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Capital Thinking

Capital Thinking Prepares to Adjourn; Senate Hurries on Highways as House Readies for Recess

Posted in General Legislative

As House Prepares to Adjourn, So Does Capital Thinking

With House lawmakers set to leave Washington at the end of the week (and the Senate to follow shortly thereafter), Capital Thinking will also begin its own August recess, returning on September 14.

Senate Legislative Activity

The Senate will meet on Monday, July 27, at 2:o0pm. Following any Leader remarks, the Senate will resume consideration of H.R.22, the legislative vehicle for the Highway Bill. All time during adjournment of the Senate will count post-cloture on Kirk amendment #2327 (reauthorization of the Export-Import Bank). If no agreement is reached, all post-cloture time on Kirk amendment #2327 will expire at approximately 10:00pm. Pending Amendments to H.R.22, the legislative vehicle for the Highway Bill include:

  • McConnell amendment #2266, as modified (substitute amendment);
  • McConnell for Kirk first degree amendment # 2327 (reauthorization of the Export-Import Bank);
  • McConnell first degree amendment to underlying bill #2329 (two-month surface transportation extension); and
  • McConnell second degree amendment #2330 to SA #2329 (date change)

House Legislative Activity

On Monday, July 27, the House will meet at 12:00pm for morning hour and at 2:00pm for legislative business, with votes postponed until 6:30pm. The following legislation will be considered under suspension of the rules:

  1. H.R. 1138 – Sawtooth National Recreation Area and Jerry Peak Wilderness Additions Act;
  2. H.R. 774 – Illegal, Unreported, and Unregulated Fishing Enforcement Act of 2015, as amended;
  3. Concur in the Senate Amendment to H.R. 2499 – Veterans Entrepreneurship Act of 2015;
  4. H.R. 1482– Need-Based Educational Aid Act of 2015;
  5. H.R. 1656 – Secret Service Improvements Act of 2015, as amended;
  6. H.R. 2750 – Improved Security Vetting for Aviation Workers Act of 2015, as amended;
  7. H.R. 2770 – Keeping Our Travelers Safe and Secure Act, as amended;
  8. H.R. 2843 – TSA PreCheck Expansion Act, as amended;
  9. H.R. 2127 – Securing Expedited Screening Act, as amended;
  10. H.R. 1300 – First Responder Anthrax Preparedness Act, as amended;
  11. H.R. 2206 – State Wide Interoperable Communications Enhancement Act, as amended;
  12. H.R. 1634 – Border Security Technology Accountability Act of 2015, as amended;
  13. H.R. 998 – Preclearance Authorization Act of 2015, as amended;
  14. H.R. 1831 – Evidence-Based Policymaking Commission Act of 2014, as amended;
  15. H.J. Res. 61– Hire More Heroes Act of 2015;
  16. H.R. 675 – Veterans’ Compensation Cost-of-Living Adjustment Act of 2015; and
  17. H.R. 1607 – Ruth Moore Act of 2015

On Tuesday and Wednesday, July 28 and 29, the House will meet at 10:00am for morning hour and at 12:00pm for legislative business. On Thursday, July 30, the House will meet at 9:00am for legislative business, with last votes expected by 3:00pm. The House will consider:

  1. H.R. 427 – Regulations from the Executive in Need of Scrutiny (REINS) Act of 2015 (Subject to a Rule); and
  2. H.R. 1994 – VA Accountability Act of 2015 (Subject to a Rule)

The House may also consider H.R. __ – VA Budget and Choice Improvement Act and the Conference Report to Accompany H.R. 1735 – National Defense Authorization Act for Fiscal Year 2016.  It is possible that additional legislative items will be added to the schedule.

On Friday, July 31, no votes are expected in the House.

Appropriations Process All But Over, CR Likely; Budget Negotiations Possible, But Who and When is Unclear

Posted in Budget and Appropriations

Legislative Activity

Appropriations Process All But Over, CR Likely

The appropriations process is almost certainly over and when Congress returns from the August recess there will be just ten legislative days before federal funding runs out, hardly enough time to negotiate a budget deal or an omnibus spending bill. As anticipated, Congress will likely pass a Continuing Resolution (CR) before funding runs out. On Thursday, House Speaker John Boehner (R-OH) admitted as much to reporters, but said no decisions have been made as to what it will look like.

This year, the House passed six appropriations bills, half of the total, before a controversial confederate flag amendment stalled the process. The Senate Appropriations Committee passed all twelve appropriations bills out of the Committee this year, for the first time since 2009. Despite that milestone, Senate Democrats have held to their strategy to block any appropriations bills from coming to the floor, effectively dooming the appropriations process from the start. It is unclear if the Senate Democrats’ strategy will ultimately culminate in a spot at the budget negotiations table, as they had hoped.

Budget Negotiations Possible, But Who and When is Unclear

President Obama and Congressional Democrats have been pushing Republicans to negotiate a budget deal for months, and it seems Congress may be headed in that direction, but it is unclear what a budget deal would look like, or who would lead the negotiations.

