Roundtable Weekly

Months of negotiations on bipartisan infrastructure legislation between President Biden and Republicans led by Sen. Shelley Moore Capito (R-WV) collapsed this week – and talks have shifted to alternative approaches from bipartisan groups of congressional policymakers. Meanwhile, House and Senate committees are moving forward on spending bills to meet the nation’s surface transportation needs before current funding expires on Sept. 30. (White House statement, June 8 and CQ, June 10) 

Alternative Paths 

• President Biden recently reduced his original infrastructure package proposal from $2.3 trillion to $1.7 trillion – and requested at least $1 trillion in new spending from Republicans. The Senate GOP group counteroffered with nearly $1 trillion, which included only $330 billion in new spending and the rest from repurposed COVID-19 relief funding signed into law earlier this year. Biden cancelled the talks after the gap over the package’s scope and funding could not be bridged. (The Hill and AP, June 8)
  
  
• Yesterday, a bipartisan group of 10 senators said they would propose a plan focused on “core, physical infrastructure” infrastructure that would cost $974 billion over five years, or $1.2 trillion over eight years, including about $579 billion in new spending. (CQ and New York Times and Washington Post, June 10)
  
  
• According to Axios, “The group proposes paying for it through unspent coronavirus relief aid, public-private partnerships, indexing the gas tax to account for inflation and allowing states to borrow necessary money through a revolving loan fund.”
  
  
• A joint statement released by the senators said, “[We] reached a bipartisan agreement on a realistic, compromise framework to modernize our nation’s infrastructure and energy technologies. This investment would be fully paid for and not include tax increases.” (Joint statement, June 10)
  
  
• In the House, the Problem Solvers Caucus, which has 29 Democrats and 29 Republicans, on June 9 released a $1.25 trillion infrastructure spending framework, including $761.8 billion in new spending over eight years – yet did not include any details about how to pay for the proposal. (News release, Building Bridges Infrastructure  Framework and section-by-section summary)
  
  
• The co-chairs of the House caucus – Reps. Josh Gottheimer (D-NJ) and Brian Fitzpatrick (R-PA) – are also in contact with a key group of bipartisan group of senators, including Bill Cassidy (R-LA), Kyrsten Sinema (D-AZ), Rob Portman (R-OH) and Joe Manchin, (D-WV) about developing a bipartisan, bicameral infrastructure package. (CQ, June 9)
  
  
• White House Press Secretary Jen Psaki this week said, “[President Biden] feels it’s encouraging to see multiple proposals put out there, both from Republicans in the House and the Problem Solvers Caucus, as well as a bipartisan group that’s working on a proposal. Both will have increased numbers over what we’ve seen and been negotiating to date. Those are all positive steps.” (White House Press Gaggle, June 9)

Surface Transportation Legislation 

• Yesterday, the House Transportation and Infrastructure (T&I) Committee advanced a five-year, $547 billion surface transportation bill by a vote of 38-26 that included two supporting Republican votes. (Section-by-section summary of the INVEST in America Act)
  
  
• Although the House Ways and Means Committee needs to address how to fund the bill’s costs, many of the provisions align with Biden administration transportation priorities – and could serve as a possible cornerstone for a larger infrastructure package. (CQ and BGov, June 10)
  
  
• House Majority Leader Steny Hoyer (D-MD) said the chamber will take up the T&I committee bill the week of June 28.  A reauthorization bill for surface transportation is considered must-pass legislation as current funding expires Sept 30. (Washington Post, June 10)
  
  
• In the Senate, several committees have jurisdiction over portions of that chamber’s surface transportation bill. The Environment and Public Works Committee unanimously voted on May 26 to advance a $303.5 billion bill over the next five years to fund the nation’s roads, bridges, tunnels, and mass transit projects. (Roundtable Weekly, June 4)
  
  
• The Senate Commerce, Science and Transportation Committee is scheduled to consider rail and safety issues on June 16. Separately, a spokeswoman for Senate Banking, Housing and Urban Committee said Chairman Sherrod Brown (D-OH) said he continues to work with Ranking Member Patrick Toomey (R-PA) “in hopes of reaching a bipartisan agreement on a robust transit title for a surface transportation bill.” (CQ, June 10)

Reconciliation

• Democrats are also considering the use of the budget “reconciliation” process, which would allow them to bypass the Senate’s 60-vote requirement to pass legislation and push through an infrastructure package on a party line vote. (Roundtable Weekly, June 4)
  
