On August 25, 2022, President Biden announced a new Executive Order (“EO”) addressing the Implementation of the CHIPS Act of 2022 (“CHIPS Act”).  The CHIPS Act was signed by President Biden on August 9, 2022, and, among other things, authorizes $39 billion in funding for new projects to establish semiconductor production facilities within the United

President Biden recently signed the $280 billion CHIPS and Science Act into law. It was the culmination of more than a year of bipartisan, bicameral negotiations to craft comprehensive innovation and competition legislation. As we previously reported, the new law includes a historic investment in domestic semiconductor manufacturing and the nation’s pursuit of science and technology leadership. But there’s another aspect of the bill that hasn’t garnered much media attention: it is permeated with provisions to expand opportunities to Americans who have been underrepresented in science and technology.

The CHIPS and Science Act is the most comprehensive effort in history to create opportunities in science and technology for women, people of color, and other underrepresented groups. The new law will advance diversity, equity, and inclusion in science and technology by:

  • Creating new research, invention, and entrepreneurial opportunities;
  • Authorizing $13 billion for STEM and invention education and providing teachers with the necessary resources to expand STEM;
  • Expanding access to the skills and training needed to join the scientific workforce;
  • Ensuring that people of color and other underrepresented groups have information about these opportunities;
  • Funding research on diversity and inclusion in the tech sector and sexual harassment in STEM fields;
  • Making federal agency policy and personnel changes related to diversity, equity, and inclusion, including developing caregiver policies for all science agencies and creating a position for a Chief Diversity Officer at the National Science Foundation (NSF)—the nation’s chief science agency; and
  • Recognizing the importance of diversity and inclusion in national science and technology strategies.


Continue Reading More than Semiconductors and Science:  New Law Recognizes Role of Diversity, Equity, and Inclusion in America’s Global Competitiveness

In a series of prior blog posts, we previously highlighted the historic implications of the Inflation Reduction Act (IRA) for the U.S.’s international climate commitments, as well as for private companies navigating the energy transition.  Shortly after our series published, the Senate passed the IRA on Sunday August 7th with only minor modifications to the bill’s $369 billion in climate and clean energy spending.  Today, the House passed the IRA without any further changes, and soon hereafter President Biden is expected to sign it into law. 

However, this is only the beginning of the road; the IRA will have sweeping implications beyond the four corners of its pages.  In the coming months and years, we expect to see intense jockeying over agency rulemakings that will shape the IRA’s implementation, as well as determine its ultimate success as an energy policy.  

I. Congressional Permitting Reform

As an initial matter, it seems Congress has not finished its work revamping the nation’s climate and energy laws.  As part of his agreement to support the IRA, Senator Joe Manchin (D-WV) announced that “President Biden, Leader Schumer and Speaker Pelosi have committed to advancing a suite of commonsense permitting reforms this fall that will ensure all energy infrastructure, from transmission to pipelines and export facilities, can be efficiently and responsibly built to deliver energy safely around the country and to our allies.”  While the exact contours of this legislation are not currently known, Senator Manchin’s office recently released a legislative framework, which includes proposals to, among other things:

Continue Reading House Passes Inflation Reduction Act, Marks a New Era for Climate Policy

On August 9, 2022, President Biden signed into law the CHIPS and Science Act—a massive, $280 billion bill to boost public and private sector investments in critical and emerging technologies.

We anticipate significant opportunities and an evolving regulatory landscape for companies, associations, universities, and others who work in various technology sectors, including:

  • High performance computing, semiconductors, and advanced computer hardware/software
  • Advanced communications technology and immersive technology
  • Advanced energy and industrial efficiency technology (including batteries, nuclear)
  • Advanced materials science (including composites 2D and next-generation materials)
  • Artificial intelligence, machine learning, autonomy, and related advances
  • Quantum information science and technology
  • Biotechnology, medical technology, genomics, and synthetic biology
  • Data storage/management, distributed ledgers, and cybersecurity (including biometrics)
  • Natural and anthropogenic disaster prevention or mitigation
  • Robotics, automation, and advanced manufacturing

Below is an overview of the legislation and the funding and tax credit opportunities it provides for entities that participate in the research, development, production, education, or transfer of critical and emerging technologies, especially semiconductor manufacturing and research and open-RAN technology.

Overview

Headlining the bill are $54 billion in appropriations to fund the Creating Helpful Incentives to Produce Semiconductors (“CHIPS”) for America Act, which was authorized in 2021. The bill also includes $1.5 billion in appropriations for a wireless supply chain innovation fund under the Utilizing Strategic Allied Telecommunications Act, which was similarly authorized in 2021. Across these two sets of appropriations, over $40 billion are allocated for direct financial assistance in the form of competitive grants for which private companies will be able to apply. The law also authorizes over $200 billion in new programs across the federal government, paving the way for additional grants, public-private partnerships, and technology transfer opportunities.