The Murray-Ryan 2013 budget deal, which relaxed the sequester’s spending limits for two years, could be a blueprint for a 2015 budget deal. However, Congressman Paul Ryan (R-WI) and Senator Patty Murray (D-WA) are unlikely to lead current negotiations, as neither Chair their respective House and Senate Budget Committees as they did in 2013 and Rep. Ryan, as Chairman of the House Ways and Means Committee, is currently focused on the heavy lift of international tax reform.

While it is unclear how a budget deal will come together, it is likely that Democrats will fight for equal spending increases for both defense and non-defense discretionary spending. Republicans will push for fully offsetting any increase in spending, and probably resist Democratic efforts to include closing tax loopholes alongside reduced spending to pay for the increases. While the details are yet to be determined, the pressure to enter budget deal negotiations will certainly increase in the coming weeks and months.

This Week’s Hearings:

  • Tuesday, July 28: The House Budget Committee will hold a hearing titled “First Principles of Congressional Budgeting.”

Senate is Likely to Consider Cybersecurity Legislation Before August Recess

Posted in Cybersecurity

Legislative Activity

Senate is Likely to Consider Cybersecurity Legislation Before August Recess

Once it completes its work on surface transportation reauthorization legislation, the Senate has indicated that it plans to consider the Cybersecurity Information Sharing Act (CISA/S. 754) on the Senate floor before it leaves for recess, which is scheduled to begin on August 7. It is likely that Senators will introduce a number of amendments to the legislation when it hits the floor, including amendments that would seek to create data breach notification standards, to expand the privacy protections in the bill, and to update federal cybersecurity efforts, particularly in light of the Office of Personnel Management data breach.

Last week, Senate Homeland Security and Governmental Affairs Chairman Ron Johnson (R-WI) and Ranking Member Tom Carper (D-DE) announced that they would mark up a bill on Wednesday that would accelerate the deployment of the Department of Homeland Security’s cybersecurity program, EINSTIEN 3, to all federal agencies. Additionally, Senator Susan Collins (R-ME), along with a bipartisan group of Senators, also announced last week that they were introducing a separate bill – the FISMA Reform Act of 2015 – to strengthen the cyber defense posture of federal networks by updating the Federal Information Security Modernization Act that was signed into law last year. Both of these bills are likely to be offered as amendments to the Cybersecurity Information Sharing Act.

While the timing for consideration of CISA has not been made official to date, Senate Majority Leader Mitch McConnell (R-KY) is currently assessing how much time will be needed to consider the bill on the floor, as well as the potential for a number of controversial amendments that could take up significant floor time. A number of stakeholders, including the U.S. Chamber of Commerce and the Information Technology Industry Council, have indicated that they will include the vote on CISA as a key vote on their scorecards.

The House previously passed two information sharing bills: the Protecting Cyber Networks Act (H.R. 1560) and the National Cybersecurity Protection Advancement Act (H.R. 1731) in April. These bills were combined after passage and will have to be conferenced with CISA once it is passed by the Senate.

This Week’s Hearings:

  • Tuesday, July 28: The House Homeland Security Subcommittee on Cybersecurity, Infrastructure Protection, and Security Technologies will hold a hearing titled “Promoting and Incentivizing Cybersecurity Best Practices.”
  • Wednesday, July 29: The Senate Homeland Security and Governmental Affairs Committee will mark up a number of homeland security bills including the Critical Infrastructure Protection Act of 2015 and the EINSTEIN Act of 2015.
  • Thursday, July 30: The House Permanent Select Committee on Intelligence will hold a hearing titled “World Wide Cyber Threats.”

House Members introduce Bipartisan Education Measures; ED Seeks Feedback on Recognizing Innovative Programs

Posted in Education

Legislative Activity

Higher Education Act Reauthorization

Last Thursday, several Members of Congress joined together in a bipartisan manner to introduce legislation that aims to improve the country’s higher education system by simplifying the financial aid process, improving consumer information, providing financial aid counseling, and creating a more flexible Pell Grant program. The House Education and the Workforce Committee published fact sheets for each of the four bills, described below:

  • The Simplifying the Application for Student Aid Act (H.R. 3177), introduced by Reps. Joe Heck (R-NV), Phil Roe (R-TN), Jared Polis (D-CO), and Mark Pocan (D-WI), would “allow students to use family income data from two years prior to the date of the FAFSA application.” It would also “improve the ability to link between the online FAFSA form and income tax data stored by the Internal Revenue Service to automatically input income data into the FAFSA form, reducing the need to manually input information that often prevents low-income students from applying for aid.”
  •  The Strengthening Transparency in Higher Education Act (H.R. 3178), introduced by Reps. Virginia Foxx (R-NC), Luke Messer (R-IN) and Gregorio Sablan (D-MP), would “create a consumer-tested College Dashboard that would display only key information students need when deciding which school to attend.” Among other statistics, the College Dashboard would include information on the student completion rates, including Pell Grant recipients.
  • The Empowering Students through Enhanced Financial Counseling Act (H.R. 3179), introduced by Reps. Brett Guthrie (R-KY), Rick Allen (R-GA), and Suzanne Bonamici (D-OR), would direct “the secretary of education to maintain and disseminate a consumer-tested, online counseling tool institutions can use to provide annual loan counseling, exit counseling, and annual Pell Grant counseling.”
  • The Flexible Pell Grant for 21st Century Students Act (H.R. 3180), introduced by Reps. Elise Stefanik (R-NY), Carlos Curbelo (R-FL) and Rubén Hinojosa (D-TX), “would provide students the flexibility to draw Pell Grant funds at an accelerated pace in order to pay for additional courses within an award year.”