  
• Senate Majority Leader Charles Schumer (D-NY), above, said yesterday, “We continue to proceed on two tracks. A bipartisan track and a reconciliation track — and both are moving forward.” (Washington Post, June 10)
  
  
• Schumer said last week that he wants to move forward on an infrastructure bill in July, whether it is bipartisan or not. (The Hill, May 25)
  
  
• A National League of Cities’ 2021 State of Cities report released this week supported the need for infrastructure investment nationwide. Of the 600 mayors who provided information for the report, 91 percent said they did not have the funds to make needed infrastructure investments. (NLC news release, June 10)

The Roundtable will focus on the evolving infrastructure negotiations and their possible impact on CRE during its June 15-16 Annual Meeting and Policy Advisory Committee Meetings in Washington, DC.

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The increasing frequency and size of ransomware cyberattacks on U.S. companies prompted the White House on June 2 to issue a stark warning urging businesses to take "immediate steps" to increase their ransomware defense based on the federal government’s best practices. (White House  Deputy National Security Advisor for Cyber and Emerging Technology Anne Neuberger, above)

A National Threat

• Ransomware is a type of malicious computer network attack where criminals encrypt an organization’s data and demand payment to restore access. In some instances, attackers may also steal an organization’s information and demand additional payment in return for not disclosing the information to the public.
  
  
• The document from the White House's Neuberger notes, “All organizations must recognize that no company is safe from being targeted by ransomware, regardless of size or location. Much as our homes have locks and alarm systems and our office buildings have guards and security to meet the threat of theft, we urge you to take ransomware crime seriously and ensure your corporate cyber defenses match the threat.” (White House, What We Urge You To Do To Protect Against The Threat of Ransomware and Readout of Neuberger Meeting)
  
  
• In the past month, $15 million in cyber-ransom was paid to hackers in bitcoin by Colonial Pipeline and JBS USA, the world’s largest meat-processing company. The U.S. Justice Department reported on June 7 that it had retrieved $2.3 million paid by Colonial. (Axios, June 9 and CNBC, June 8)
  
  
• In an interview with the Wall Street Journal this week, FBI Director Christopher Wray compared the challenge of countering the threat of ransomware to the 9/11 terrorist attacks and that the agency was currently investigating about 100 different types of ransomware.
  
  
• Wray also testified on June 10 before the House Judiciary Committee that companies should not make ransomware payments to hackers but instead contact the FBI for help to restore stolen data. Wray said, “There are a whole bunch of things we can do to prevent this activity from occurring, whether they pay the ransom or not, if they communicate and coordinate with law enforcement right out of the gate. That's the most important part,” he added. (AP, June 10)
  
  
• Additional hearings this week on ransomware and other cyber threats to infrastructure where held by the Senate Homeland Security and Governmental Affairs Committee on June 8 and the House Homeland Security Committee on June 9.

CRE and Cybersecurity

• Commercial real estate companies are taking steps to meet cybersecurity threats. See interview with James Whalen, SVP, Chief Information & Technology Officer, Boston Properties. (Gate 15, March 23, 2021)   
  
  
• The CRE industry has also responded to emerging cyber threats through the Real Estate Information Sharing and Analysis Center (RE-ISAC) – a public-private information sharing partnership organized and managed by The Real Estate Roundtable since 2003. (Information on joining the RE-ISAC)  

• The RE-ISAC has worked with InfraGard National Capital Region (InfraGardNCR) to establish the Commercial Facilities Cyber Working Group (CCWG), a virtual effort to share cyber threat intelligence. The group shares threat reports, ransomware victim examples, and other information on a regular basis. 

• The RE-ISAC sends a Daily Report to members to raise awareness on cyber threats and other domestic concern affecting the U.S. commercial facilities sector, while sharing guidance from the Department of Homeland Security’s Cybersecurity and Infrastructure Security Agency (CISA) and other agencies.

Resources and Reference

• ISA this week published “Rising Ransomware Threat to Operational Technology Assets,” a fact sheet for critical infrastructure owners and operators detailing the rising threat of ransomware, along with recommended actions and resources.

