The tech sector was both the beneficiary of immense public investments and the target of significant regulation from public policy makers in the past year.  This dynamic is expected to continue with the new Congress and the Administration.

In August, Congress enacted the bipartisan $280B CHIPS and Science Act to boost public and private sector investments in critical and emerging technologies.  The law included $50 billion for the CHIPS for America Fund, as well as a 25% tax credit for U.S. chip manufacturing.  The Commerce Department is expected to begin considering grant applications as soon as February and awarding funds next year.  The law also authorized, but did not fund, a host of new programs to spur research and development across the tech sector and to create a new technology directorate at the National Science Foundation.

Despite this major bipartisan law to support the tech industry, policymakers also supported significant new bills and regulations to rein in the sector.  Most prominently, Democrats and Republicans teamed up to sponsor a host of antitrust bills and hauled in top tech executives to testify and defend their practices. 

We expect a similar “hot-and-cold” dynamic in the new Congress with a mix of public support and scrutiny.  In line with its public support under the CHIPS and Science Act this year, Congress is expected to increase funding for the National Science Foundation to jumpstart a new era of invention and global technology leadership.  At the same time, the Republican majority in the House is likely to pursue an array of bills that challenge tech companies.  The focus is expected to shift from antitrust law toward content moderation and economic decoupling from China that are of particular interest to Republicans.

Continue Reading CONGRESS AND THE BIDEN ADMINISTRATION TO CONTINUE PUBLIC SUPPORT AND SCRUTINY OF TECH SECTOR

With just one race in each chamber still pending, we know that in the 118th Congress, Republicans will control the House with a slim majority, and Democrats will hold the Senate with either 50 or 51 votes. Republicans will field new chairs for every House committee. On the Senate side, with Democrats maintaining control, there will be only minor changes to committee leadership.

Both chambers have elected their party leadership. In the House Republican conference, Republicans have nominated Kevin McCarthy (R-CA) for Speaker of the House in a 188-31 vote, and have elected Steve Scalise (R-LA) for House Majority Leader, Tom Emmer (R-MN) for House Majority Whip, and Elise Stefanik (R-NY) for Republican Conference Chair. When the new Congress is sworn in on January 3, 2023, Mr. McCarthy must win a majority of the vote of the full House to be elected Speaker. Mr. McCarthy lost 31 votes in the Republican conference race for Speaker, and will have to win over the vast majority of these no votes to be elected by the full House in January. 

This morning, House Democrats elected a new generation of leaders. Approved by acclimation, Hakeem Jeffries (D-NY) is the House Minority Leader, Katherine Clark (D-MA) is the House Minority Whip, and Pete Aguilar (D-CA) is the Democratic Caucus Chairman. Mr. Jeffries is the first Black lawmaker to lead a party caucus in Congress. Current House Majority Whip Jim Clyburn (D-SC) and Rep. David Cicilline (D-RI) are competing for the position of Assistant Democratic Leader, the #4 leadership spot in the House Democratic Caucus. That election is tomorrow. Yesterday, Democrats named Nancy Pelosi “Speaker Emerita,” a role with no formal responsibilities but one in which Pelosi is expected to advise the new Democratic leadership.

Continue Reading Outlook for Party and Committee Leadership and Committee Priorities in the 118th Congress

On 19 October 2022, the European Commission (the “Commission”) adopted its new State aid Framework for research, development and innovation (the “2022 RDI aid Framework”). This instrument governs Member States’ investment in RDI activities. It is an important response to the 2020 Commission Communication on a new European Research Area for Research and Innovation (the “ERA Communication”), aiming at strengthening investments and reaching a 3% GDP investment target in the field of RDI. The 2022 RDI aid Framework is a revision of the previous version of 2014.

The three most important things you need to know about the 2022 RDI aid Framework are:

  • The Commission’s approval is subject to a set of criteria to determine whether the aid is justified and can be authorised, and compliance with recent EU objectives such as the EU Green Deal and the EU Industrial and Digital Strategies will have a positive influence on the Commission’s assessment;
  • RDI activities now explicitly include digitalisation and digital technologies; and
  • Member States can grant aid for testing and experimentation infrastructures which predominantly provide services to undertakings for R&D activities closer to the market.

