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Election Update: Biden Transition, Early Policies Relevant to OFS

Analysis from PESA Vice President Government Affairs Tim Tarpley

The Electoral College will meet December 14 and is expected to elect Joe Biden as President. The Trump campaign continues to file legal challenges in multiple states, but have been unable to provide the evidence of widespread fraud necessary to overturn election results in the swing states of Pennsylvania, Arizona, Nevada, Michigan or Wisconsin.

So far, governors and state legislators in those states have refused to overturn the election results and have certified their respective state’s vote counts. December 8 was the “safe harbor” deadline, which is typically referenced by the U.S. Supreme Court as the deadline for any election challenges to successfully alter outcomes.

While some members of the House of Representatives and the U.S. Senate are discussing a challenge of the Electoral College vote in January, these efforts will likely prove unsuccessful absent some new set of facts or unanticipated turn of events.

More important for the Biden Administration’s legislative agenda is the outcome of the Georgia Senate runoff elections. Should the GOP lose both seats, the Senate will be tied at 50/50 with Vice President-elect Kamala Harris serving as the tie breaker. This scenario would give President-elect Biden a pathway to pass large climate legislation.

Moderate Democratic senators like Joe Manchin and others will become an extremely important back stop in this scenario. Should the GOP win one or both seats, they will retain control of the Senate and serve as a major roadblock to Biden administration legislative efforts. The importance of these two races and the potential legislative outcomes for the OFS sector cannot be understated.

BIDEN CABINET
The Biden transition team has continued to announce cabinet level appointees with particular importance to the OFS sector. At the top of this list is Biden’s plan to have John Kerry serve as a Special Envoy for Climate within the National Security Council.

This envoy position does not require Senate confirmation so there will be no formal process to learn details about his plans for the role. Kerry served as Secretary of State during President Barack Obama’s second term and helped negotiate and sign the Paris climate agreement. He has stated multiple times that he believes the United States should rejoin the Paris Agreement.

This appointment confirms President-elect Biden’s intent to bring the U.S. back into the Paris Agreement. The fact that this envoy position will operate within the National Security Council is also very important. Should Biden choose to declare climate change a “national security crisis” — as many progressives in his party have urged — Kerry could wield emergency powers and become quite important.

This role could end up being even more important than cabinet level positions like Secretary of Energy, EPA and Interior, which have yet to be named. It could be used to coordinate a cross-agency climate agenda, which could impact our sector and the entire energy industry.

Some of these “emergency” powers could be taken without the need for legislation and could be one of the primary vehicles to enact climate proposals in the coming years. There has also been discussion of the Biden team adding a “Domestic Climate” position to complement Kerry’s international focus. No further details of who would fill that position and its role have been released.

Expected Early Policy Battles Relevant to OFS

TAXES
President-elect Biden has expressed interest in an ambitious strategy that would involve tax increases on corporations and high-worth individuals. This strategy would be crippled if the GOP retains control of at least one of the Senate seats in Georgia. Some elements of his plan may garner bipartisan support such as using tax incentives to lure overseas jobs back to the U.S. The incoming administration is close with organized labor, and the industry should expect their priorities to be at the forefront.

FINANCE
Secretary Steve Mnuchin announced last month that the Treasury department would not approve renewal of the Federal Reserve emergency lending program for small- and medium-sized companies past the end of the 2020. Janet Yellen, Biden’s nominee for the position, has indicated she would likely continue these programs in 2021, if she’s confirmed by the Senate.

These programs have been used minimally by our sector due to unfavorable terms that caused many companies to determine they are not worth applying for. We could see a reevaluation of these terms, which could make them more attractive to companies in our sector and others.

Biden is also expected to take dramatic steps to increase ESG and carbon reporting in the financial sector. This could include a requirement that companies disclose carbon and climate risk as part of their regulatory filings.

TARIFFS AND TRADE
Many business leaders are urging the incoming administration to ease tariffs on imports from China, while some unions are urging the administration to maintain them. With larger economic and COVID issues likely to take the forefront after inauguration, expect this debate to stay heated with current tariffs likely remaining for at least a few months. If the economy recovers quickly from COVID, pressure may ease to immediately alter or remove the tariffs.

STIMULUS/COVID LIABILITY REFORM
While bipartisan progress on the proposed $908 billion coronavirus relief proposal is being made, one of the biggest sticking points is an issue important to the OFS sector: whether companies will be given some sort of federal liability protection from COVID-related lawsuits. Senate Majority Leader Mitch McConnell has repeatedly said liability protections for businesses and schools must be included to garner his support.

There have been serious discussions over the past week of a six-month moratorium on all COVID-related litigation. Sen. Mitt Romney proposed a blanket defense for 2020 as long federal guidelines were being followed. This debate may get rolled into the end of year omnibus package, which is expected to be debated next week. Democrats meanwhile are pushing for weaker liability language and additional federal COVID standards for the workplace.

For additional information on PESA’s Government Affairs efforts, please contact Tim Tarpley, Vice President Government Affairs. 

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