The move, at least for now, indicates Committee members will try to work in a bipartisan fashion on HEA reauthorization, or at least look for common ground in select areas.

Student Data Privacy Legislation

Last week, House Education and the Workforce Subcommittee on Early Childhood, Elementary, and Secondary Education Chairman Todd Rokita (R-IN) and Ranking Member Marcia Fudge (D-OH) introduced the Student Privacy Protection Act (H.R. 3157) to update the Family Educational Rights and Privacy Act (FERPA). House Education and the Workforce Committee Chairman John Kline (R-MN) and Ranking Member Bobby Scott (D-VA) also signed on as original co-sponsors of the legislation. According to the Committee, the bill would do the following:

  • Update the definition of an education record to ensure student information connected to classroom technology is protected.
  • Prohibit schools or independent entities, such as technology companies, from using a student’s education record to market products or services to that student.
  • Reaffirm a parent’s right to access their child’s education record and opt out of sharing their student’s directory information such as name, address, and date of birth.
  • Strengthen security requirements for storing and gaining access to student education records.
  • Provide parents with greater transparency about what student information schools determine can be used, collected, and shared for educational purposes.
  • Reinforce privacy protections by providing schools better guidance, support, and oversight.
  • Ensure compliance with the law and communication between parents and school leaders by requiring schools to designate a privacy official to oversee the use of student information.

Although the Committee had originally planned to mark up the legislation this week, it appears that they have now decided to postpone the mark-up until after the August recess. This bill is one of many student data privacy bills that have been introduced in the 114th Congress and likely has the best chance of seeing movement this year given that it was authored by the staff on the Committee with jurisdiction over the bill and is bipartisan in nature. It is unclear at this time whether there is an appetite within the rest of the House and in the Senate to complete work on a FERPA update this Congress.

This Week’s Hearings:

  • Wednesday, July 29: The Senate Health, Education, Labor and Pensions Committee will hold a hearing  titled “Reauthorizing the Higher Education Act: Combating Campus Sexual Assault.”

Executive Branch Activity

Department of Education Seeks Feedback on Recognizing Innovative Programs

In a blog post published on July 17, Department of Education Under Secretary Ted Mitchell announced the Department is seeking feedback over the next weeks and months to expand its understanding of how to assess the quality of non-traditional higher education programs. These innovative programs help to create a more accessible and cost-effective system of higher education, according to the Department. However, the quality of these programs varies and the Department says it lacks the tools to distinguish between the high-quality and poor-quality programs—from Massive Open Online Courses (MOOCS) and online skills courses to boot-camps and competency-based degrees. Additionally, the Department stated that current regulation prevents the certification of these high-quality programs to receive federal financial aid because the programs are not “institutions.”

The Department now seeks to develop “a new set of quality assurance questions” for innovative higher education programs, with a focus on “outputs and evidence.” In framing the discussion, it has identified three general categories for feedback: providers’ claims about student learning, effectiveness of student assessments, and student outcomes. The Department invites stakeholders to send their thoughts, questions, and ideas for engagement on these quality assurance questions to collegefeedback@ed.gov.

House and Senate Moving on Energy Bills; Spill Prevention and Coastal Management Also To Be Considered

Posted in Environment and Natural Resources

Legislative Activity

House and Senate “Compressive” Energy Bills

Last week, the House Energy and Commerce Committee, Subcommittee on Energy and Power held a markup of its comprehensive energy legislation that will be considered by the full House in the weeks ahead. In the Senate, Chairman Lisa Murkowski (R-AK) and Ranking Member Maria Cantwell (D-WA) introduced their bi-partisan “Energy Policy Modernization Act of 2015” which the Senate Energy and Natural Resources Committee will markup over two days this week on July 28 and July 30.

This Week’s Hearings:

Spill Prevention

On Tuesday, July 28, the House Committee on Transportation and Infrastructure, Subcommittee on Coast Guard and Maritime Transportation, will hold a hearing to consider the Foreign Spill Protection Act.

Natural Resources

The House Committee on Natural Resources will hold three hearings this week:

  • On Wednesday, July 29, there will be full committee oversight hearing titled, “Federal Agencies’ Selective Enforcement of Endangered Species Act (ESA) Consultation”
  • On Tuesday, July 28, the Subcommittee on Oversight and Investigations will hold a hearing titled “Accountability, Policies, and Tactics of Law Enforcement within the Department of Interior and Forest Service”
  • Also on Tuesday, July 28, the Subcommittee on Energy and Mineral Resources will hold a hearing to explore “Federal Implementation of the Coastal Zone Management Act”

Nuclear Energy

On Wednesday, July 29, the House Committee on Science Space and Technology, Subcommittee on Energy, will hold a hearing to review the Nuclear Regulatory Commission’s licensing process.

