhardt, who has been leading the Department in an acting capacity since former Secretary Ryan Zinke resigned.

The House spent most of an abbreviated work week on the Save the Internet Act, the Democratic proposal to restore Obama-era net neutrality regulations (see below for additional details). Leadership also unveiled a new $17.2 billion disaster aid package that adds $3 billion for Midwest flooding. While the impasse between the House and the Senate over funds for Puerto Rico hurricane recovery continues, senators from states recently impacted by natural disasters will meet with the President this afternoon to discuss a potential path forward. The House adjourned early for the Democratic policy retreat on Thursday and Friday in Virginia.

Looking Ahead

Both the House and the Senate will be in recess for the next two weeks and will return to Washington the week of April 29. During the recess, the House Administration Subcommittee on Elections will hold a series of field hearings on voting rights, including sessions in North Dakota and North Carolina. Looking further ahead, the Senate Armed Services Committee will begin marking up the FY20 National Defense Authorization Act (NDAA) the week of May 20.

In the coming weeks, Senate Majority Leader McConnell (R-NY) and Speaker Pelosi (D-CA) will endeavor to reach a two-year deal on budget caps. Staff-level negotiations are likely to begin during the recess. After the recess, the House Energy and Commerce Committee is expected to hold a hearing on a potential federal privacy framework with testimony from the Federal Trade Commission.

Opposition to European Digital Taxes Mounts in Congress and the Administration

As France moves ahead with a new tax on digital services companies, most of which are US-based, members of Congress and senior administration officials are exploring ways to counter the tax and to discourage other European countries from taking similar steps. This week, Clete Willems, the outgoing deputy director of the White House National Economic Council, said that the United States is disappointed France is moving ahead on its own after a proposal to implement EU-wide tax failed to move forward amid opposition from Denmark, Finland, Ireland, and Sweden. Willems said that the Organization for Economic Co-operation and Development (OECD) should be the venue for an international agreement and that independent countries’ efforts complicate that process. The administration is urging France to delay implementation until 2021, or to revoke its own tax at the end of 2020, when OECD negotiations are set to end.

Members of Congress are also urging the administration to take action in response to the new French tax. Last week, Republican members of the House Ways and Means Committee wrote to the President arguing that France and any other country to moves ahead with its own digital services tax should be considered a “trade barrier.” There is bipartisan opposition to Europe implementing taxes that largely impact US-based companies. Senate Finance Committee Chairman Grassley (R-IA) and Ranking Member Wyden (D-OR) and House Ways and Means Committee Chairman Neal (D-MA) and Ranking Member Brady (R-TX) issued a joint release this week stating that “the tax challenges that have arisen due to digitalization of the economy affect businesses headquartered all over the world, and solutions to these challenges are best negotiated multilaterally.”

Treasury Secretary Steve Mnuchin and French Finance Minister Bruno Le Maire are scheduled to meet in Paris on May 7.

Senate Judiciary Subcommittee Holds Hearing on Free Speech and Technological Censorship

Yesterday, the Senate Judiciary Subcommittee on the Constitution held a hearing entitled “Stifling Free Speech: Technological Censorship and the Public Discourse.” The hearing included two panels of witnesses, the first of which featured executives from Twitter and Facebook. The company representatives provided details regarding their content evaluation practices and briefed the Subcommittee on efforts to maintain neutral oversight of user activity. The second panel featured issue experts as well as victims of faulty content censorship practices.

Similar to previous hearings on this topic, Republican lawmakers expressed concern that dominant platforms engage in biased censorship practices that stifle conservative content and free speech on social media sites. Subcommittee Chairman Cruz (R-TX) suggested Congress should examine potential remedies to this issue, such as reforming Section 230 of the Communications Decency Act (CDA) to eliminate safe harbor protections for technology companies or employing antitrust law. Ranking Member Hirono (D-HI) criticized the Subcommittee for focusing on an issue that she believes lacks sufficient evidence instead of addressing more pressing matters related to privacy and foreign interference.

Chairman Cruz noted the Subcommittee will hold additional hearings on content censorship later this year.

Senator Markey Introduces Bill to Improve Children’s Internet Safety

On April 4, Senator Ed Markey (D-MA) announced plans to introduce legislation that would increase online protections for children. The Kids Internet Design and Safety (KIDS) Act creates new regulations to prevent manipulative practices, such as autoplay features on sites that encourage children to continue watching videos. The Act also establishes industry requirements to mitigate children’s exposure to certain online advertisements and graphic content. “While kids’ technology use and media consumption have exploded in recent years, our laws have failed to keep pace,” Senator Markey noted. “I’m proud to introduce the KIDS Act to combat manipulative design features, unhealthy marketing practices, and the amplification of harmful content that makes the internet a gauntlet of hazards for children today.” Markey formally announced the bill during the Truth About Tech conference organized by Common Sense Media and the Center for Humane Technology.

Senate and House Legislators Reintroduce Vehicle Innovation Act

This week, Senators Peters (D-MI.), Stabenow (D-MI), and Alexander (R-TN) and Reps. Dingell (D-MI) and Stevens (D-MI) reintroduced the Vehicle Innovation Act. The bill is virtually identical to a title of the Energy Policy Modernization Act, which passed the Senate in 2016, and authorizes the Secretary of Energy to spend over $300 million annually for five fiscal years for research, development, engineering, demonstration, and commercial application of vehicle and vehicle-related technologies. 

The bill aims to explore and promote technologies that reduce the use of and emissions from petroleum-based fuels through energy efficiencies and other technological improvements, such as electric, natural gas, and hydrogen-powered vehicles. It also supports research and development, as well as commercial application of each vehicle or vehicle-related system in which energy and environmental improvements are possible. Further, it directs the Secretary to explore transformational technology, such as in the areas of communication and connectivity among vehicles, infrastructure, and the electric grid. The bill encourages industry participation through cooperation and public-private partnerships, as well as by interagency, intra-agency, and intergovernmental collaboration, and provides criteria for the issuance of grants to industry and State and local governments.

The Vehicle Innovation Act establishes a separate competitive grant program for research, development, engineering, demonstration and commercial application of innovative technologies for medium- and heavy-duty commercial and transit vehicles.  

House Lawmakers Pass Net Neutrality Bill

On Tuesday, the House voted 232-190 to pass the Save the Internet Act (H.R. 1644), largely along party lines with one Republican voting in favor of the bill to restore Obama-era net neutrality regulations. The previous evening, the House Rules Committee made 12 of 17 filed amendments in order, including two Republican amendments. One requires the Government Accountability Office to study the role of all companies within the internet ecosystem. The second requires the FCC to publish a list of the common-carrier regulations it will not apply to internet service providers. 

Despite its success in the House, the Save the Internet Act is unlikely to move forward in the Senate with Majority Leader McConnell (R-KY) describing the bill on Tuesday as “dead on arrival.” Furthermore, the Office of Management and Budget (OMB) issued a statement on Monday announcing that White House advisers would recommend the President veto the bill if it were to reach his desk. OMB called the proposal “a heavy-handed regulatory approach” and argued that it would “prevent the Commission from adopting rules similar to the current regulations, tying the hands of the Commission in the future and preventing the agency from evolving its rules to adapt to emerging technologies.”