Background

Similarly to its previous version, the 2022 RDI aid Framework recalls the instances where RDI aid does not qualify as a State aid and is therefore not caught by the State aid rules. This would be the case where the aid is granted to non-economic activities conducted by universities or where universities, although publicly funded, engage in RDI activities with companies pursuing commercial goals.

Continue Reading The Commission has revised its framework for State aid for research and development and innovation

Mandatory gender pay gap reporting is new to Ireland and is likely to attract media attention and potential comparisons, particularly for multinational and higher profile companies.  Deciding how best to communicate the gender pay gap – if it exists – will be important in averting any particular anxieties which may arise for employees and their representatives in particular. 

Ireland’s unadjusted 11.3% gender pay gap, last reported in 2019, is below the then EU average of 14.4% (down to 13% in 2020 without Ireland, Greece and the UK reporting) and is explained largely by education, occupation, working time and enterprise size.  It is pretty typical of most other EU states and addressing the EU gender pay gap is a key focus for the EC’s gender equality policy.  It is also important for Europe in addressing the estimated 30.1% pension gap feeding the at-risk-of-poverty rate disparity between the sexes.

What organisations are in scope?

The first compliance deadline looms this December for employers of more than 250 employees.  The workforce threshold numbers will decline on a staggered basis over the next two years but smaller employers with less than 50 employees are exempt.

Picking a snapshot date for reporting

The Employment Equality Act 1998 (Section 20A)(Gender Pay Gap Information) Regulations 2022 detail the reporting requirements for employers in Ireland.  Organisations in scope this year (having more than 250 employees) are required to pick a snapshot date from last June and to report the results no later than 6 months later, December 2022. 

Continue Reading New Gender Pay Gap reporting – deadlines loom in Ireland

As noted in our COP27 recap, this year’s climate summit in Sharm el-Sheik involved both the historic creation of a fund to compensate countries most impacted by climate change, as well as lost opportunities to adopt more ambitious and accelerated climate mitigation commitments.  Perhaps hidden between these headlines, President Biden announced an initiative with significant implications for federal contractors.  Under this proposal, the United States would become the first country to require major government suppliers and contractors to set science-based emissions reduction targets aligned with the Paris Agreement.  It would also require contractors to disclose their greenhouse gas (GHG) emissions and climate risks. 

This initiative—the proposed Federal Supplier Climate Risks and Resilience Rule—would have wide-reaching impacts if ultimately finalized.  Collectively, the proposed rule would cover about 86 percent of the federal government’s supply chain GHG impacts and 86 percent of federal annual spending.  To put this in perspective, in the last fiscal year alone the United States purchased $630 billion in goods and services.

The comment period for the proposed Federal Supplier Climate Risks and Resilience Rule closes on January 13, 2023.  The proposed compliance requirements for major contractors would start two years after publication of a final rule.  If promulgated, this rule may be challenged in court along the lines of the Biden Administration’s COVID-19 vaccine mandate for federal contractors. 

Continue Reading US Government Proposes Rule Requiring Major Federal Contractors to Disclose Greenhouse Gas Emissions and Establish Science-Based Emissions Reduction Targets

The United Nations annual climate change conference—officially known as the 27th Conference of the Parties to the UN Framework Convention on Climate Change (“UNFCCC”), or COP27 for short—held in Sharm el Sheik, Egypt, finally concluded early Sunday morning, more than 24 hours late.

COP27 was held amidst the ongoing Russian war in Ukraine and the consequent economic turmoil, including Europe’s scramble to secure non-Russian gas. It was previewed by a UNFCCC report which concluded that on its current trajectory the world faced warming of between 2.5 and 2.9 degrees Celsius by the end of the century, and accompanied by a new report from the International Energy Agency’s 2022 World Energy Outlook which concluded that the world needed to spend at least $4 trillion annually to tackle climate change from now until 2030.

