Wilbur Ross and Ryan Zinke Get Their Day in the Senate, House Returns for Full Week

Senate Legislative Activity

The Senate convenes today, February 27, at 12:00pm.  Following any Leader remarks, the Senate will proceed to Executive Session and resume consideration of the nomination of Wilbur Ross, to be Secretary of Commerce.

At 3:00pm, Sen. Ben Sasse (R-NE) will be recognized to deliver Washington’s Farewell Address.  Following the reading of Washington’s Farewell Address, the Senate will resume consideration of the Ross nomination.

At 7:00pm, all remaining post-cloture time will be deemed expired, and the Senate will proceed to vote on confirmation of the Ross nomination. Following that vote, the Senate will proceed to vote on the motion to invoke cloture on the nomination of Rep. Ryan Zinke (R-MT), to be Secretary of Interior.

There will be two roll call votes tonight beginning at 7:00pm.

  1. Confirmation of the nomination of Wilbur Ross, to be Secretary of Commerce
  2. Motion to invoke cloture on the nomination of Rep. Ryan Zinke (R-MT), to be Secretary of Interior

As a reminder, Senator McConnell has filed cloture on the following three cabinet nominations:

  1. Ryan Zinke, nominated to be Secretary of Interior
  2. Ben Carson, nominated to be Secretary of Housing and Urban Development
  3. James Richard Perry, nominated to be Secretary of Energy

Each cloture petition will ripen upon disposition of the previous nomination, and each nomination is subject to 30 hours of post-cloture debate.

House Legislative Activity

Today, the House will meet at 12:00pm for morning hour and 2:00pm for legislative business. Votes will be postponed until 6:30pm.  The following legislation will be considered under suspension of the rules:

  1. H.R. 88 – Shiloh National Military Park Boundary Adjustment and Parker’s Crossroads Battlefield Designation Act (Sponsored by Rep. Marsha Blackburn / Natural Resources Committee)
  2. H.R. 228 – Indian Employment, Training and Related Services Consolidation Act of 2017, as amended (Sponsored by Rep. Don Young / Natural Resources Committee)
  3. H.R. 699 – Mount Hood Cooper Spur Land Exchange Clarification Act (Sponsored by Rep. Greg Walden / Natural Resources Committee)
  4. H.R. 863 – To facilitate the addition of park administration at the Coltsville National Historical Park, and for other purposes (Sponsored by Rep. John Larson / Natural Resources Committee)
  5. H.R. 442– National Aeronautics and Space Administration Transition Authorization Act of 2017 (Sponsored by Sen. Ted Cruz / Science, Space, and Technology Committee)
  6. H.R. 1033 – Open Book on Equal Access to Justice Act (Sponsored by Rep. Doug Collins / Judiciary Committee)

On Tuesday, February 28, the House will meet at 10:00am for morning hour and 12:00pm for legislative business. The House will recess no later than 5:00pm and reconvene at approximately 8:35pm for a Joint Session of Congress to receive the President’s Address. Members are requested to be on the Floor and seated no later than 8:25 p.m.

  1. H.R. 998 – SCRUB Act (Subject to a Rule) (Sponsored by Rep. Jason Smith / Oversight and Government Reform Committee)

On Wednesday, March 1, the House will meet at 10:00am for morning hour and 12:00pm for legislative business.

On Thursday, March 2, the House will meet at 9:00am for legislative business. Last votes expected no later than 3:00pm.

On Friday, March 3, no votes are expected in the House.

  1. H.J.Res. 83 – Disapproving the rule submitted by the Department of Labor relating to “Clarification of Employer’s Continuing Obligation to Make and Maintain an Accurate Record of Each Recordable Injury and Illness” (Subject to a Rule) (Sponsored by Rep. Bradley Byrne / Education and the Workforce Committee)
  2. H.R. 1009 – OIRA Insight, Reform, and Accountability Act, Rules Committee Print (Subject to a Rule) (Sponsored by Rep. Paul Mitchell / Oversight and Government Reform Committee)
  3. H.R. 1004 – Regulatory Integrity Act of 2017 (Subject to a Rule) (Sponsored by Rep. Tim Walberg / Oversight and Government Reform Committee)

Sources:  www.democrats.senate.govhttp://www.majorityleader.gov/

State Attorneys General February 27 Update

Squire Patton Boggs’ State Attorneys General Practice Group is comprised of lawyers who have served at senior levels in state AG offices around the country and whose practices focus, to one degree or another, on representing clients before these increasingly assertive and powerful, yet often overlooked, government agencies, as explained in detail here.

In these updates, we will call attention to the most noteworthy state AG news or developments emerging in the previous week.

Litigation

Maine AG Janet Mills has announced that her office and the US Federal Trade Commission have filed a lawsuit against three corporations and six individuals “for their roles in a deceptive campaign to sell a joint health supplement and a cognitive health supplement in violation of state and federal laws,” according to a Maine AG news release. The complaint alleges that the defendants “employed unfair or deceptive acts or practices in the advertising, marketing, distribution, and sale of [the health supplements] FlexiPrin and CogniPrin,” including making “false claims about the efficacy and testing of their products” and “deceptively enroll[ing] consumers in ‘continuity plans’, or automatic monthly shipments for which consumers’ credit and debit cards were automatically charged,” according to the news release. The news release notes that six of the nine defendants have agreed to settlements that “will result in over $500,000 total in monetary judgment and strong injunctions,” including for “one defendant and his corporations, a 20-year ban on marketing or selling dietary supplements directly to consumers.”

Texas AG Ken Paxton has announced that his office has filed a lawsuit charging a Texas-based construction company and its owners with “repeat violations of the Texas Deceptive Trade Practice Act (DTPA)” for “allegedly targeting Hispanics in a home building scam,” according to a Texas AG news release. The lawsuit alleges that the company “claimed in ads targeted to Spanish-speaking consumers that it could complete a new home in five months with ‘no financing’ and ‘no interest,’” however an investigation by the Texas AG’s office “found that prospective home buyers were required to make deposits of up to 60 percent in order to start construction of their homes, [and] the company would often delay starting or neglect to complete,” according to the news release. The news release further states that “a number of consumers complained about facing local fines because their homes were built without proper permits.” The Texas AG’s lawsuit seeks a “permanent injunction against the defendants, restitution for affected home buyers, and civil penalties of up to $20,000 for each of the defendants’ violations of the DTPA,” according to the news release.

Advocacy

On February 22, state AGs from 18 states and the District of Columbia sent a letter to the US Department of Education and Congressional leaders to “express [the AGs’] support for recent federal protections for students and taxpayers in higher education,” and to state that the AGs are “deeply concerned that rollbacks of these protections would again signal ‘open season’ on students for the worst actors among for-profit post-secondary schools.” The “recent federal protections” supported by the AGs in the letter include, for example, the “Gainful Employment Rule,” which the AGs’ letter notes “allows prospective students to compare debt-to-income ratios across schools” and so “protects students from programs that will leave them saddled with debt and without job prospects in the careers for which they trained.” The AGs state in the letter that the Gainful Employment Rule and other federal protections are needed in part because “[o]ver the past fifteen years, millions of students have been defrauded by unscrupulous for-profit post-secondary schools.” The AGs’ letter also notes that “[a]s the chief consumer law enforcement agencies in our states, our offices handle thousands of complaints concerning higher education every year.” According to the AGs, “[a]llowing for-profit schools unfettered access to federal student loan money without reasonable oversight and accountability is a mistake that American students and taxpayers should not be made to pay for again.”

