Opportunities and Threats for Business Under the Biden

Opportunities and Threats for Business Under the Biden Administration

Aaron Cooper, Rachel Alpert, Madeleine Findley, Suedeen Kelly, Gabrielle Sigel June 4, 2021

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Introduction

Cyber Insecurity and Geopolitical Risk

Sanctions and US Foreign Policy

Communications & Broadband: FCC and Beyond

Clean Energy Initiatives in the Biden Administration

Environment and Climate Change

Questions?

Agenda

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Introduction






Questions?

Agenda

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Cyber Insecurity a Defining Theme: Major cyber incidents mark the first six months of the Biden Administration

SolarWinds

Exchange Servers

Colonial Pipeline

Collapse of Public-Private Divide:

Victims are private sector entities

Hacking affects government networks, critical infrastructure, and supply chain

Political Risk: Congressional oversight and government investigations

Geopolitical Risk:

Nation-state actors v. private entities

International norms and deterrence

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Cyber Insecurity

White House issues May 12 Executive Order on Improving the Nation’s Cybersecurity

Articulates a Policy View: Improve national cybersecurity posture through federal government leadership and public-private partnership

Fact Sheet: We encourage private sector companies to follow the Federal government’s lead and take ambitious measures to augment and align cybersecurity investments with the goal of minimizing future incidents.

EO, Section 1: The private sector must adapt to the continuously changing threat environment, ensure its products are built and operate securely, and partner with the Federal Government to foster a more secure cyberspace.

Sets a timetable

Federal agency deliverables

Private sector effects

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Cyber Insecurity

What does the EO change?

Public-private information sharing

Federal cybersecurity standards

Software supply chain security

Cyber Safety Review Board

Incident response playbook

Federal network detection

Investigation and remediation

Who does the EO affect?

IT/Cloud service providers

Software developers

Government contractors

Regulated industries

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Polling Question

The Solar Winds hack was attributed to which country?

China

North Korea

Russia

Iran

Papua New Guinea

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Cyber Insecurity

Key players – every agency is a cyber agency

DHS/CISA

Intelligence Community

Commerce/NIST

FTC

OMB

Bipartisan support in Congress for legislation

Focus is on mandatory reporting of cyber incidents

Potential to reach more broadly than the EO

Potential to include additional compulsory measures

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Geopolitical Risk

Geopolitical aspects of cyber insecurity

Nation-state adversaries carry out sophisticated attacks

Nation-states provide safe harbors for criminal groups

How to address nation-state actions?

Norms – new United Nations GGE Report

Sanctions

How to deter criminal groups?

Prosecution/extradition challenges

“Name-and-shame” indictments

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Introduction






Questions?

Agenda

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Emphasis on:

Human Rights

Multilateralism

Targeted approach

US Treasury Department conducting a top to bottom review of U.S. economic and financial sanctions.

Secretary of State Blinken: The United States is committed to playing a strong leadership role in global efforts to combat serious human rights abuse, through the Global Magnitsky sanctions program and similar efforts. Targeted sanctions, including against those who violate or abuse human rights, are an important tool to discourage malign actors and promote accountability.

Deputy Treasury Secretary Adeyemo: “Sanctions remain a potent and valuable tool for policymakers and as programs are evaluated, it is critical to keep an eye toward ensuring they remain a strong, viable option in years to come.”

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Polling Question

To what country did the Biden administration’s first sanctions designations relate?

Russia

Yemen

Burma

Belarus

Iran

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Sanctions and US Foreign Policy: Burma

Executive Order 14014, “Blocking Property With Respect to the Situation in Burma” in response to the military coup (issued Feb. 11, 2021).

Targeted designations under the Executive Order:

32 Individuals affiliated with military

2 military units,

15 entities, including military-industrial complex and State Administrative Council

Multilateral Approach:

Discussion in UN Security Council

Coordinated EU, UK, and Canadian designations

Focus on protecting civilians and supporting human rights

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Sanctions and US Foreign Policy: Russia

Sanctions in response to: Navalny Poisoning and Detention (March 2, 2021)

State Department Sanctions on Scientific Institutes (EO 13382)

Treasury Department Sanctions on Russian officials (EO 13661)

6 Scientific and Research Institute Additions to the Countering America’s Adversaries Through Sanctions Act (CAATSA) Section 231 List (Russian Federation’s defense or intelligence sector).