Continued Focus on Dodd-Frank, Challenge to CFPB Moves Forward

Posted in Financial Services

Legislative Activity

Financial Services Lawmakers Hone in on Dodd-Frank Reform as Fifth-Year Anniversary Approaches

Last week, the Senate Appropriations Committee passed along party lines in a 16-14 vote a $20.6 billion financial services appropriations package into which Republican appropriators inserted Senate Banking Committee Chairman Richard Shelby’s (R-AL) financial services regulatory reform bill. While the bill will now be sent to the full Senate for consideration, Senate Democrats are expected to continue blocking appropriations bills from coming to the floor. As such, Republican tactics will have no direct impact on financial services regulations. The move may, however, result in an environment in which it is even harder for lawmakers to come together on reforms.

In the House, with the fifth anniversary since the enactment of the Dodd-Frank Act now behind them (and the Volcker Rule compliance date having officially passed last week), financial services lawmakers are continuing to focus on ways to reform the law and will hold a series of hearings to examine the state of financial services regulation. The first of such hearings is scheduled for this coming week, with lawmakers set to discuss whether Dodd-Frank has made the nation more prosperous.

This Week’s Hearings:

  • Tuesday, July 28: The House Financial Services Committee will hold a markup of various pieces of legislation.
  • Tuesday, July 28: The House Financial Services Committee will hold a hearing titled “The Dodd-Frank Act Five Years Later: Are We More Prosperous?”
  • Tuesday, July 28: The Senate Banking Committee will hold a hearing titled “Lifting the Crude Oil Export Ban.”
  • Wednesday, July 29: The House Agriculture Committee will hold a hearing titled “Dodd-Frank Turns Five: Assessing the Progress of Global Derivatives Reform.”
  • Wednesday, July 29: The Senate Banking Subcommittee on Financial Institutions and Consumer Protection will hold a hearing titled “Financial Institutions and Consumer Protection.”

Regulatory Activity

Constitutional Challenge to the CFPB to Move Forward

Last week, the DC Court of Appeals reversed the ruling of a lower court and found that Texas-based State National Bank of Big Spring has standing to challenge both the constitutionality of the Consumer Financial Protection Bureau (CFPB) and the recess appointment of Director Richard Cordray. The Court did not address the merits of the case, the central argument of which goes to the single director structure and insulation against oversight. This comes on the heels of newly introduced legislation by Senator Ted Cruz (R-TX) and Representative John Ratcliffe (R-TX) to eliminate the agency.

CFTC to Hold Meeting of Energy and Environmental Markets Advisory Committee

On Wednesday, July 29, the Commodity Futures Trading Commission (CFTC) will hold a meeting of its Energy and Environmental Markets Advisory Committee (EEMAC), which is sponsored by Commissioner J. Christopher Giancarlo. The meeting will focus on the Commission’s proposed rules with respect to position limits, trade options, and its recent final interpretation concerning forward contracts with embedded volumetric optionality and how these initiatives will impact energy and environmental markets.

House Committee on Energy and Commerce to Mark Up Health Legislation; Potential Senate Vote on Obamacare Repeal This Week; House Committee on the Judiciary Announces Hearings on Competition in the Health Care Marketplace; Medicare Trustees Release Annual Report

Posted in Health Care

Legislative Activity

House Committee on Energy and Commerce to Mark Up Health Legislation

The House Committee on Energy and Commerce has announced that it will hold a markup on Tuesday, July 28. Several health bills are on the agenda: H.R. 1344, the Early Hearing Detection and Intervention Act of 2015, which reauthorizes a program for early detection, diagnosis, and treatment regarding deaf and hard-of-hearing newborns, infants, and young children; H.R. 1462, the Protecting Our Infants Act of 2015, which seeks to reduce the rise of prenatal opioid abuse and neonatal abstinence syndrome through improving data and developing recommendations for prevention and treatment; H.R. 1725, the National All Schedules Prescription Electronic Reporting Reauthorization Act of 2015, which amends and reauthorizes the controlled substance monitoring program under the Public Health Service Act; and H.R. 2820, the Stem Cell Therapeutic and Research Reauthorization Act of 2015, which reauthorizes the National Cord Blood Inventory program and the C.W. Bill Young Cell Transplantation Program.

Potential Senate Vote on Obamacare Repeal This Week

On Sunday, July 26, the Senate Republicans failed to attach an Affordable Care Act (ACA) repeal provision to the highway funding bill. The amendment fell on a partisan 49-43 vote, but eight senators were absent from the weekend proceedings. Sen. Mike Lee (R-UT) is expected to propose a procedural motion early this week that would allow approval of the Obamacare repeal provision with a simple majority vote.

House Committee on the Judiciary Announces Fall Hearings on Health Care Competition

On Thursday, July 23, House Committee on the Judiciary Chairman Bob Goodlatte (R-VA), Ranking Member John Conyers Jr. (D-MI), Subcommittee on Regulatory Reform, Commercial and Antitrust Law Chairman Tom Marino (R-PA), and Subcommittee on Regulatory Reform, Commercial and Antitrust Law Ranking Member Hank Johnson (D-GA) announced that the Committee plans to hold a series of hearings to explore competition in the U.S. health care marketplace. According to the Committee, the first hearing in September will consider the role the ACA has played in the consolidation of the industry. It will also examine any impacts on care accessibility and affordability for consumers. The second hearing will focus on consolidation within the industry, including the proposed mergers between Aetna and Humana and Anthem and Cigna.