2018 Farm Bill Hearings Officially Underway; Kansas’ “Big First” Representative Roger Marshall Welcomes Panelists

Legislative Activity

2018 Farm Bill Hearings Officially Underway; Kansas’ “Big First” Representative Roger Marshall Welcomes Panelists

Last week, leaders of the Senate Agriculture Committee – Chairman Pat Roberts (R-KS) and Ranking Member Debbie Stabenow (D-MI) – traveled to Kansas State University in Manhattan, Kansas, to kick off the first 2018 Farm Bill hearing. The discussion lasted approximately three hours and included nearly 20 testimonies from farmers, community leaders, and business owners across the state of Kansas. The location of the hearing was particularly special for Chairman Roberts, as he received his Bachelor of Art degree in Journalism from the university in 1958.

The hearing’s Welcome Panel included the newest member of the Kansas delegation. Congressman Roger Marshall (R-KS), former Obstetrician and Captain in the United States Army Reserves, was sworn in last month to represent the Sunflower State’s First Congressional District – coined the “Big First.” In his remarks, Rep. Marshall discussed the importance of working with his colleagues in Washington to identify farm bill policies that will support the nation’s farmers, ranchers, and consumers. Rep. Marshall, also a graduate of Kansas State University, defeated incumbent Tim Huelskamp by more than 13 points in the Kansas Republican primary in August of 2016, and then sailed through the Election Day, receiving 66 percent of the three-way vote. Rep. Marshall’s presence at the first official farm bill hearing is particularly noteworthy, as his predecessor made headlines during his time in Washington.

A member of the far-right faction of the Republican Party, Tim Huelskamp was elected in November of 2010 during the tea party wave that flipped the House of Representatives to Republican control. Huelskamp served on the House Agriculture Committee for nearly two years; however, he frequently bucked House Republican leadership and committee chairmen on fiscal matters and was subsequently removed from his position on the House Committees on Agriculture and the Budget in December of 2012. Nevertheless, the revocation of his committee memberships did little to stop Huelskamp from opposing legislation relating to federal spending, even when it meant voting against the wishes of the majority of his constituents. During the summer of 2013, Huelskamp joined 61 of his Republican colleagues and all but 24 of his Democratic colleagues in voting against the farm bill on the House floor. Ironically, his ‘no’ vote was cast in protest of the bill’s inability to cut as much spending from the Supplemental Nutrition Assistance Program (SNAP), formerly known as the Food Stamp Program, as he believed was necessary, while the majority of the Democratic ‘no’ votes were in protest of the bill’s cuts to the same program. Because of the wide opposition to the nutrition title, with Huelskamp’s help, the farm bill failed by a 195-234 vote. This angered many agriculture groups who helped elect Huelskamp as their voice in Washington.

After losing the support of many rural and farm groups in Kansas, including the Kansas Farm Bureau, and unable to persuade House Speaker Paul Ryan (R-WI) to lead the charge in reinstating his membership on the House Agriculture Committee, Huelskamp was ultimately unable to retain his congressional seat. To add salt to Huelskamp’s wounds, Representative Marshall was recently selected to serve on the House Agriculture Committee for the 115th Congress, giving Kansas’ “Big First” the agriculture-focused voice in Washington its constituents have made clear they desire.

As the current farm bill expires in September 2018, the House and Senate Agriculture Committees are expected to continue farm bill-related outreach through hearings and listening sessions to help guide committee members and their staff as they collaborate to write effective food and farm policies.

This Week’s Hearings/Business Meetings:

  • On Tuesday, February 28, the House Agriculture Subcommittee on Conversation and Forestry has scheduled a hearing titled “The Next Farm Bill: Conservation Policy.” The witnesses will be announced.
  • On Tuesday, February 28, the House Agriculture Subcommittee on Livestock and Foreign Agriculture has scheduled a hearing titled “The Next Farm Bill: International Market Development.” The witnesses will be announced.
  • On Wednesday, March 1, the House Agriculture Committee has scheduled a business meeting to consider the Budget Views and Estimates Letter of the Committee on Agriculture for the agencies and programs under the jurisdiction of the committee for Fiscal Year 2018.

Congress Looks to Finalize Funding for the Current Fiscal Year; Trump’s FY 2018 “Skinny Budget” Expected Mid-March

Executive Branch Activity

Trump’s FY 2018 “Skinny Budget” Expected Mid-March

The Trump Administration is reporting it will release its FY 2018 budget proposal by mid-March, according to White House Press Secretary Sean Spicer. The proposal is expected to be a “skinny budget” and provide an outline of the President’s fiscal goals, while a more comprehensive budget plan is not anticipated until May.

While constructing a budget, the President is expected to face challenges as he attempts to keep his campaign promises of enacting tax cuts for the middle class and to “look for every last dollar of savings” while finding ways to pay for a border wall and a $1 trillion infrastructure package. In its pursuit of a balanced budget, the Trump Administration recently tapped Paul Winfree, a former Heritage Foundation analyst, to join the Office of Management and Budget (OMB) and work with recently confirmed Director Mick Mulvaney to craft the budget proposal. Winfree helped craft the conservative foundation’s budget plan that calls for overhauling entitlement programs, eliminating regional Environmental Protection Agency programs, and abolishing several Department of Transportation grant programs, among other things.

However, Treasury Secretary Steven Mnuchin indicated on Sunday that the President’s FY 2018 budget proposal will not contain large cuts to entitlement programs, such as Social Security and Medicare. The President is expected to highlight his budget plans when he addresses Congress in a joint session on Tuesday.

Legislative Activity

Congress Looks to Finalize Funding for the Current Fiscal Year

As the Trump Administration constructs a budget proposal for the upcoming fiscal year, appropriators in Congress are reportedly working to finalize FY 2017 spending bills as the April 28th expiration of the current Continuing Resolution (CR) approaches. It remains unclear, however, whether the spending bills will be passed individually, through an omnibus, or, more likely, through several minibus packages. The process could be complicated by an anticipated military supplemental and an initial request of $12-$15 billion for the border wall.

Hearings

  • On Tuesday, February 28, the House Committee on Appropriations, Subcommittee on Agriculture, Rural Development, Food and Drug Administration, and Related Agencies, will hold an oversight hearing on the Farm Credit Administration.
  • On Tuesday, February 28, the House Committee on Financial Services will hold a markup of the Committee’s budget views and estimates for FY 2018.
  • On Tuesday, February 28, the House Committee on Appropriations, Subcommittee on Commerce, Justice, and Science, will hold a Member’s Day hearing.
  • On Tuesday, February 28, the House Committee on Appropriations, Subcommittee on Interior and Environment, will hold a Member’s Day hearing.
  • On Wednesday, March 1, the House Committee on Appropriations, Subcommittee on Homeland Security, will hold a Member’s Day hearing.
  • On Wednesday, March 1, the House Committee on Appropriations, Subcommittee on Labor, Health and Human Services, and Education, will hold a Member’s Day hearing.
  • On Wednesday, March 1, the House Committee on Agriculture will hold a business meeting to consider the Committee’s Budget Views and Estimates Letter for agencies and programs under its jurisdiction for FY 2018.
  • On Thursday, March 2, the House Committee on the Budget will hold a Member’s Day hearing.