Against this challenging backdrop, COP27 was never going to be straightforward. But those difficulties were compounded by divisions between developing and developed world over the priorities that should form the focus for COP27. Those divisions manifested themselves most clearly in tensions before, during, and at the conclusion of the Conference over the issue of “loss and damage.” This acrimony overshadowed almost all other aspects of the COP, which will nonetheless be viewed as historic for being the first COP to not only place the loss and damage issue on the official agenda, but for its creation of a separate fund to compensate countries most impacted by climate change. But loss and damage aside, the broader picture that emerged from COP27 was one of lost opportunities to adopt more ambitious and accelerated climate mitigation commitments in response to the dire scientific warnings about the impact of rapid global warming on the planet. In particular, efforts calling for a phase down of all fossil fuels were ultimately unsuccessful in the Summit’s final agreement and highlighted the mismatch between the pace of global emissions reduction commitments and that which is needed to avoid the most disruptive climate impacts.

Continue Reading COP27: A Flawed though still Consequential Climate Summit

On Monday, November 7, the Supreme Court heard argument in Axon Enterprise, Inc. v. FTC and SEC v. Cochran to decide whether a party subject to an FTC or SEC administrative proceeding can simultaneously challenge the constitutionality of an administrative proceeding, or even of the agency itself, in federal district court rather than waiting for final agency action.  At least five Justices expressed some measure of support for the private parties’ arguments, which indicates that the Court may permit certain kinds of collateral constitutional attacks (e.g., due process and appointments clause claims) at the outset of administrative proceedings.

Although predicting the outcome of any case from the oral argument is extremely difficult, three Justices – Neil Gorsuch, Samuel Alito, and Clarence Thomas – expressed strong support for finding in Axon’s and Cochran’s favor. Through their questions, they implied that 28 U.S.C. Section 1331, which grants federal district courts “original jurisdiction of all civil actions arising under the Constitution of the United States,” provides a clear grant of jurisdiction over constitutional claims and neither the FTC Act nor the Securities Exchange Act of 1934 (“the Exchange Act”) could strip district courts of that jurisdiction. They also suggested that Free Enterprise Fund v. PCAOB requires a finding for the companies. In PCAOB, the Court held that a district court had jurisdiction to hear an appointments clause challenge to PCAOB’s structure despite the fact that the SEC had not yet issued a final order against Free Enterprise Fund.

Other justices appeared to favor the private parties, but not as overtly. Chief Justice John Roberts’s questions suggested that PCAOB may prove to be an insurmountable barrier to the government’s claims and that the availability of jurisdiction in other forums (i.e., the court of appeals) under the FTC Act and the Exchange Act clearly does not act as an implied removal of jurisdiction from Section 1331. Justice Brett Kavanaugh’s questions indicated that he believes that the issue may be decided solely by reference to the “wholly collateral” factor of the Thunder Basin test, which courts have used to guide determinations about when a party may bring an Article III challenge to agency proceedings before those proceedings have concluded. Thunder Basin Coal Co. v. Reich, 510 U.S. 200 (1994) (holding that the statutory review scheme of the Federal Mine Safety and Health Amendments Act of 1977 precludes a district court from exercising subject-matter jurisdiction over a pre-enforcement challenge to the Act). He stated that clarity, certainty, and speed counseled in favor of permitting district courts to hear constitutional claims.

Continue Reading Supreme Court Considers Whether to Allow Early Constitutional Challenges to FTC and SEC Administrative Proceedings

Public Policy

With Senate Democrats having secured the 50th vote needed to maintain control of the Senate,  both parties are eagerly awaiting the results of the Georgia runoff on December 6 between Democratic Senator Raphael Warnock (D-GA) and Republican candidate Herschel Walker.  If Walker wins, the Senate will be split 50-50.  The implications of a 51–49 Democratic majority versus a 50–50 Democratic majority are significant.