Last week, Anthem Inc. agreed to purchase Cigna Corp. for $48.4 billion, which would create the largest health insurer in the country if the deal passes regulatory muster. Several weeks ago, Aetna Inc. agreed to buy Humana Inc. for $34 billion.

This Week’s Hearings:

  • Tuesday, July 28: The House Committee on Ways and Means Subcommittee on Health will hold a hearing to discuss rural health care disparities created by Medicare regulations.
  • Tuesday, July 28: The House Committee on Education and the Workforce will hold a hearing titled “Reviewing the Policies and Priorities of the U.S. Department of Health and Human Services.” The Honorable Sylvia Mathews Burwell is slated to testify.
  • Tuesday, July 28: The House Committee on Energy and Commerce Subcommittee on Oversight and Investigations will hold a hearing titled “Continuing Concerns with the Federal Select Agent Program: Department of Defense Shipments of Live Anthrax.”
  • Tuesday, July 28: The House Committee on the Judiciary Subcommittee on Crime, Terrorism, Homeland Security, and Investigations will hold a hearing titled “America’s Growing Heroin Epidemic.”
  • Tuesday, July 28: The House Committee on Energy and Commerce will hold a markup to consider H.R. 985, Concrete Masonry Products Research, Education, and Promotion Act of 2015; H.R. 1344, Early Hearing Detection and Intervention Act of 2015; H.R. 1462, Protecting Our Infants Act of 2015; H.R. 1725, National All Schedules Prescription Electronic Reporting Authorization Act of 2015; H.R. 2820, Stem Cell Therapeutic and Research Reauthorization Act of 2015; and H.R. 3154, E-Warranty Act of 2015.
  • Wednesday, July 29: The Senate Committee on Indian Affairs will hold a hearing titled “Examining the True Costs of Alcohol and Drug Abuse in Native Communities.”
  • Thursday, July 30: The House Committee on Agriculture Subcommittee on Livestock and Foreign Agriculture will hold a hearing titled “Examination of Federal and State Response to Avian Influenza.”
  • Friday, July 31: The Senate Special Committee on Aging will hold a field hearing in St. Louis, Missouri titled “Celebrating Medicare: Strengthening The Program For The Next 50 Years.”

Regulatory Activity

CMS Names Participants in Hospice Demonstration

On Monday, July 20, the Centers for Medicare and Medicaid Services (CMS) named the hospice providers that will be participating in the Medicare Care Choice Model, a demonstration which will allow Medicare and dually eligible beneficiaries to receive palliative care services from certain hospice providers while concurrently receiving curative care services. Current payment rules require Medicare and dually eligible beneficiaries to forego curative care in order to receive palliative care services offered by a hospice.

CMS has selected 140 Medicare-certified hospice centers to participate in this five year demonstration. Participating hospices will provide services that are currently available under the Medicare hospice benefit for routine home care and respite levels of care, but which cannot be separately billed under Medicare Parts A, B, and D. CMS will pay the hospices a per beneficiary monthly fee ranging from $200 to $400.

Medicare Trustees Release Annual Report

On Wednesday, July 22, the Boards of Trustees for Medicare released its annual report to Congress titled “2015 Annual Report of the Boards of Trustees of the Federal Hospital Insurance and the Federal Supplementary Medical Insurance Trust Funds.” This mandated report addresses the financial operations and actuarial status of the Medicare trust funds.

Of note, the Board projects that, in the future, expenditures will increase at a somewhat faster pace than the overall economy. As a percentage of gross domestic product (GDP), expenditures are projected to increase from 3.5 percent in 2014 to 6.0 percent in 2089. The Trustees estimate that the Medicare Part A trust fund will be depleted in 2030, the same year stated in last year’s report. The Trustees recommend that Congress and the Executive Branch work together “with a sense of urgency” to address the depletion of the Medicare Part A trust fund, as well as the projected growth rate in Medicare Parts A, B, and D.

CMS Provides Guidance on State Innovation Waivers

On Wednesday, July 22, CMS released guidance on the section 1332 State Innovation Waiver. This waiver is designed to encourage states to pursue innovative strategies in ACA implementation, while ensuring that the basic protections of the ACA are retained. This guidance provides an overview and a list of frequently asked questions on the State Innovation Waiver application process. This guidance also provides the key elements to be included in an application and a description of the application review process.

State Innovation Waivers are slated to be available beginning on January 1, 2017. CMS will approve the waivers for five-year periods, and they may be renewed.

CMS Announces Expedited Review of Section 1115 Demonstrations

On Friday, July 24, CMS released an informational bulletin, which announced that the agency is establishing a “fast-track” process for federal review of proposed extensions to section 1115 Medicaid and Children’s Health Insurance Program (CHIP) demonstrations. Section 1115 demonstrations give states flexibility in designing and improving their CHIP and Medicaid programs.