Continue Reading Significant Funding and Tax Credit Opportunities in the CHIPS and Science Act

Policymakers and candidates of both parties have increased their focus on how technology is changing society, including by blaming platforms and other participants in the tech ecosystem for a range of social ills even while recognizing them as significant contributors to U.S. economic success globally.  Republicans and Democrats have significant interparty—and intraparty—differences in the form of their grievances and on many of the remedial measures to combat the purported harms.  Nonetheless, the growing inclination to do more on tech has apparently driven one key congressional committee to have compromised on previously intractable issues involving data privacy.  Rules around the use of algorithms and artificial intelligence, which have attracted numerous legislative proposals in recent years, may be the next area of convergence. 

While influential members of both parties have pointed to the promise and peril of the increasing role of algorithms and artificial intelligence in American life, they have tended to raise different concerns.  Legislative proposals from Democrats have frequently focused how deployment of algorithms and artificial intelligence affects protected classes, while Republican proposals have largely, but not exclusively, been aimed at perceived unfairness in how algorithms treat Republicans and those expressing conservative views.  For instance, Republican Whip John Thune (R-SD), the former chair of the Senate Committee on Commerce, Science, and Transportation, has sponsored the Political BIAS Emails Act (S. 4409), which would address technology companies reportedly filtering Republican campaign emails.  Meanwhile, Senator Ron Wyden (D-OR) introduced the Algorithmic Accountability Act (S. 3572) that, among other things, requires that “automated decision systems” be subject to an “evaluation of any differential performance associated with consumers’ race, color, sex, gender, age, disability, religion, family status, socioeconomic status, or veteran status.”

Continue Reading ARTIFICIAL INTELLIGENCE AND ALGORITHMS IN THE NEXT CONGRESS

Late on July 27, Sen. Joe Manchin and Senate Majority Leader Charles Schumer announced an agreement on the Inflation Reduction Act (IRA): a reconciliation package that implements prescription drug pricing reform, invests in Affordable Care Act health care subsidies, imposes a corporate minimum tax and improves tax enforcement, and—most relevant for this post—provides $369

Background

As we previously reported, President Biden and Congress took steps in March 2022 to revoke Russia’s most-favored-nation (or “MFN”) trade status, known as Permanent Normal Trade Relations (“PNTR”) status under U.S. law.  As a result of these actions, the Suspending Normal Trade Relations with Russia and Belarus Act (“Suspending NTR Act”) entered into force on April 8, 2022, formally revoking PNTR status for Russia and Belarus.  Under the terms of the Act, imports into the United States of products from Russia and Belarus became subject to tariff rates set out in column 2 of the U.S. tariff schedule, rather than the column 1 rates that had previously applied.  Column 2 tariff rates are often higher—sometimes much higher—than MFN tariff rates in column 1, and as a result of this change, tariffs on U.S. imports from Russia increased from an average of approximately three percent to 32 percent.  In addition to implementing this immediate change in applicable tariff rates, the Suspending NTR Act also temporarily authorized the President, through the end of 2023, to increase even further tariffs applicable to imports from Russia and Belarus.

On June 27, pursuant to the authority granted under the Suspending NTR Act, President Biden issued Presidential Proclamation 10420, announcing that the United States would further increase tariffs applicable to certain categories of imports from Russia, worth approximately $2.3 billion annually.  U.S. Customs and Border Protection (“CBP”) recently issued guidance on these tariff increases, which will apply effective July 27, 2022.  This alert provides additional information on the forthcoming tariff increases, and discusses potential implications for importers of Russian goods.

Overview of July 27 Tariff Rate Increase on Certain U.S. Imports from Russia

Since revocation of PNTR status in April, products imported into the United States from Russia and Belarus have been subject to tariff rates set forth in column 2 of the U.S. tariff schedule.  Under the terms of Presidential Proclamation 10420, however, duty rates of 35 percent ad valorem will apply to 570 categories of Russian products in lieu of column 2 rates, beginning July 27, 2022.  These product categories have an estimated value of approximately $2.3 billion annually.  The Proclamation does not impact imports from Belarus, which will remain subject to column 2 tariff rates.

Continue Reading Increased Tariffs on Certain U.S. Imports from Russia Effective July 27, 2022: What Companies Need to Know

Two months after Congress launched the Conference Committee on Bipartisan Innovation and Competition Legislation in May 2022, the Senate is nearing passage of a compromise “CHIPS Plus” bill.  Majority Leader Chuck Schumer (D-NY) initiated a test vote for the bill on Tuesday and received the assurance—a strong bipartisan vote of 64 to 53—that he sought to proceed. 

The CHIPS Plus bill, at just over 1000 pages, is much shorter than either the Senate’s United States Innovation and Competition Act (“USICA”) or the House’s America Creating Opportunities to Meaningfully Promote Excellence in Technology, Education, and Science Act (“America COMPETES Act”), but significantly more ambitious than an earlier approximately 80-page bill that was limited only to semiconductor and wireless supply chain incentives.