Chemical and Biological Weapons Act Export Controls

Department of Commerce Bureau of Industry and Security Entity List Additions

EU designated 4 individuals under its new Global Human Rights Sanctions Regime introduced in December 2020

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Sanctions and US Foreign Policy: Russia

Sanctions in response to: Election Interference and SolarWinds Hack (April 15, 2021)

Executive Order 14024 Authorizes sanctions on a wide range of persons, including those operating in the technology, defense, and related material sectors of the Russian economy

Designated 6 Russian technology companies

Expands existing sovereign debt sanctions to ruble-denominated bonds and lending, effective June 14

Sanctioned 32 persons for carrying out Russian government-directed attempts to influence the 2020 election and other acts of disinformation and interference.

With the EU, UK, Australia, and Canada, sanctioned 8 persons associated with Russia’s occupation of Crimea.

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Sanctions and US Foreign Policy: Belarus

Revocation of sanctions authorizations related to Executive Order 13405(sanctioned parties that undermined democratic processes and engaged in political repression in Belarus).

On April 19, Replaced General License 2G (which authorized transactions with sanctioned entities) with 2H, which allowed 45 days to wind down transactions involving sanctioned entities.

As of June 3, US persons are prohibited from transacting with the following entities, or entities owned, directly or indirectly, 50% or more in the aggregate by such entities:

• Belarusian Oil Trade House • Belneftekhim• Belneftekhim USA, Inc. • Belshina OAO • Grodno Azot OAO

• Grodno Khimvolokno OAO • Lakokraska OAO • Naftan OAO • Polotsk Steklovolokno OAO

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Sanctions and US Foreign Policy: Areas to Watch

China sanctions and foreign policy: Currently under review

Russia sanctions: Possible additional sanctions

Iran: Some sanctions may be removed in return to JCPOA compliance

Supply chain: General human rights considerations and semiconductor industry-specific supply chain concerns

Cuba: Possible future loosening of sanctions

Compliance: Emphasis on cloud computing-related sanctions compliance (e.g., BitPay and SAP settlement agreements)

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Introduction






Questions?

Agenda

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The American Jobs Plan

President Biden outlined his American Jobs Plan in March 2021

Calls for $100 billion* investment in broadband in order to “bring affordable, reliable, high-speed broadband to every American”

• The “commitment” suggests that an effort to engage in rate regulation is a possibility

The President wants to use the investment to:

• Build broadband infrastructure to reach 100 percent coverage and ensure that it is “future proofed”

• Prioritize support for networks “owned, operated by, or affiliated with local governments, non-profits, and co-operatives”

• Remove barriers that prevent municipally-owned or affiliated ISPs and rural electric co-ops from competing with private ISPs

• Require ISPs to clearly disclose the prices they charge

The President is also “committed to working with Congress to find a solution to reduce internet prices for all Americans”

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Polling Question

Who regulates broadband?

FCC

FTC

USDA

States

It’s complicated

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Network Neutrality

Low Income Broadband

Homework Gap

The Biden FCC is expected to reclassify broadband as a telecommunications service subject to “common carrier” regulation

Agency jurisdiction issues: FCC, FTC

What role will states have in net neutrality regulation?

The Biden FCC is pursuing efforts to close the Homework Gap

Recent Federal legislation includes billions of dollars in funding

$7.17 billion to the Biden FCC for schools and libraries to purchase broadband services and equipment

The Biden FCC is focusing significant attention on broadband adoption

$3.2 billion to the Biden FCC for the Emergency Broadband Benefit (EBB) Program

Lifeline Reforms and Lifeline Marketplace Reform

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Privacy & Security: Broadband and beyond

The Biden FCC may revisit the Obama FCC broadband privacy rules

But Congressional Review Act (CRA) presents an obstacle

Political pressure on the Federal Government to act

Potential for collaboration/cooperation with FCC, FTC, DOJ, States

Potential legislation on “bipartisan issues” like children’s privacy

What happens to state laws (California, Virginia)?

Federal Government efforts to improve network security & focus on information and communication supply chain likely to increase

Additional vectors for Government scrutiny: USF funding, transaction reviews, supply chain integrity & availability, etc.