This expedited review process will be available for states with existing section 1115 demonstrations that have “proven program outcomes,” have not made substantial program changes since the last extension cycle, and are not proposing “major or complex changes.” The informational bulletin provides a streamlined approach for section 1115(a) extensions and simplifications to section 1115(e) and section 1115(f) extensions.

CMS will provide states with further information roughly 18 months prior to the expiration of their current demonstration in order to assist the state in considering whether to use the new fast-track process.

Congress Continues Oversight of Aviation Security Agency

Posted in Homeland Security

Legislative Activity

Congress Continues Oversight of Aviation Security Agency

On Thursday, July 23, the House Homeland Security Subcommittee on Transportation Security advanced three measures aimed at strengthening the Transportation Security Administration (TSA), after covert TSA testing earlier this year found airport screeners failed to detect prohibited items in 67 out of 70 test cases.

The Transportation Security Administration Reform and Improvement Act of 2015 would amend the Homeland Security Act of 2002 to improve the efficiency of TSA’s PreCheck program, review TSA’s secure flight program comparing airline passenger lists to government watch lists, and require a report on the efficiency and effectiveness of the Surface Transportation Security Inspection Program, which surveys and conducts inspections of freight rail operations across the United States.

The Airport Access Control Security Improvement Act of 2015 (H.R. 3102) would create a risk-based program for airport employee screening based on their need for access to secure areas. A manager’s amendment introduced by Subcommittee Chairman John Katko (R-NY) and adopted during the mark-up would establish redress procedures for airport employees denied access based on past criminal offenses.

Finally, the Partners for Aviation Security Act (H.R. 3144) would require consultations with the Aviation Security Advisory Commission, a panel of industry groups and other interested stakeholders, when considering the list of items prohibited from being taken onto commercial aircraft.

Separately, newly-confirmed TSA Administrator will appear before the House Homeland Security Committee on Wednesday, July 29, to discuss his plans for leading the agency and how he intends to address concerns regarding TSA management.

This Week’s Hearings:

  • Tuesday, July 28: The Senate Homeland Security and Governmental Affairs Committee will hold a hearing titled “Avoiding Duplication: An Examination of the State Department’s Proposal to Construct a New Diplomatic Security Training Facility.”
  • Wednesday, July 29: The Senate Homeland Security and Governmental Affairs Committee will hold a Business Meeting.
  • Wednesday, July 29: The House Homeland Security Committee will hold a hearing titled “Aviation Security Challenges: Is TSA Ready for the Threats of Today?”

President Obama Travels to Africa; Congress Continues to Scrutinize the Iran Deal, While the Senate Looks to Possibly Reauthorize the Ex-Im Bank

Posted in Defense, International

President Obama’s Africa Trip

President Barack Obama travelled to Kenya this past weekend, where he met with Kenyan President Uhuru Kenyatta.  The Governments of the United States and Kenya issued a joint commitment to promote good governance and anti-corruption efforts in Kenya.  The White House also released fact sheets on: (1) Advancing Democracy, Human Rights, Gender Equality, Wildlife Conservation, and Governance in Africa; (2) deepening the U.S.-Africa trade relationship; (3) Power Africa; and (4) U.S. Investment in Entrepreneurship.  On Sunday afternoon, President Obama travelled to Ethiopia, where he is expected to meet with Ethiopian officials and officials from the African Union.

Iran

A largely skeptical panel of Senators questioned Secretary of State John Kerry over the Iran nuclear deal last Thursday, with both sides previewing criticisms likely to be repeated throughout the agreement’s 60-day congressional review period. Secretary Kerry told the Senate Foreign Relations Committee (SFRC) that there is no alternative if the United States rejects the deal. SFRC Chairman Bob Corker (R-Tennessee) alleged that Secretary Kerry had turned Iran from being a pariah, to putting Congress in that role during the course of making the agreement.

During the hearing, Senator Marco Rubio (R-Florida), a 2016 Republican presidential contender, warned that the next U.S. President could overturn the deal, observing it is not a binding treaty. Should Congress ultimately vote against the deal and should President Obama veto such an act, he will need to secure significant support from Democrats to sustain his veto. Senator Bob Menendez (D-New Jersey) appeared to voice wider frustration in Congress that Members had not been more closely consulted during the negotiating process.

Russia/Ukraine Crisis

Ukrainian Prime Minister Arseniy Yatsenyuk and General Philip Breedlove, Commander of Supreme Allied Command and of U.S. European Command, met in Kyiv last week, where they discussed the progress of joint Ukrainian-U.S. military exercises. General Breedlove is also expected to visit the training exercises in Lyiv Oblast.

Separately, Ukrainian Prosecutor General Viktor Shokin and U.S. Assistant Secretary of State for International Narcotics and Law Enforcement Affairs William Brownfield discussed reforms and personnel changes in prosecution agencies. Assistant Secretary Brownfield also signed a Memorandum of Understanding (MOU) with Mikheil Saakashvili, Governor of Ukraine’s Odessa Oblast, assuring American support. The MOU marks the first agreement between the regional Ukrainian government and the United States. The signing ceremony also formally recognized the official deployment of a new patrol police force in Odessa trained by the California Highway State Patrol.