The 80-page bill now forms the base — the CHIPS component — of the CHIPS Plus bill.  That bill included $54 billion in emergency appropriations for semiconductor and wireless supply chain incentives, “guardrails” that potentially constrain the companies that receive the incentives from undertaking certain business activities in China and other foreign countries of concern, and a 25% advanced manufacturing investment tax credit for the construction or acquisition of property integral to a facility whose primary use is to manufacture semiconductors or semiconductor manufacturing equipment.  The CHIPS Plus bill contains all of these provisions, as well as a similar set of guardrails for the tax credits.

The Plus component, added only the day before the test vote, authorizes over $100 billion dollars in government programs to support research and development (“R&D”), technology transfer, innovation, and science, technology, education, and mathematics (“STEM”) education.  These programs draw from Senate Commerce, Science, and Transportation Committee provisions in the USICA and from House Science, Space, and Technology Committee provisions in the America COMPETES Act.  They contain important policy changes and are likely to present massive opportunities for businesses, nonprofits, and education institutions to bolster their R&D efforts and to partner with the Federal government.  Funds will need to be appropriated for many of these programs for them to be effective.

Continue Reading Senate Reaches Compromise on Innovation and Competition Legislation

            After years of negotiations, members of the U.S. Senate and House of Representatives have released bipartisan comprehensive privacy legislation—the American Data Privacy and Protection Act.  Democrats and Republicans have put forward separate proposals in the past that have more in common than different.  The two main points of disagreement that have historically stalled a comprehensive proposal are whether there should be a private right of action for privacy violations and to what extent federal laws should preempt state laws.  Even though this new draft takes novel approaches to both of those issues, division continues.  The chances of Congress passing privacy legislation this session or the next will turn on whether a broader consensus can be found in these two areas, especially after outside stakeholders and the business community now have an opportunity to fully engage.

            Aside from the private right of action and preemption, there is general agreement on how personal information should be collected, used, and shared.  For example, the main Democratic proposal, the Consumer Online Privacy Rights Act (S. 3195) introduced by Senator Maria Cantwell (D-WA), creates consumer rights to delete or correct data and port personal information.  Likewise, Republicans, led by Senators Roger Wicker (R-MS) and Marsha Blackburn (R-TN), have introduced the Setting an American Framework to Ensure Data Access, Transparency, and Accountability (SAFE DATA) Act (S. 2499), which would do largely the same.  The American Data Privacy and Protection Act unsurprisingly follows along these lines as well.  The most notable differences between the parties’ positions have been that the Democratic proposal has a private right of action, while the Republic version has no private right and would completely preempt state law.  The challenge continues to be finding a middle ground between these two approaches.  In particular, whether there is a way to address concerns about repeated lawsuits and opportunities to preserve at least some ability for states to enact and enforce their own regulations.

Continue Reading IS CONGRESS ABOUT TO PASS COMPREHENSIVE PRIVACY LEGISLATION?

Congress launched the Conference Committee on Bipartisan Innovation and Competition Legislation last week with a four-hour meeting featuring remarks by nearly one-hundred committee chairs and members from both chambers of Congress. Chaired by Senator Maria Cantwell (D-WA), the Conference Committee’s objective is to reconcile differences between the United States Innovation and Competition Act (“USICA”), which passed the Senate by a bipartisan vote of 68–32 in June 2021, and the America Creating Opportunities to Meaningfully Promote Excellence in Technology, Education, and Science Act (“America COMPETES Act”), which passed the House by a partisan vote of 222–210 in February 2022.

The kick-off meeting suggested that this objective is attainable, but by no means guaranteed.

On display was broad consensus that the United States is not doing enough to spur innovation and remain competitive around the world, and that legislation is needed in support of those goals.  Chair Cantwell opened the conference by recognizing that this is a “historic day” with a supply chain crisis and that this is a “Sputnik moment.”  A bicameral and bipartisan chorus, including Senate Commerce Committee Ranking Member Roger Wicker (R-MS), House Science Committee Chair Eddie Bernie Johnson (D-TX), and House Science Committee Ranking Member Frank Lucas (R-OK) echoed her optimism and urgency.

Members also generally agreed on several key components in the bills.  Members of both chambers and both sides of the aisle recognized the importance of anchoring supply chains of critical products including semiconductors and pharmaceutical drugs in the United States.  A bipartisan group expressed support for the $52 billion in funding for semiconductor incentives that is included in both the USICA and America COMPETES Act.  Several Democrats and Republicans also noted that they are working together on an additional tax provision, which is currently not in either bill, to encourage semiconductor design and manufacturing in the United States.  Members also agreed on the need to push back against anti-competitive conduct by China such as cyberattacks and intellectual property theft, and to invest in science, technology, education, and mathematics (STEM) education to expand and improve the U.S. workforce.

Continue Reading Congress Kick Offs Conference Committee on Bipartisan Innovation and Competition Legislation