• Ransomware insurance is another important aspect of the threat. Ransom and extortion claims increased 150 percent between 2018 and 2020, according to AIG, one of the world's largest insurers. Additionally, AIG reports that one in five cyber insurance claims relate to ransom demands. (CNN Business, June 7: “Hit by a ransomware attack? Here's what to do”)
  
  
  • Ransomware Threats in Commercial Real Estate – A Common Cyber Threat (ReShield, Feb. 21, 2020) 
    
    
  • Real Estate Ransomware Attacks: Hackers Have a New Target (James Moore) 
    
    
  • Atlanta Real Estate Firm Gets Ransomware (BoostIT)
    
    
• The Roundtable’s Homeland Security Task Force (HSTF) works closely with federal agency partners and the RE-ISAC on protective options that CRE businesses may consider as they implement infrastructure resistant to cyber breaches.
  
  
• HSTF – co-chaired by Roundtable members Dan Kennedy (URW) and Charlie McGonigal (Brookfield) – will discuss ransomware and CRE during their next (remote) committee meeting on June 16, which will be held in conjunction with the Roundtable’s June 15 Annual Meeting.

For more information, contact Gate 15 Managing Director and RE-ISAC staff Andy Jabbour or The Roundtable’s RE-ISAC Executive Director and HSTF Liaison Chip Rodgers.

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The Real Estate Roundtable on June 9 commented on the unique challenges facing commercial real estate businesses if the Securities and Exchange Commission (SEC) eventually requires corporate issuers to report on climate-related financial risks. (See SEC’s 15 Questions for Consideration and The Roundtable’s responses) 

• The SEC’s March 15 request for public comments is not unique to real estate, but seeks information from all corporate stakeholders on climate change reporting and metrics.  “It’s time to move from the question of ‘if’ to the more difficult question of ‘how’ we obtain disclosure on climate,” said former Acting Chair Allison Herren Lee. (SEC speech, March 15) 
  
  
• On May 6, the new SEC chair, Gary Gensler, testified before the House Financial Services Committee that he intends to propose new rules on corporate climate risk disclosures in the second half of 2021. (Reuters, May 6) 

Roundtable Comments

• The Roundtable’s comments recommend a “principles-based” approach to corporate climate risk disclosures as opposed to a prescriptive “one size fits all” reporting standard. It coordinated closely with Nareit in developing its submission to the SEC.
  
  
• More specifically, The Roundtable’s comments provide:
  
  
  • Energy consumption and associated emissions from any particular building or portfolio depend on a range of variables – such as a building’s age, location, asset-type, and tenant mix.  The SEC should be flexible in developing reporting standards for companies that develop, own and operate income-producing real estate.
    
    
  • The GHG metrics that building owners can most accurately measure and quantify arise from their direct and immediate operations of assets they manage and control on a day-to-day basis. Building owners should not be compelled to measure, quantify or report on indirect emissions that derive from off-site facilities, or the actions of tenants or other third-parties beyond the owner’s immediate control.
    
    
  • The SEC should allow a marketplace of reporting frameworks to thrive, flourish, and evolve. No single reporting framework should be mandated.

House Legislation

• The House Financial Services Committee on May 12 advanced the Climate Risk Disclosure Act of 2021. The bill would direct the SEC to issue rules within two years that require public companies to disclose: 
  
  
  • Direct and indirect greenhouse gas emissions;
    
    
  • Total amount of fossil-fuel related assets that it owns or manages;
    
    
  • How its valuation would be affected if climate change continues at its current pace, and;
    
    
  • Risk management strategies related to the physical risks and transition risks posed by the climate crisis.

• The House bill would also direct the SEC to tailor disclosure requirements to different industries. (JD Supra, May 17). The bill likely faces a more difficult path forward in the Senate.

Investment Industry Comments

• The Investment Company Institute (“ICI”), which represents firms including BlackRock, Vanguard and JPMorgan Chase, submitted comments to the SEC on June 4. ICI believes “using a combination of principles-based and prescriptive elements is particularly apt in the context of climate-related information.” (Reuters, June 8).
  
  
• While ICI recommends that companies within the SEC’s jurisdiction should report on “direct” emissions (“Scope 1”) and emissions due to electricity purchases (“Scope 2”), it does not believe that companies should be mandated to report on so-called indirect “Scope 3 emissions” at this time.
  
  
• PoliticoPro (June 7) reported that “ICI made the recommendations as investors increasingly demand that companies follow certain environmental, social and governance reporting standards so they can channel capital to green projects and workplaces that promote equity and inclusion.”

The Real Estate Roundtable’s Sustainability Policy Advisory Committee (SPAC) – which meets remotely on June 16 in conjunction with The Roundtable’s June 15 Annual Meeting – will continue to work with policymakers in Congress and the Administration on energy and climate issues of importance to commercial real estate. 

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