Syria/Iraq

U.S. Secretary of Defense Ash Carter met Kurdish leaders during an unannounced visit to the capital of Iraq’s Kurdistan Region. Secretary Carter landed early last Friday in Irbil. This visit comes a day after his stop in Baghdad, where Secretary Carter took a firsthand look at joint U.S.-Iraqi army efforts to thwart the advances of ISIL. He also visited Israel, Jordan, and Saudi Arabia last week.

Turkey

After the 20 July terrorist attack, reportedly by the PKK, in Suruç, Turkey, National Security Council Spokesperson Ned Price expressed U.S. solidarity with the Turkish Government and its people, reaffirming U.S. resolve to work with Turkey and other allies to combat terrorism.

On 22 July, President Obama spoke with Turkish President Recep Tayyip Erdogan about deepening bilateral cooperation in the fight against ISIL and common efforts to bring security and stability to Iraq and a political settlement to the conflict in Syria. After months of negotiations, Turkish leaders agreed to U.S. requests to use the Incirlik Air Base in southern Turkey to send fighter jets and armed drones to attack fighters based in Syria and Iraq.

Trade

Despite U.S. efforts to conclude a final deal with the Trans-Pacific Partnership (TPP) countries, there are a number of outstanding issues reported to yet be resolved during the 28-31 July Ministerial Meeting in Maui, Hawaii. These issues include: (1) intellectual property (pharmaceuticals); (2) goods market access (dairy, rice, sugar, and apparel and footwear); (3) automotive issues with Japan; (4) rules of origin (textiles and apparel); (5) state-owned enterprises and which entities should be exempt; (6) investment (the investor-state dispute settlement mechanism); (7) labor; (8) non-conforming measures on services and investment; and (9) tobacco.

Last week, U.S. and EU trade officials, along with several members of their respective legislatures, held off-the-record panels and receptions with business leaders to discuss a wide range of topics, including ongoing Transatlantic Trade and Investment Partnership (TTIP) talks.

While some Republican lawmakers acknowledged that plans have been delayed for holding formal discussions to reconcile differences between the House and Senate versions of the pending customs and enforcement bill (H.R. 644) due to issues in the informal negotiations, they reiterated their aim wrap up talks before the August recess. Senator John Thune (R-South Dakota), Republican conference chair and one of the seven Senate conferees on the bill, expressed doubts that the House would vote on the motion to go to conference before the recess, delaying action on the customs bill until the fall.

In a 17 July letter, 12 Democratic lawmakers argued for the conferees to remove the climate change language in the House-passed customs bill, calling it misplaced, ambiguous, and serving only to send the wrong message to the world on U.S. climate policy.

Ex-Im Bank

Senator Maria Cantwell (D-Washington) alleged to reporters that Congress is treating reauthorization of the lapsed U.S. Export-Import (Ex-Im) Bank charter like a pawn. Some in the House are saying they would allow movement to renew Ex-Im if the Senate takes up the short-term highway and transit bill. On Thursday, White House Press Secretary Josh Earnest affirmed that the Administration insists the provisions reauthorizing the Export-Import Bank be added to any transportation bill that passes Congress before the end of July.

Senator Pat Roberts (R-Kansas), Chairman of the Senate Committee on Agriculture, filed an amendment last week to the Senate highway bill to repeal mandatory country of origin labeling (COOL) requirements for beef, pork and chicken – to prevent billions of dollars in retaliatory tariffs by Canada and Mexico on the U.S. economy. Last Friday, Senate Majority Leader Mitch McConnell (R-Kentucky) moved to block any amendments to the transportation bill in a procedure called “filling the amendment tree.”

Majority Leader McConnell has said he will allow two amendment votes — (1) one related to repealing Obamacare, and (2) another related to the Ex-Im Bank. The Majority Leader said on the floor that he is still open to having debate on germane amendments. An aide to Senator McConnell reported that the Senate will likely vote on the Obamacare amendment on Sunday, with a vote on Ex-Im later next week. The Senate Republican Leadership is anticipating a final passage vote on the bill possibly on Thursday.

Trafficking in Persons Report

The State Department is due to release its overdue Trafficking in Persons (TIP) Report on Monday, 27 July. On 15 July, President Obama announced his intention to nominate Susan Coppedge to be the next Director of the Office to Monitor and Combat Trafficking, with rank of Ambassador at Large. The Senate has yet to schedule a confirmation hearing for Ms. Coppedge.

FIFA

U.S. authorities investigating the widespread Fédération Internationale de Football Association (FIFA) corruption scandal are now reportedly looking into the role that major financial institutions played in the alleged scheme. The United States has also asked Paraguay to extradite Nicolás Leoz, the former president of South America’s soccer confederation, Conmebol, a suspect in the scandal.