Challenges with overlapping actions and oversight

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Spectrum

Wireless Infrastructure

Making additional spectrum available for 5G and Wi-Fi will continue to be a priority under the Biden FCC

Differences are in the details of how the Biden FCC makes this spectrum available (exclusive use vs. shared use) / (licensed vs. unlicensed)

Democrats tend to be more supportive of shared and unlicensed use

The next spectrum auction is scheduled for early October 2021

Improved inter-agency coordination

The Biden FCC is expected to take a less combative posture towards state and local governments

The Trump FCC’s 2018 Small Cell Order limited state and local right-of-way access fees and adopted shot clocks

The Biden FCC will encourage the development of Open RAN technology

Notice of Inquiry was adopted in March 2021

Provides an opportunity for the FCC to weigh security risks and supply-chain vulnerabilities posed by foreign equipment vendors

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Mergers

The Biden FCC will more heavily scrutinize transactions that seek consolidation

Verizon/Tracfone will be an early test

The Biden FCC extended the time for review & requested extensive information

17 State Attorneys General, CWA, and public interest groups have asked the Biden FCC to impose conditions

Verizon has indicated a willingness to accept conditions

Conditions could be imposed to ensure Tracfone’s continued participation in Lifeline

WarnerMedia/Discovery may also get FCC review

The Biden FCC is unlikely to find the communications market to be competitive

Approach will apply across the board – merger reviews, spectrum aggregation matters, and marketplace assessments

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Introduction






Questions?

Agenda

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Administration’s Energy Policy Focuses on the Positive, Not the Negative

Placing the Climate Crisis at the Forefront of U.S. Foreign and Domestic Agendas: E.O. 14008, Tackling the Climate Crisis at Home and Abroad, Jan. 27, 2021

Department of Energy: Deployment of Clean Energy Technologies

Department of Interior: Steps That Can Be Taken to Develop Renewable Energy Production, including Offshore Wind, on Public Lands and Waters

Tribal Lands – Engagement with Tribal Authorities

No Mention of Independent Agencies

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Survey Question

What does FERC stand for?

Federal Energy Regulatory Commission

Something else

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Relevant Energy Agencies

Department of Energy

Research, Grants, Financing

FERC

Regulation of Electric Transmission and Wholesale Rates and Markets for Electricity

Supportive of Competition in Generation

Regulation of Natural Gas Pipeline Siting and Rates

Department of Interior

Public and Tribal Lands

Department of Transportation

Electrification

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FERC

Chairman

Rich GlickCommissioner

Commissioner Commissioner

Commissioner

Allison Clements

Neil Chatterjee Mark Christie

James Danly

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Administration Energy-Related Initiatives

Funding for projects related to resiliency, energy efficiency, renewable energy, and grid integration at public facilities (DOE)

Financing to deploy clean energy technologies and to help build high-voltage electric transmission lines (DOE) (White House, Actions to Upgrade America’s Power Infrastructure, Apr. 27, 2021)

Enable use of existing rights-of-way for electric transmission (DOT) (Id.)

Secretary of Transportation

Pete Buttigieg

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FERC Initiatives

Threats to electric system reliability from climate change/extreme weather

Increasing electrification of the economy and its impact on transmission and generation needs and state/federal coordination

Increasing real-time and day-ahead market efficiency of the bulk power system through improved software

Possible ways to ensure resource adequacy in the Western Interconnection

Integration of hybrid resources in wholesale markets

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FERC Initiatives (continued)

Policy issues related to the reliability of the bulk power system

How wholesale power markets should be reformed, including ways to ensure markets properly value benefits flexible resources provide

Whether state opt-out provisions for retail demand response in wholesale markets still make sense

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Introduction






Questions?