House Works on Perkins Rewrite; President Trump Rescinds Title IX Protections for Transgender Students; New Members Appointed to NACIQI

Legislative Updates

House Begins Work on Perkins Reauthorization

 This week the House Committee on Education and the Workforce will hold a hearing to examine reauthorization of the Perkins Act, the federal law overseeing career and technical education last reauthorized in 2006. Last Congress the Strengthening Career and Technical Education for the 21st Century Act (H.R. 5587) was passed with strong bipartisan support in the House, but time ran short before the Senate was able to schedule a vote on its version of the legislation, the Innovation for Tomorrow’s Workforce Act  (S.3344).

Rep. Virginia Foxx (R-NC), chairwoman of the House Committee on Education and the Workforce, published a February 15 op-ed where she outlined her priorities for the Committee in the 115th Congress. While the main focus of the piece was cutting back federal regulations, she also highlighted the importance of career and technical education and named it as a priority for the committee. Her goal for a Perkins Act reauthorization will provide states more flexibility, reduce administrative burdens, improve accountability and better ensure students are prepared for in-demand jobs.

While addressing the American Association of Community Colleges on February 16, Education Secretary Betsy DeVos reiterated President Trump’s “contract with the American voter” and his Administration’s plans to expand access to vocational and technical education, make two and four year school more affordable, and find more “paths to post-secondary education.” With Congress and the Administration committed to rewriting the Perkins Act to fit the needs of the 21st Century workforce, progress from last Congress, and strong bipartisan support, this hearing is expected to be a strong first step in getting the bill across the finish line.

This Week’s Hearings:

  • On Tuesday, February 28, the House Committee on Education and the Workforce Subcommittee on Early Childhood, Elementary, and Secondary Education will hold a hearing titled, “Strengthening Career and Technical Education.”
  • On Wednesday, March 1, the House Committee on Education and the Workforce will hold a hearing on “Legislative Proposals to Improve Health Care Coverage and Provide Lower Costs for Families,” including H.R.1101, the “Small Business Health Fairness Act”; the “Self-Insurance Protection Act”; and the “Preserving Employee Wellness Programs Act.”

Regulatory Updates

President Trump Rescinds Title IX Protections for Transgender Students

On Wednesday, February 22 the Departments of Education and Justice released a guidance letter rescinding President Obama’s protections for transgender students under Title IX. The letter cited “significant litigation” and the Administration’s desire to “further and more completely consider the legal issues involved.” Further, the Administration believes this is a matter that should be left to states.

Reportedly at the insistence of Education Secretary Betsy DeVos, the directive emphasizes the importance of protecting LGBT students from bullying, discrimination, and harassment.

Two New Members Appointed to Federal Accreditation Panel

Republicans in Congress appointed two new members to the National Advisory Committee on Institutional Quality and Integrity (NACIQI), the federal advisory committee overseeing college accreditors, before the panel’s first meeting during the Trump Administration last week. Claude Pressnell, president of the Tennessee Independent Colleges and Universities Association, and Brian Jones, president of Strayer University, have been chosen to fill the two vacancies on the 18-person panel.

Mr. Pressnell was selected by Senate Republicans and has previously served on a task force on deregulating higher education for Senator Lamar Alexander (R-TN), chairman of the Senate Committee on Health, Education, Labor, and Pensions. House Republicans selected Mr. Jones, who has previously represented for-profit colleges on the negotiated-rulemaking panel for gainful employment during the Obama Administration and served as general counsel at the Department of Education during the George W. Bush Administration.

Under the Obama Administration, college accreditors came under harsh criticism for not putting enough emphasis on student outcomes at the schools the oversee and the Department published “accreditor dashboards” to spotlight accreditors that approved poor-performing schools. It is not clear year how the Trump Administration will approach accreditation at this point, but the Department did update the accreditor dashboards this week ahead of the NACIQI meeting.

Senate to Vote on Secretary for the Department of the Interior; House Hearings on Social Cost of Carbon and Water Infrastructure

Legislative Activity

Cabinet Update

 The Senate is expected to continue voting on President Donald Trump’s cabinet nominees. A floor vote for the confirmation of Rep. Ryan Zinke (R-MT) to serve as the Secretary of the Department of the Interior is expected to take place this week. The Senate is scheduled to proceed to a cloture vote on his nomination today, and if cloture is invoked, Democrats will have 30 hours of debate before a confirmation vote will take place. This follows a failed attempt by Senate Republicans to confirm Rep. Zinke by voice vote on February 17, which was halted by Democratic opposition. The confirmation vote for Governor Rick Perry to serve as Secretary of Energy is expected to take place in March.  

This Week’s Hearings:

  • On Tuesday, February 28, the House Committee on Science, Space, and Technology, Subcommittee on Environment and Subcommittee on Oversight, will hold a joint hearing titled “At What Cost – Examining the Social Cost of Carbon.”
  • On Wednesday, March 1, the House Committee on Natural Resources, Subcommittee on Water, Power, and Oceans, will hold a hearing to discuss “Modernizing Western Water and Power Infrastructure in the 21st Century.”
  • On Wednesday, March 1, the Senate Committee on Environment and Public Works will hold a hearing to consider “Flood Control Infrastructure: Safety Questions Raised by Current Events.”

Financial Services Regulatory Reform Debate Abounds in Congress and at the Agencies; FSOC to Meet Under Mnuchin

Legislative Activity

CHOICE Act 2.0 Could Be Weeks Away as GOP May Need to Resolve Differences

While previous reports indicated that House Financial Services Committee Chairman Jeb Hensarling (R-TX) was set to move on a revised version of the Financial CHOICE Act (CHOICE Act 2.0), his plan seems to have been met with delay. Though the text of the revised bill has not been introduced, it appears that the revised bill will, among other things: (1) eliminate the CAMELS requirement from the capital election; (2) exempt banking organizations that make the capital election from stress tests; (3) make targeted “improvements” to stress tests and CCAR; (4) restructure the CFPB as a civil law enforcement agency with additional restrictions on its authority; (5) make numerous SEC-related reforms to improve capital markets; (6) impose additional requirements on financial regulators to hold them accountable, including by designating a “Lead Banking Investigator”; and (7) expand the JOBS Act to improve the atmosphere for small businesses and encourage capital formation. The bill will also likely include a technical corrections section to conform the current legislation with Dodd-Frank.

Despite a general agreement among Republicans that financial services regulatory reform is needed, the division within the party may prove problematic when trying to pass broad reform legislation. Take Orderly Liquidation Authority (OLA) provided for in the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank), for example. The OLA created a new federal receivership process whereby the Federal Deposit Insurance Corporation (FDIC) serves as receiver for large, interconnected financial companies whose failure poses a significant risk to the financial stability of the United States. In its place, the CHOICE Act, as introduced last year, would add a new Subchapter V to Chapter 11 of the Bankruptcy Code – also known as new Chapter 14 – to facilitate reorganizations for large financial companies. Some Republican constituencies, however, oppose plans to repeal OLA. Other examples of potential points of contention, including repeal of the Durbin Amendment and the authority of the Financial Stability Oversight Council (FSOC) to designate certain payments and clearing organizations as systemically important “financial market utilities”, are discussed in greater detail in our recent alert.

This Week’s Hearings:

  • On Tuesday, February 28, the House Financial Services Committee has scheduled a markup of the Committee’s FY18 Budget Views and Estimates.