An Equally Divided Senate

Since February 3, 2021, the Senate has operated under an organizing resolution negotiated by Majority Leader Chuck Schumer (D-NY) and Minority Leader Mitch McConnell (R-KY).  The organizing resolution formalized a power-sharing agreement for the 117th Congress and was largely modeled on the 2001 power-sharing agreement reached by then-Democratic leader Tom Daschle (D-SD) and then-Republican leader Trent Lott (R-MS) following the November 2000 elections that resulted in a 50–50 Senate split for the 107th Congress.  The 2021 power-sharing agreement laid out internal rules of the Senate, apportioned the makeup and control of committees, and prescribed procedures for the control of Senate business.  Specifically, the 2021 power-sharing agreement provides that:

  • Senate committees be equally balanced with members of both parties;
  • The majority and minority on each committee have equal budgets and office space;
  • If a subcommittee vote is tied on either legislation or a nomination, the committee chair may discharge the matter and place it on the full committee’s agenda;
  • If a committee vote is tied, the Majority or Minority Leader may offer a motion to discharge the measure from committee, subject to a vote by the full Senate;
  • Debate may not be cut off for the first 12 hours; and
  • It is the “sense of the Senate” that both Majority and Minority leaders “shall seek to attain an equal balance of the interests of the two parties” when scheduling and debating legislative and executive business.
Continue Reading Governing the Senate in the 118th Congress

The California Fair Political Practices Commission (FPPC) adopted on Thursday higher political contribution limits and public officer gift limits for the 2023-2024 political cycle. The new limits take effect on January 1, 2023.

Contribution Limits

Under the new limits, an individual, business entity, or committee/PAC can contribute $5,500 per election to candidates for state legislature, up from $4,900.  This means that individuals may generally give $11,000 per candidate per cycle, because the primary and general are considered separate elections.  The same limit also applies to a candidate for local office unless the locality has adopted its own limits.  The limit on contributions from an individual, business entity, or committee/PAC to a candidate for governor also increased, from $32,400 to $36,400 per election.  The limit on contributions to PACs that contribute to candidates increased from $8,100 to $9,100 per year, though PACs can also have a separate, noncontribution account with no limit.

The following chart has additional details on the limits for individuals in 2023 and 2024:

An individual, business entity, or committee/PAC may contribute to…

Governor$36,400per election
Lt. Governor, Secretary of State, Attorney General, Treasurer, Controller, Supt. of Public Instruction, Insurance Commissioner, and Board of Equalization$9,100per election
Senate and Assembly$5,500per election
City and County Candidates if no locally enacted limit$5,500per election
CalPERS/CalSTRS$5,500per election
Committee (PAC), other than a Political Party, that contributes to State Candidates$9,100per calendar year
Political Party Account for State Candidates$45,500per calendar year
Small Contributor Committee$200per calendar year
Committee Non-Contribution AccountNo Limitper calendar year
Continue Reading California Raises Campaign Contribution and Gift Limits for 2023-2024

Immediate Reaction

With Republicans only holding a slim majority in the House and the Democrats keeping their majority in the Senate, there is almost universal agreement that President Biden and the Democratic Party as a whole have outperformed expectations.  The President and the White House surely view these results as validation of his approach, his agenda, and his work so far.  A key part of this, which is at the core of his unity agenda and something he reiterated in his speech following this election, is his long-standing commitment to reaching across the aisle.  We can therefore expect the Administration to continue to seek out opportunities to work with Republicans, particularly in areas that garner bipartisan attention such as technology, children, and veterans.  We can also expect judicial nominations to remain a priority, both in the lame duck and in the next Congress, and for the President to continue advancing his agenda by taking Executive action when legally able.

Meanwhile, agencies will continue their work implementing key laws passed by this Congress—including the Bipartisan Infrastructure Law, the Inflation Reduction Act, and the PACT Act—at the same time that they look for new ways to implement the President’s agenda through rulemaking and enforcement.  In particular, it seems likely that the Federal Trade Commission and the Justice Department’s Antitrust Division will become even more active consistent with the Administration’s larger competition agenda. 

A key question moving into the next Congress is how those agency actions will interact with the strain of populism that partially animates efforts in both parties to regulate “Big Tech.”  The push to move certain antitrust legislation during the lame duck is unlikely to materialize; instead, it is likely to morph in the next Congress into a focus on content moderation and amending Section 230 of the Communications Decency Act.  Other priorities—like privacy and child protection, including bills like the Kids Online Safety Act—will almost certainly remain at the top of next year’s agenda if they do not pass as part of a larger spending bill this Congress.    

Continue Reading Midterm Elections: Democratic Reaction