Agenda

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Environmental & Climate Change Priorities

Roll back the rollback

Prioritize climate change

Focus on environmental justice

Reenergize federal enforcement

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Day One Initiatives

Issues 30+ Presidential Actions in the First Three Days Many Address Environmental & Climate Policies

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Day One Initiatives

Other Others Actions Significantly Impact Environmental Policies

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Biden Environmental & Climate Team

Michael Regan

EPA Administrator

John Kerry

Special PresidentialEnvoy for Climate

Gina McCarthy

National Climate Advisor

Brenda Mallory

CEQ Chair

Jennifer Granholm

Secretary of Energy

Merrick Garland

Attorney General

Deb Haaland

Secretary of Interior

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Biden Administration Environmental & Climate Change Priorities

First, roll back the rollback

Many Trump-era rules are gone or soon to be: Transparency in Science for Regulatory Acts (1/6/21) ASAP Gone by 1/27/21

Cost/Benefit for CAA Rulemaking (12/23/20) ASAP Gone by mid-June 2021 (public comment on interim rule)

Regulation of GHGs from Existing Power Plants (ACE Rule) Gone by court decision, 1/19/21; under further consideration by EPA; inside or outside fenceline?

Keystone Pipeline permit revoked Gone on Day One

New emphasis on PFAS - EPA Council on PFAS (4/27/21)

Suspend Arctic Nat’l Wildlife refuge drilling leases (6/1/21)

Every environmental program is affected, e.g., CAA (stationary and mobile), CERCLA, TSCA, WOTUS

https://www.federalregister.gov/documents/2021/01/06/2020-29179/strengthening-transparency-in-pivotal-science-underlying-significant-regulatory-actions-and

https://www.federalregister.gov/documents/2020/12/23/2020-27368/increasing-consistency-and-transparency-in-considering-benefits-and-costs-in-the-clean-air-act

https://www.epa.gov/stationary-sources-air-pollution/affordable-clean-energy-rule

https://www.epa.gov/sites/production/files/2021-04/documents/per-and_polyfluoroalkyl_substances.memo_.signed.pdf

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Second, prioritize climate change


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Social cost of carbon – OMB seeks public comment by 6/21/21

Energy efficiency standards – revise, suspend, rescind

SEC: ESG and climate disclosure rules – task force started 3/21; SEC Risk Alert 4/9/21

EPA: Concentrate on methane and HFCs

American Jobs Plan

Second, prioritize climate change


https://www.federalregister.gov/documents/2021/05/07/2021-09679/notice-of-availability-and-request-for-comment-on-technical-support-document-social-cost-of-carbon

https://www.sec.gov/files/esg-risk-alert.pdf

https://www.whitehouse.gov/briefing-room/statements-releases/2021/03/31/fact-sheet-the-american-jobs-plan/

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Poll

Carbon tax law

Grants and tax incentives to clean energy projects

Cap-and-trade law for greenhouse gas emissions

Issue regulations under existing laws, like Clean Air Act, to make fossil fuel use more expensive

Concentrate on methane, HFCs, and other GHGs with higher global warming potential

I wouldn’t

If you were President, how would you address greenhouse gas emissions (GHGs) in the U.S.?

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White House Council on Environmental Justice: 5/13/21 – Interim Recommendations

American Jobs Plan

Third, focus on environmental justice


https://www.epa.gov/sites/production/files/2021-05/documents/whejac_interim_final_recommendations_0.pdf

https://www.whitehouse.gov/briefing-room/statements-releases/2021/03/31/fact-sheet-the-american-jobs-plan/

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EPA OIG report re decline in federal enforcement may expose public and environment to undetected harmful pollutants – 5/13/21

No. 1 step for EPA’s EJ efforts

EPA orders Virgin Islands refinery to stop all operations “due to multiple improperly conducted operations that present an imminent risk to public health,” under CAA § 303. (5/14/21)

EPA orders S.C. containerboard company to reduce hydrogen sulfide emissions CAA § 303 to protect S.C., N.C., and tribal communities. (5/13/21)

EPA considers health-based drinking water goals for two PFAS substances

Fourth, reenergize federal enforcement


https://www.epa.gov/office-inspector-general/report-resource-constraints-leadership-decisions-and-workforce-culture-led

https://www.epa.gov/newsreleases/epa-administrator-announces-agency-actions-advance-environmental-justice

https://www.epa.gov/newsreleases/epa-uses-emergency-powers-protect-st-croix-communities-and-orders-limetree-bay-refinery

https://www.epa.gov/newsreleases/epa-issues-emergency-order-and-information-request-new-indy-containerboard-pulp-and

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Introduction






Questions?

Agenda

Documents

Opportunities and Threats for Business Under the Biden