Regulatory Activity

FSOC to Hold First Meet Under Mnuchin’s Leadership

On Thursday, March 2, Treasury Secretary Steven Mnuchin will preside over his first executive session of the FSOC. The preliminary agenda includes: (1) an update on market developments; (2) a discussion of FSOC’s 2017 annual report; and (3) an update on the annual re-evaluation of the designation of a nonbank financial company.

Fiduciary Rule Delay Still Pending at OMB

Less than two weeks after President Trump’s February 3 Executive Memorandum (further discussed here) calling on the Department of Labor (DOL) to conduct a legal and economic review of the Fiduciary Rule’s potential impact, DOL has submitted a notice to the Office of Management and Budget (OMB) that it plans to delay the rule’s effective date for 180 days. Note, however, the 180 day delay is not effective until published in the Federal Register. As of the time of publication, no such announcement has been published. As finalized last year, the rule was set to take effect on April 10, 2017.

Note, DOL’s decision follows a February 17 ruling by a Kansas federal judge who sided with DOL by finding that the Department did not exceed its authority in promulgating the Fiduciary Rule.

Next SEC Chairman May Seek to Scale Back Certain Regulations

Following his nomination by President Trump to be the next Chairman of the Securities and Exchange Commission (SEC), Mr. Jay Clayton has expressed concern that many of the SEC’s rules have become too burdensome for small companies trying to raise capital and that repeal of certain regulations may be necessary. SEC Acting Chairman Michael Piwowar has already frozen agency action on unfinished Dodd-Frank rules and called for a review of the CEO Pay Ratio Rule. Note that a confirmation hearing for Mr. Clayton before the Senate Banking Committee has not yet been scheduled.

D.C. Circuit Panel Shakes Up Fannie and Freddie

Last week, a D.C. Circuit panel rejected allegations that an amendment to the 2008 bailout of Fannie and Freddie improperly swept up profits from Fannie Mae and Freddie Mac to the Treasury, affirming a lower court’s ruling that actions taken under the Federal Housing Finance Agency’s (FHFA) conservatorship of Fannie and Freddie cannot be challenged in court. . Separately, Treasury Secretary Steven Mnuchin has said the Trump Administration would move quickly to end government-control of the companies, although neither Secretary Mnuchin nor President Trump have specified their plans for reform.

Repeal and Replace or Repair and Rebrand?; Energy and Commerce Holds First Hearing on User Fees; MedPAC and MACPAC Meetings This Week

Legislative Activity

Repeal and Replace or Repair and Rebrand?

With reconciliation instructions in the FY 2017 spending bill that initiate the House and Senate committees with health care jurisdiction to reduce the deficit, Republicans in both chambers are eager to use the fast-track, fifty-vote process to repeal and replace as much of the Affordable Care Act (ACA) as soon as possible. While many lawmakers have proposed their own strategies for changing the health care law, the plan currently gaining the most traction is the House Republicans’ Blueprint, released on February 16, 2017. The Blueprint, presented by House Committee on Energy and Commerce Chairman Greg Walden (R-OR) and House Committee on Ways and Means Chairman Kevin Brady (R-TX), builds upon the House Republicans’ Better Way White Paper from 2016 and is the first step in the repeal and replace effort. The legislation will provide a universal health care tax credit, reform Medicaid with a per capita allotment and repeal the Medicaid expansion with a transition period, utilize state innovation grants to improve insurance markets, and promote health savings accounts (HSAs) by increasing the maximum HSA contribution limit. A draft of the legislative text dated February 10 was leaked to the public on Friday, February 24 and included reconciliation recommendations from the House Committee on Energy and Commerce and the House Committee on Ways and Means. A mark up of an updated draft of the committees’ reconciliation recommendations is expected as soon as February 28 or March 1. Reportedly, Republican senators remain divided on how to approach Medicaid reform for states that have and have not expanded Medicaid under the ACA and republican governors have voiced similar concerns. While step one of the repeal and replace process can pass the senate with a fifty-vote margin through reconciliation, a broader replace effort that would require a sixty vote threshold in the Senate is looking increasingly more difficult. Former Speaker John Boehner, a Squire Patton Boggs Senior Strategic Advisor, recently said Members “shouldn’t have called it repeal and replace because that’s not what’s going to happen.  They’re basically going to fix the flaws and put a more conservative box around it.” As the health reform debate continues will Republicans stay true to their repeal and replace rhetoric, or is repair and rebrand more likely?

Energy and Commerce Holds First Hearing on User Fees

On Thursday, March 2, the House Committee on Energy and Commerce Subcommittee on Health will hold a hearing titled “Examining FDA’s Generic Drug and Biosimilar User Fee Programs.” The Generic Drug User Fee Amendments of 2012 (GDUFA) and the Biosimilar User Fee Act of 2012 (BsUFA) are two of the user fee programs set to expire in September 2017. The user fee agreements for brand drug makers and medical devices must also be examined and will most likely be packaged into one bill. H.R. 749, the Lower Drug Costs Through Competition Act, introduced by Rep. Kurt Schrader (D-OR), will also be discussed at the hearing. The reauthorization of the Food and Drug Administration (FDA) user fee agreements are traditionally a bipartisan effort, but this year may be an exception. The Trump Administration has yet to nominate a FDA Commissioner and the President has indicated the new leadership may focus on deregulating the agency. This could greatly complicate the reauthorization process. Additionally, the topic of drug pricing could be raised making a bipartisan agreement more challenging. The House Committee on Energy and Commerce is the first committee to hold a hearing on the user fee programs and the Committee expects to hold multiple hearings to better understand the programs. The Senate Committee on Health, Education, Labor, and Pensions (HELP) has yet to announce a user fee program hearing date. Both the House and Senate are currently occupied with the ACA repeal and replace efforts, but stakeholders believe Congress will come together to get this “must pass” legislation reauthorized by September 30.

This Week’s Hearings:

  • Monday, February 27: The House Committee on Veterans Affairs Subcommittee on Oversight and Investigations will hold a hearing titled “Assessing the VA’s Risks for Drug Diversion.”
  • Tuesday, February 28: The House Committee on the Judiciary will markup H.R. 372, Competitive Health Insurance Reform Act of 2017; H.R. 1215, Protecting Access to Care Act of 2017; and H.Res. 111, Resolution of Inquiry.
  • Tuesday, February 28: The House Committee on Energy and Commerce Subcommittee on Oversight and Investigations will hold a hearing titled “Ways to Improve and Strengthen the International Anti-Doping System.”
  • Tuesday, February 28: The Senate Committee on Veterans Affairs and the House Committee on Veterans Affairs will hold a joint hearing titled “Legislative Presentation of Disabled American Veterans.”
  • Wednesday, March 1: The House Committee on Appropriations Subcommittee on Labor, Health and Human Services, Education, and Related Agencies will hold its Members’ Day hearing.
  • Wednesday, March 1: The House Committee on Education and the Workforce will hold a hearing titled “Legislative Proposals to Improve Health Care Coverage and Provide Lower Costs for Families.”
  • Thursday, March 2: The House Committee on Energy and Commerce Subcommittee on Health will hold a hearing titled “Examining FDA’s Generic Drug and Biosimilar User Fee Programs.”