Looking Ahead

Washington will likely focus on the following upcoming matters:

  • 23-28 July: President Obama to travel to Kenya attend the Global Entrepreneurship Summit
  • TBD August: AGOA Forum in Libreville, Gabon
  • 15 September: 70th Session of the UN General Assembly (UNGA) opens in New York City
  • 24 September: Pope Francis to address Congress and meet with President Obama
  • 28 September: General debate of the UNGA begins
  • 30 Nov.-11 Dec.: UN Global Climate Conference in Paris

Lawmakers Hoping to Move Forward on Highway Bill, IRS Proposes Regulations on “Disguised Payments”

Posted in Tax and Retirement

Legislative Activity

Tax-Writers Running Out of Time on Highway Bill

Following the passage last week of the House’s $8 billion five-month highway patch, the Senate continues to remain focused on moving forward with its own bill, which provides for a six year highway reauthorization and three years’ worth of funding (more than $47 billion), with offsets derived from: (1) shifting the deposit of civil motor vehicle safety penalties to the Highway Trust Fund; (2) tax compliance, such as mortgage information reporting; (3) fees and receipts, such as index user fees; and (4) outlays, such as rescinding certain unused TARP funds.

After weekend work on the legislation, the Senate hopes to wrap up the process before the House leaves town on Friday. Still, concerns over the underlying safety title, various pay-fors, and unrelated amendments (i.e., votes on Affordable Care Act repeal and Export-Import reauthorization) have put the bill’s future in jeopardy. What’s more, recognizing that the longer-term bill faces a tough road, Majority Leader McConnell has suggested that his backup plan will be to put forward a two-month patch in its steed. With only five legislative days left in the session before the House closes up shop until September, it is unclear what approach will ultimately prevail.

Importantly, if the House’s five-month extension does win the day, House Ways and Means Committee Chairman Paul Ryan (R-WI) is likely to press forward with international tax reform when lawmakers return to Washington in September. If the Senate’s longer-term bill prevails, however, any outstanding hope for international tax reform this year is all but dead.

Lawmakers to Debate Tax Code’s Impact on Foreign Acquisitions  of U.S. Businesses

This week, the Senate Permanent Subcommittee on Investigations will hold a hearing to explore the impact of the U.S. tax code on foreign acquisitions of U.S. businesses and the ability of U.S. businesses to expand by acquisition. Despite Democrats continued frustration over tax inversions – and desire to combat the issue with further regulations – we expect Senator Rob Portman (R-OH), Chair of the Subcommittee, to continue urging lawmakers to instead focus on reforming the tax Code as a way to make U.S. businesses more competitive and encourage them to stay in the United States.

This Week’s Hearings:

  • Tuesday, July 28: The House Ways and Means Subcommittee on Select Revenue Measures will hold a hearing titled “Reform of the Multiemployer Pension System.”
  • Tuesday, July 28: The Joint Economic Committee will hold a hearing titled “Dynamic Scoring: How Will It Affect Fiscal Policymaking?”
  • Wednesday, July 29: The Senate Judiciary Subcommittee on Oversight, Agency Action, Federal Rights and Federal Courts will hold a hearing titled “Revisiting IRS Targeting: Progress of Agency Reforms and Congressional Options.”
  • Thursday, July 30: The Senate Homeland Security and Governmental Affairs Permanent Subcommittee on Investigations will hold a hearing titled “Impact of the U.S. Tax Code on the Market for Corporate Control and Jobs.”

Regulatory Activity

IRS Issues Proposed Rule on “Disguised Payments”, Exempt Organizations

On Thursday, July 23, the Department of the Treasury and Internal Revenue Service (IRS) issued a long-awaited notice of proposed rulemaking (Notice) on “Disguised Payments for Services.” The Notice addresses, among other things, the tax treatment of management fee waivers, the tax treatment of carried interests received by a recipient for services to be provided by a person other than the recipient of the carried interest (such as a management company), and a variety of technical, but sometimes important issues, relating to whether payments or obligations to make payments are treated as: (1) distributive shares of partnership income; (2) payments to a partner in a capacity other than as a partner to which section 704(a) of the Internal Revenue Code applies; or (3) “guaranteed payments” to which section 704(c) applies. The technical provisions can be of importance because they may convert what a partner thought would be a share of partnership capital gain income to ordinary income.

The Notice states that proposed regulations included in the Notice will be effective with respect to arrangements entered into or modified after the regulations are issued in final form. It also states that pending final regulations, the determination of whether a payment is a disguised payment for services is made on the basis of the statute and the legislative history and “[p]ending the publication of final regulations, the position of the Treasury Department and the IRS is that the proposed regulations generally reflect Congressional intent as to which arrangements are appropriately treated as disguised sale payments for services.” Thus, for practical purposes the proposed regulations can be viewed as effective immediately with potential retroactive effect.

The Squire Patton Boggs tax team will provide a more detailed analysis of the Notice soon, including its impact on partners in existing partnerships.

Separately, IRS Commissioner John Koskinen last week indicated that final rules on political activity for exempt organizations will not be effective before the 2016 presidential election. According to Commissioner Koskinen he does not “want people thinking we are trying to get these regs done so we can influence the election.” However, the IRS may actually propose the rules in advance of the election, providing for a 90 day comment period, which will be followed by a hearing. Specifically, the rules are expected to address how much political activity exempt organizations can engage in without jeopardizing their tax-exempt status.