Emerging Technologies Washington Update

July 16, 2020

Pardon Our Dust

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This week: Coronavirus response; EU Court Strikes Down EU-US Privacy Shield; Biden Campaign Releases Federal Technology R&D Proposal; and New Rule Prohibits Contracts with Entities Using Covered Telecommunications Products.

Coronavirus Response

The Latest

While the Senate remains in recess until next week, the House is continuing to hold hearings examining various COVID-19-related issues, including its impact on certain sectors and communities and the federal government response. This week, committees looked at issues ranging from capital markets and worker protections in the COVID-19 era, solutions for a small business recovery, the need for more federal investments in technology in light of COVID-19, protecting homeowners during the pandemic, and the role of workforce development and small business rehiring. Tomorrow, committees will address oversight of the Small Business Administration and Department of Treasury pandemic programs and the impact of COVID-19 on social security. Former Federal Reserve Chairs will also speak about the federal response to the economic crisis.

On Monday, President Trump signed S. 4091, the “Emergency Aid for Returning Americans Affected by Coronavirus Act,” into law, increasing the amount that the Department of Health and Human Services may spend for the provision of assistance to repatriated U.S. citizens in fiscal year 2020 from $1 million to $10 million. Elsewhere, amid mounting criticism and litigation, the Administration backed away from plans this week to require international students to depart the country if their coursework moves online this fall.

The Treasury Department and Small Business Administration (SBA) released updated guidance this week for the Paycheck Protection Program (PPP) lender processing fee payment and 1502 reporting process. SBA also released a summary of PPP lending as of July 10 and the Treasury published updated FAQs on the CARES Act Payroll Support Program for air carriers and contractors. The Federal Reserve Board announced it will extend the rule to allow certain bank directors and shareholders to apply to their banks for PPP loans for their small businesses.

Find more on actions Congress and the Administration have taken to respond to the pandemic here.

What’s Next

With the Senate returning to Washington next week, Majority Leader McConnell (R-KY) is expected to soon unveil his proposal for Phase 4 coronavirus response legislation, which will differ from the House-passed HEROES Act in a number of key ways. At a high-level, the Senate Republican bill will likely not exceed $1 trillion, while the House Democratic package totals $3 trillion. McConnell has also been explicit that his focus is on economic reopening and that liability protections will be core to the bill. Congressional Democrats have panned that approach, focusing instead on providing more support for state and local governments.

There will also be significant debate around the expiring CARES Act provision, which expires July 31, that temporarily provides an extra $600 per week in unemployment benefits for pandemic-related job loss. Additionally, there is growing bipartisan support to extend the Payroll Support Program for air carriers and contractors as several airlines have notified tens of thousands of employees that they will or may be laid off when that program expires on October 1.

With just a handful of legislative days remaining before Congress is scheduled to depart in early August for the summer recess, leadership will have little time to reach a deal, but will be under intense pressure to do so as lawmakers prepare to spend weeks at home with their constituents.  

Next week, the Senate and House have scheduled a number of COVID-19-related hearings on topics including the need for Federal IT modernization, protecting Americans from COVID-19 scams, a discussion with COVID-19 vaccine manufacturers, and getting American veterans back to work. The Senate Homeland Security and Governmental Affairs Committee will markup S. 4204, the Federal Emergency Pandemic Response Act; S. 4210, the Securing Healthcare Response and Equipment Act; S. 4153, the National Response Framework Improvement Act; S. 4157, the National Infrastructure Simulation and Analysis Center Pandemic Modeling Act; and S. 4158, the PPE Supply Chain Transparency Act.

Relevant Resources

In Other News

EU Court Strikes Down EU-US Privacy Shield

Today, the Court of Justice of the European Union (CJEU), the highest court of the European Union (EU), struck down a major agreement governing the transfer of EU citizens’ data to the United States, the EU-US Privacy Shield. At its core, the case reflects a conflict between United States surveillance law and European data protection and privacy laws.

According to a press release following the highly anticipated ruling, the Court found that the limitations from surveillance by U.S. public authorities on the personal data transferred from the European Union does not satisfy “requirements that are essentially equivalent to those required under EU law” concluding that the United States surveillance programs “are not limited to what is strictly necessary.”  The Court also found that its decision is consistent with the principles of the General Data Protection Regulation (GDPR) and other EU Provisions on personal data that guarantee respect for private and family life, personal data protection and the right to effective judicial protection.” 

U.S. Secretary of Commerce Wilbur Ross expressed deep disappointment in the ruling, noting that the United States is studying the decision further to understand its practical impacts on $7.1 trillion in transatlantic digital trade between Europe and the United States. The largest percentage of this trade is said to be between small-medium enterprises (SMEs) or start-ups.

Biden Campaign Releases Federal Technology R&D Proposal

Last week, presumptive Democratic presidential nominee Joe Biden released a $300 billion plan to promote research and development (R&D) of emerging technologies in America. The plan promises to protect American intellectual property, use government funds to invest in the next generation of technology, and demonstrate global leadership in technological innovation. To achieve these goals, the Biden campaign is advocating for major increases in federal R&D spending through programs like the Defense Advanced Research Projects Agency (DARPA) and the National Institutes of Health (NIH); creating new federal R&D programs to direct investment towards critical technologies such as 5G and artificial intelligence; implementing better workforce development programs in order to close the skills gap and promote STEM education; and providing resources for educational institutions and research centers to build new labs, buy modern equipment, and construct business parks.

In addition, the Biden campaign argues that highly profitable products developed with the support of federal funds should provide royalties to the government, so American taxpayers see the financial benefits of their investment. Finally, the proposal includes protections for workers whose companies receive federal R&D funds. The protections include notice of technology changes and automation in the workplace, paid skills training programs so workers can succeed in new jobs, and requirements for employers to negotiate with unions in order to protect workers who would otherwise be displaced by new technologies.

New Rule Prohibits Contracts with Entities Using Covered Telecommunications Products

On Tuesday, the Federal Acquisition Regulation (FAR) Council published an interim rule implementing Section 889(a)(1)(B) of the John S. McCain National Defense Authorization Act for Fiscal Year 2019, prohibiting executive agencies from entering into, renewing, or extending contracts with an entity that uses any equipment, system, or service that uses covered telecommunications equipment or services as a substantial or essential component of any system, or as critical technology as part of any system. The covered equipment and services are those produced or provided by a number of Chinese companies, including, but not limited to, Huawei and ZTE and their subsidiaries and affiliates. The interim rule will take effect on August 13, 2020. However, a one-time waiver may be granted on a case-by-case basis that will expire no later than August 13, 2022. Contractors who have incorporated such equipment or services in their systems and operations, particularly those with federal contracts, must now review and modify their supply chains to ensure they are in compliance.