Other Activity

MedPAC and MACPAC Meetings This Week

On Thursday, March 2, and Friday, March 3, the Medicare Payment Advisory Commission (MedPAC) and the Medicaid and Children’s Health Insurance Program (CHIP) Payment and Access Commission (MACPAC) will hold meetings to discuss Medicare and Medicaid policy issues and questions, as well as develop recommendations for Congress.

The MedPAC agenda includes the following topics:

  • Implementing a unified payment system for post-acute care;
  • Hospital and Skilled Nursing Facility (SNF) use by Medicare beneficiaries who reside in nursing facilities;
  • Medicare Part B drug payment policy issues;
  • Refining Merit-based Incentive Payment System (MIPS) and Advanced Alternative Payment Models (APMs) and encouraging primary care;
  • Standardization issues in premium support; and
  • Possible impacts of premium support.

The MACPAC agenda includes the following topics:

  • Changing Medicaid approaches to treating opioid use disorders;
  • State flexibility overview;
  • State Medicaid responses to fiscal pressures;
  • Congressionally requested study on mandatory/optional benefits and populations: review of methods, limitations, and policy issues;
  • Alternative approaches to Medicaid financing: setting per capita caps;
  • States’ experiences managing spending and use for high-cost drugs; and
  • The role of section 1915(b) waivers in Medicaid Managed Care.

Department of Homeland Security Secretary Issues EO Implementation Memos

Legislative Activity

This Week’s Hearings:

  • On Tuesday, February 28, the House Homeland Security Subcommittee on Emergency Preparedness, Response, and Communications has scheduled a hearing titled “The Future of FEMA: Recommendations of Former Administrators.” The witnesses will be announced.
  • On Tuesday, February 28, the House Homeland Security Subcommittee on Counterterrorism and Intelligence has scheduled a hearing titled “The Future of Counterterrorism: Addressing the Evolving Threat to Domestic Security.” The witnesses will be announced.
  • On Wednesday, March 1, the House Appropriations Subcommittee on Homeland Security has scheduled a Members’ Day hearing.
  • On Wednesday, March 1, the Senate Homeland Security and Governmental Affairs Committee has scheduled a hearing titled “The Effects of Border Insecurity and Lax Immigration Enforcement on American Communities.” The witnesses will be:
    • Ms. Julie Nordman, Wentzville, Missouri;
    • The Honorable Eric Severson, Sheriff, Waukesha County, State of Wisconsin; and
    • Mr. Ryan Rectenwald, Chief Deputy of Special Operations, Grant County Sheriff’s Office, State of Washington.
  • On Thursday, March 2, the House Armed Services Subcommittee on Military Personnel has scheduled a hearing titled “Overview of Military Review Board Agencies.” The witnesses will be:
    • Francine Blackmon, Deputy Assistant Secretary of the Army (Review Boards);
    • Mark S. Teskey, Director, Air Force Review Boards Agency; and
    • Robert Woods, Assistant General Counsel for the Assistant Secretary of the Navy for Manpower and Reserve Affairs.
  • On Thursday, March 2, the House Oversight and Government Reform Committee has scheduled a hearing titled “Transparency at TSA.” The witnesses will be announced.

Executive Branch Activity

Department of Homeland Security Secretary Issues EO Implementation Memos

On January 25, 2017, President Donald Trump signed two Executive Orders (EOs) titled “Enhancing Public Safety in the Interior of the United States” and “Border Security and Immigration Enforcement Improvements.” The EOs called for the construction of a physical wall along the U.S. southern barrier, the restriction of federal funding to sanctuary jurisdictions, and the hiring of a total of 15,000 additional immigration enforcement officers (5,000 U.S. Customs and Border Patrol (CPB) agents and 10,000 U.S. Immigration and Customs Enforcement (ICE) officers).

On Monday, February 20, Department of Homeland Security (DHS) Secretary John Kelly published memoranda regarding the implementation of both EOs. The memoranda direct DHS personnel to immediately hire additional immigration officers as directed by the EOs, begin planning the design of a barrier along the southern border, enhance DHS detention capabilities, and faithfully execute the enforcement of federal immigration law. The memoranda also provide guidance relating to the prioritization of deportation resources, the development of Congressional budget requests, and expanding the 287(g) Program to enhance immigration enforcement capacity.

However, the memoranda do not discuss the restriction of federal funds for sanctuary jurisdictions as directed by the EO titled “Enhancing Public Safety in the Interior of the United States.”

The implementation memorandum accompanying the “Enhancing Public Safety in the Interior of the United States” EO:

  • Directs all DHS personnel to faithfully execute U.S. immigration laws against all removable aliens, with the exception of those protected under President Obama’s Deferred Action for Childhood Arrivals (DACA) and Deferred Action for Parents of Americans (DAPA) programs;
  • Directs ICE to hire an additional 10,000 officers subject to available resources, and directs ICE agents to prioritize immigrants consistent with the enforcement guidelines outlined in the EO;
  • Replaces the Priority Enforcement Program with the Secure Communities Program;
  • Calls for an expansion of the 287(g) program, which deputizes state and local law enforcement officers to enforce federal immigration law;
  • Provides full authority to DHS personnel to arrest or apprehend illegal aliens with probable cause; and
  • Rescinds Privacy Act protections for non-U.S. citizens and directs the ICE Director to develop a method of reporting statistical data regarding undocumented immigrants apprehended by ICE.

While the memorandum does not define “sanctuary jurisdictions,” it directs ICE to publish a weekly report on non-federal jurisdictions that release undocumented immigrants from their custody. It does not provide guidance for the withholding of federal funds to these jurisdictions.

The implementation memorandum accompanying the “Border Security and Immigration Enforcement Improvements” EO:

  • Directs CBP to immediately begin the process of hiring 5,000 additional agents and 500 Air & Marine agents, subject to the availability of resources;
  • Directs the expansion of the 287(g) Program by engaging all willing and qualified law enforcement jurisdictions near the southern border;
  • Directs immediate planning for the design, construction, and maintenance of a southern border wall.  Initial wall construction will focus on locations near El Paso, Texas, Tucson, Arizona, and El Centro, California, where existing infrastructure was found to be no longer effective;
  • Directs ICE and CBP to allocate available resources to expand detention capacity near the U.S. southern border;
  • Directs the expedited removal of undocumented immigrants apprehended at the southern border, stating that if an immigration officers determines an arriving alien inadmissible to the U.S., they should order the alien removed without further hearing or review unless the alien is an unaccompanied child or intends to apply for asylum; and
  • Directs the development of uniform guidance for processing unaccompanied undocumented minors who enter the U.S. Agents encountering unaccompanied alien children are directed to transfer them to the custody of the Office of Refugee Resettlement within the Department of Health and Human Services (HHS) within 72 hours of apprehension.

President Trump to Address Congress; Senate to Vote on Ross’ Nomination; Pentagon to Submit Its Anti-ISIS Plan

President Donald Trump is preparing to release another immigration-related Executive Order (E.O.) that is expected to refine a previous directive that banned Syrian refugees from entering the United States and suspended the issuance of visas and admission into the United States for foreign nationals from seven countries of “particular concern.” The President will address a joint session of Congress on Tuesday and give a speech expected to focus on the renewal of the American spirit.

The U.S. Congress returns to Washington on Monday, 27 February, with the Senate scheduled to vote that evening on Wilbur Ross’ nomination to serve as Secretary of Commerce.  The Pentagon is also set to submit its plan for defeating ISIS to the White House on Monday.

Syria: Combatting ISIS – DoD Plan Completed

Secretary of Defense Jim Mattis concluded his first trip to the Middle East on 20 February, a trip that included stops in the United Arab Emirates and Iraq. Pentagon Press Operations Director Navy Capt. Jeff Davis told reporters on Tuesday that Secretary Mattis gained valuable insight as he prepares to make key policy decisions, including submitting the results of a review of the Defense Department’s (DoD) strategy to defeat ISIS to the White House this week.

Chairman of the Joint Chiefs of Staff Gen. Joseph Dunford said of the military-political plan at a Brookings Institution event last week: “In the development of the plan, we have been engaged at every level of the State Department” he said.  Chairman Dunford added:  “Anything we do on the ground has to be in the context of political objectives or it is not going to be successful.”  The intelligence community and the Treasury Department have also participated in development of the plan.

Pentagon Spokesperson Capt. Jeff Davis told reporters on Friday that the Pentagon has supported an Authorization for Use of Military Force (AUMF) against ISIS under both the Trump and Obama Administrations. “An AUMF would make a lot of our congressional authorities clearer, and that thinking has not changed,” Davis said.

Senate Armed Services Committee Chairman John McCain (R-Arizona) recently traveled to Syria to speak with U.S. forces there about the campaign against ISIS, according to his office last Wednesday. His trip comes as U.S. Central Command Commander Gen. Joseph Votel told reporters that the Pentagon is considering whether to deploy additional troops to Syria. Chairman McCain met next with Saudi King Salman bin Abdulaziz al-Saud on 21 February. The two reportedly discussed regional issues and enhancing U.S. cooperation with the Kingdom.

Senate Foreign Relations Committee (SFRC) Chairman Bob Corker (R-Tennessee) and Ranking Member Ben Cardin (D-Maryland) sent a letter to Secretary of State Rex Tillerson dated 22 February that urged the Administration to “ensure Assad, Russia and Iran are made to answer for the war crimes and crimes against humanity committed in Syria.”  While all 10 Democratic Members of the SFRC signed the letter, Republican committee members appeared to be more reluctant in signing.  The letter also asks for an update on the Administration’s steps to document war crimes and crimes against humanity in Syria.

Iranian Naval Exercise Underway

Iran launched naval drills on Sunday, amid increased tension with the United States after the Trump Administration put “Iran on notice.” The U.S. Navy’s Fifth Fleet is based in the region.

Russia – Washington Scrutiny

Washington and the media continue to focus on increased allegations of Russian meddling in the United States. House Intelligence Committee Chairman Devin Nunes (R-California) said at this point there is no evidence of improper influence with respect to the Trump Administration, adding the House would not engage in a “witch hunt.”  Senator Tom Cotton (R-Arkansas), who serves as a member of the Senate Select Committee on Intelligence, cautioned this weekend against some calls for a special prosecutor to investigate the Administration’s alleged ties.  Meanwhile, the Senate Intelligence Committee is conducting an investigation of Russia’s effort to influence the 2016 U.S. election.

Mexico City Trip Readout

Secretary Tillerson and Secretary of Homeland Security John Kelly met Thursday with several Mexican officials, including Mexican President Enrique Peña Nieto. According to the State Department, both sides acknowledged that “two strong sovereign countries from time to time will have differences,” while also reaffirming “close cooperation on economic and commercial issues such as energy, legal migration, security, education exchanges, and people-to-people ties.”

Both sides also agreed the “two countries should seize the opportunity to modernize and strengthen our trade and energy relationship.” With respect to border security, the discussion included: (1) dismantling transnational criminal organizations that move drugs and people into the United States; (2) stopping the illicit flow of firearms and “bulk cash” that is originating in the United States and transiting to Mexico; and (3) curtailing irregular migration, which includes securing Mexico’s southern border and supporting efforts to stem the migration from Guatemala, Honduras, and El Salvador.

Press Secretary Spicer said of the bilateral meetings at the Thursday press briefing:  “Both sides had a candid discussion on the breadth of challenges and opportunities as part of the U.S.-Mexico relationship. The conversation covered a full range of bilateral issues, including energy, legal migration, security, education exchanges, and people-to-people ties.”

Peru Bilateral Meeting

President Trump met on Friday with Peruvian President Pedro Pablo Kuczynski, who was in the United States to receive an award from Princeton University. In remarks before the bilateral meeting, President Trump said Peru has been a “fantastic neighbor.”  President Kuczynski noted:  “Latin America needs to grow more, and we’re going to talk about how to do that.”  White House readout of the meeting reflected:  “President Trump underscored the continued United States commitment to expanding trade and investment ties with Peru and others in the Asia-Pacific region.”  The two leaders also discussed the political and economic situation in Venezuela.  President Trump also thanked Peru for hosting the 8th meeting of the Summit of the Americas next year.

Human Trafficking – A Priority

President Trump led a listening session on domestic and international human trafficking on Thursday. He acknowledged:

“Human trafficking is a dire problem, both domestically and internationally, and is one that’s made really a challenge. And it’s really made possible to a large extent, more of a modern phenomenon, by what’s taking place on the Internet, as you probably know.  Solving the human trafficking epidemic, which is what it is, is a priority for my administration”

He said he would direct the Departments of Justice and Homeland Security, as well as other federal agencies, to examine its resources and determine whether additional resources are needed to combat human trafficking:  White House Press Secretary Sean Spicer said of the meeting: “Their expertise [re: meeting participants] will be invaluable to the President as he engages with members of Congress to raise awareness about, and push through, legislation aimed at preventing all forms of the horrific and unacceptable practice of the buying and selling of human lives.”

Foreign Policy Congressional Hearings This Week

  • On Tuesday, 28 February, the Senate Foreign Relations Committee is scheduled to hold a hearing titled “Iraq After Mosul.”
  • On Tuesday, 28 February, the House Foreign Affairs Subcommittee on the Western Hemisphere is scheduled to hold a hearing titled “Issues and Opportunities in the Western Hemisphere.”
  • On Tuesday, 28 February, the House Foreign Affairs Subcommittee on Asia and the Pacific is scheduled to hold a hearing titled “Checking China’s Maritime Push.”
  • On Wednesday, 1 March, the House Judiciary Committee is scheduled to hold a hearing titled “Section 702 of the Foreign Intelligence Surveillance Act.”
  • On Thursday, 2 March, the Senate Foreign Relations Committee is scheduled to hold a hearing titled “Venezuela: Options for U.S. Policy.”

Defense Congressional Hearings This Week

  • On Tuesday, 28 February, the House Armed Services Subcommittee on Oversight and Investigations is scheduled to hold a hearing titled “Hearing on Department of Defense Inspector General Report ‘Investigation on Allegations relating to USCENTCOM Intelligence Products.’”
  • On Wednesday, 1 March, the House Armed Services Committee is scheduled to hold a hearing titled “Cyber Warfare in the 21st Century: Threats, Challenges, and Opportunities.”
  • On Wednesday, 1 March, the House Armed Services Subcommittee on Tactical Air and Land Forces is scheduled to hold a hearing titled “U.S. Ground Force Capability and Modernization Challenges in Eastern Europe.”
  • On Thursday, 2 March, the Senate Armed Services Committee is scheduled to hold a hearing titled “Cyber Strategy and Policy.”

Looking Ahead

Washington is expected to focus on the following upcoming events:

  • 28 February: President Trump to address a joint session of Congress
  • Mid-March?: Release of the President’s Budget for Fiscal Year 2018
  • 14-15 March: Chile to host a Pacific Trade Summit in Vina del Mar, Chile
  • 21-23 April: World Bank/International Monetary Fund Spring Meeting in Washington
  • 28 April: U.S. Federal Government funding expires

The Prospects for Tax Reform in Trump Town

Legislative Activity

The Prospects for Tax Reform in Trump Town

With the 115th Congress nearing the end of month two, tax reform continues to be a focal point of the political debate in Washington. Intent to move forward with their tax reform “Blueprint” released in June 2016, Speaker Paul Ryan (R-WI), House Ways and Means Committee Chairman Kevin Brady (R-TX), and other high-profile tax-writers have spent a significant amount of time and energy in recent weeks promoting their proposal, which would dramatically overhaul the U.S. tax system and make significant reforms to the Internal Revenue Service (IRS). Though initial expectations were that the text of the Blueprint might be available as early as March, Chairman Brady has since indicated that he now hopes to have the legislation released “during the first half of the year,” which likely means that the text of the bill will be finalized by June of this year.

Once the legislation is drafted, it will then be taken up and debated by the Ways and Means Committee – a process that will likely be contentious given the current political divide in Washington. That divide, however, is not solely a partisan one; signs of GOP discontent can be seen in the Senate (and, according to our sources, can also be seen even among House Ways and Means Republicans) and could potentially extend to the White House.  The main issue dividing Republicans at the moment? The Blueprint’s Border Adjustable Tax (BAT), which would essentially: (1) disallow deductions for imports when calculating the cost of goods sold; and (2) exclude revenues earned from exporting goods from taxable income.

Though Senate Republicans have generally avoided opposing BAT outright, several influential Senators have either expressed concerns about the proposal or indicated that they have doubts and are thus withholding judgement. Perhaps the most vocal opponent of BAT to date has been Sen. David Perdue (R-GA) who recently sent around a “Dear Colleague” letter arguing that the BAT is “regressive, hammers consumers, and shuts down economic growth.” Opposition in the Senate appears to be growing.  In fact, concerned about the rhetoric coming out of the Senate on the BAT, Speaker Ryan recently began outreach to Republican Senators urging them to “keep their powder dry.” Reports suggest that his visits have not been well-received and are, at best, having minimal impact in the Upper Chamber.  Notably, despite the most recent efforts by the Speaker, the skepticism in the Senate seems to be growing, with Senate Finance Committee Chairman Orrin Hatch (R-UT) just last week acknowledging he “[does not] see [BAT] happening, not the way the House has configured it.”

At the White House, a group of the nation’s largest retailers (who oppose BAT) recently met with President Trump to discuss the BAT and its negative implications for businesses and the economy. Though the President walked back his earlier comments suggesting that the BAT may be overly-complicated, he has at the same time failed to fully embrace the concept (or at least the concept as proposed in the Blueprint). Notably, though, the Trump Administration plans to release an outline of its “phenomenal” comprehensive and bipartisan tax reform proposal in the next several weeks (likely by March 14, 2017) as part of its FY 2018 budget proposal. The process of putting together such a proposal is something that will benefit from the recent confirmations of Treasury Secretary Steven Mnuchin and Director of the Office of Management and Budget Mick Mulvaney. How the President ultimately addresses BAT in his budget will be critical to whether the BAT survives.

As for timing of tax reform, much will depend on the success of the House Blueprint. Assuming the proposal moves forward largely as is, the House is aiming to wrap up debate and successfully enact tax reform by August.  That said, the likelihood that final action on tax reform – if it happens – slipping until the end of the year appears to be a possibility growing more likely by the day, as the politics of tax reform seem to be slowing the process. Moreover, on the other side of the Capitol, it is becoming clearer with every passing day that Senate Finance Committee members do not appear to be wedded to the Blueprint. As such, the Committee appears to be proceeding as if it may need to do its own bill or, at a minimum, take up and significantly amend the Blueprint.

It is also important to note that, unlike their House counterparts, Senate Democrats have the potential to wield significant influence over the tax reform process – especially given the makeup of the Senate (52 Republicans and 48 Democrats/Independents) and the fact that 60 votes are needed to pass legislation through regular order. While the Senate Democrats have pushed back on the Blueprint (e.g., the Senate Democratic Finance Committee staff memo released in December 2016), calling it regressive and urging Republicans to fill out the details, they have nevertheless pledged to work with the GOP in an effort to come together on a solution that both parties can support.

However, while this all adds extra pressure to do tax reform on a bipartisan basis, Republicans have the fallback option of reconciliation. Doing tax reform under reconciliation, however, also comes with certain drawbacks, as it cannot add to the deficit in any year outside the 10-year budget window. As currently drafted, this would likely require sunsetting at least portions of the tax policy changes called for in the Blueprint – something Republicans want to avoid if possible. Nevertheless, Republicans do not want to miss the opportunity to lower rates, thus – as Senate Majority Leader Mitch McConnell (R-KY) continues to remind his fellow Senators – reconciliation remains a real possibility if lawmakers cannot come to agreement on a bipartisan bill.

In sum, key policymakers remain committed to seeing tax reform across the finish line this year. However, with many consequential tax policy issues yet to be decided, the path to tax reform grows more perilous with each passing day. In particular if proponents of tax reform let too much time slip away, they will soon find themselves running up against the 2018 Election, which makes potentially politically difficult votes all that much harder to take.

FCC Extends Exemption from Enhanced Broadband Reporting Requirements for Smaller Broadband Providers

Legislative Activity

Cell Location Privacy Act Introduced in House

On February 15, Rep. Jason Chaffetz (R-UT) introduced H.R.1061, the Cell Location Privacy Act of 2017. The bill proposes to ban the use of cell-site simulators, known as StingRay devices, without first obtaining a warrant. Cell-site simulators are devices that appear to be legitimate cell phone towers that enable their users to collect information from mobile phones within the vicinity of the device. Such information can include metadata about calls such as who is being dialed or the duration of calls, the content of text messages and voice calls, and other data such as websites visited by the mobile phone user. Originally developed for national intelligence agencies, the devices have been adopted by local law enforcement agencies across the country. The bill carves out exceptions to the warrant requirement for foreign intelligence gathering as well as emergency circumstances. The penalty for violations would be a fine, imprisonment for up to 10 years, or both. The bill has been referred to the House Judiciary Committee.

This Week’s Hearings:

  • Wednesday, March 1: The Senate Commerce, Science, and Transportation Committee has scheduled a hearing titled “Connecting America: Improving Access to Infrastructure for Communities Across the Country.” The hearing will examine the challenge of connecting Americans, especially in rural communities, to transportation and information networks. The witnesses will be:
    • The Honorable Dennis Daugaard, Governor of South Dakota;
    • The Honorable Philip Levine, Mayor of Miami Beach;
    • The Honorable Carlos Braceras, Executive Director, Utah Department of Transportation; and
    • Shirley Bloomfield, Chief Executive Officer, NTCA-The Rural Broadband Association
  • Thursday, March 2: The Subcommittee on Communications, Technology, Innovation, and the Internet of the Senate Committee on Commerce, Science, & Transportation will hold a hearing titled “Exploring the Value of Spectrum to the U.S. Economy.” According to a statement on the Committee’s website the hearing will “explore the future of spectrum policy and how wireless technology benefits consumers and the economy” and will “examine evolving market demand for licensed and unlicensed spectrum and the Federal Communications Commission’s recent spectrum auctions. Witnesses include:
    • Scott Bergmann, Vice President, Regulatory Affairs, CTIA – The Wireless Association;
    • Roger Entner, Founder, Recon Analytics;
    • Dave Heiner, Vice President and Deputy General Counsel, Microsoft;
    • Pat LaPlatney, President and Chief Executive Officer, Raycom Media; and
    • Tom Stroup, President, Satellite Industry Association

Regulatory Activity

FCC Exempts Smaller Broadband Providers From Enhanced Broadband Reporting Requirements

On February 23, the FCC voted to “relieve[] thousands of smaller broadband providers from onerous reporting obligations stemming from the 2015 Title II Order” – sometimes referred to as the Open Internet Order – “freeing them to devote more resources to operating, improving and building out their networks,” according to an FCC News Release. The “enhanced transparency” reporting requirements adopted by the FCC in the 2015 Title II Order included, for example, a requirement that “broadband providers always must disclose promotional rates, all fees and/or surcharges, and all data caps or data allowances,” according to the Title II Order. The Order adopted by the FCC on February 23 (which has not yet been released) “finds that providers with 250,000 or fewer broadband connections would be disproportionately impacted if required to comply immediately with the 2015 enhanced reporting requirements,” per the News Release. The forthcoming Order exempts such providers from the enhanced reporting requirements both retroactively from when the requirements became effective and for “five years after the date the order is adopted,” according to the News Release. The FCC notes in the News Release, though, that such providers must “still give consumers the information that has been required since 2010 to assist them in making an informed choice of broadband providers.”

FCC Releases Proposed Rules For “Next-Gen” TV Broadcasting Standard

The FCC has issued a Notice of Proposed Rulemaking (NPRM) proposing to “authorize television broadcasters to use the ‘Next Generation’ broadcast television . . . transmission standard” – ATSC 3.0 – “on a voluntary, market-driven basis, while they continue to deliver current-generation digital television.” The NPRM was adopted unanimously by the three FCC Commissioners at the agency’s February 23 Open Commission Meeting. The FCC noted in the NPRM that, according to a “coalition of broadcast and consumer electronics industry representatives that has petitioned the [FCC] to authorize the use of ATSC 3.0, this new standard has the potential to greatly improve broadcast signal reception, . . . and it will enable broadcasters to offer enhanced and innovative new features to consumers, including Ultra High Definition (UHD) picture and immersive audio, more localized programming content, an advanced emergency alert system (EAS) capable of waking up sleeping devices to warn consumers of imminent emergencies, better accessibility options, and interactive services.” The petition referenced by the FCC was filed in April 2016 by the National Association of Broadcasters, America’s Public Television Stations, AWARN Alliance, and the Consumer Technology Association.

FCC Chairman Pai Seeking Stay of Data Security Rule Component of Broadband Privacy Framework

On February 24, FCC Office of Media Relations Acting Director Mark Wigfield issued a statement that “[FCC] Chairman Pai is seeking to act on a request to stay [the data security rule] before it takes effect on March 2.” According to the statement, if the FCC Commissioners “are willing to cast their votes by March 2, then the full Commission will decide the stay request. If not, then the [FCC’s] Wireline Competition Bureau will stay that one element of the [broadband] privacy rules.” The data security rule, one of the broadband privacy rules issued by the FCC in October 2016, would in part require that “broadband providers engage in reasonable data security practices and guidelines on steps [Internet Service Providers] should consider taking,” according to an October 27, 2016 FCC News Release. FCC Chairman Pai “has advocated returning to a technology-neutral privacy framework for the online world and harmonizing the FCC’s privacy rules for broadband providers with the FTC’s standards for others in the digital economy. Unfortunately, [the data security rule] that is scheduled to take effect on March 2 is not consistent with the FTC’s privacy standards,” according to Mr. Wigfield’s statement.

FCC Commissioner Mignon Clyburn and Federal Trade Commissioner Terrell McSweeny issued a joint statement in response to Chairman Pai’s move to roll back the privacy regime adopted by former FCC Chairman Tom Wheeler. The FCC and FTC Commissioners noted among other things that, “[t]he outcome is clear. Chairman Pai is determined to take action that leaves consumers without a cop on the beat protecting their personal information from misuse by their broadband service provider. This means no federal data security requirements whatsoever for broadband providers. This is the antithesis of putting #ConsumersFirst.” Addressing specifically the FCC’s circulation and review process, Commissioner Clyburn noted that “Chairman Pai has created an unfortunate dilemma: accept a Bureau-level action that indefinitely unwinds key consumer privacy protections established by the FCC last year, or accept four business days (rather than the usual three weeks) to evaluate and vote on a decision that has massive ramifications for the security of private information held by broadband providers.”

President Trump Expected to Discuss Infrastructure in Coming Weeks; House Transportation Committee to Hold Second FAA Hearing, Focused on Airports

Legislative Activity

President Trump Expected to Discuss Infrastructure in Coming Weeks

The President is expected to release additional information on his infrastructure agenda in the coming weeks. White House Press Secretary Sean Spicer said the President will discuss infrastructure in his address to Congress on Tuesday. Additionally, he noted that more information will be included in the President’s “skinny budget” that is expected to be released in March.

The Press Secretary’s comments followed a meeting of administration officials, including Department of Transportation (DOT) Secretary Elaine Chao and representatives from the manufacturing industry. Subjects discussed during the meeting included a focus on public-private partnerships (P3s) and streamlining permitting processes.

However, there is growing concern among transportation stakeholders that a comprehensive infrastructure bill may not be addressed until 2018. This could provide Republicans with more time to address Affordable Care Act (ACA) and tax reform while increasing pressure on Democrats to support the Administration’s infrastructure plans during the election year.

House Transportation Committee to Hold Second FAA Hearing, Focused on Airports

The House Transportation and Infrastructure (T&I) Committee Subcommittee on Aviation will hold a hearing on Wednesday titled “Building a 21st Century Infrastructure for America: State of American Airports.” The witnesses will include representatives from the Dallas/Fort Worth International Airport; the Port of Seattle; the Allegheny County Airport Authority; the Greater Asheville Regional Airport Authority; and the Director of Airports for Ventura County, California.

This will be the Subcommittee’s second hearing examining aviation issues in anticipation of a Federal Aviation Administration (FAA) reauthorization bill needed later this year. The current FAA authorization expires September 30, 2017. The Subcommittee’s first hearing focused on aviation manufacturing.

One of the major issues that will be considered in upcoming hearings will be T&I Committee Chairman Bill Shuster’s (R-PA) air traffic control (ATC) reform proposal that he introduced in the last Congress. The proposal may have gained additional support when the Eno Center for Transportation released a report last week advocating that responsibility for ATC operations be given to a government corporation or nonprofit organization.

This Week’s Hearings:

  • On Tuesday, February 28, the House Homeland Security Subcommittee on Emergency Preparedness, Response, and Communications has scheduled a hearing titled “The Future of FEMA: Recommendations of Former Administrators.” The witnesses will be announced.
  • On Wednesday, March 1, the House Transportation and Infrastructure Subcommittee on Aviation has scheduled a hearing titled “Building a 21st Century Infrastructure for America: State of American Airports.” The witnesses will be:
    • Sean Donohue, Chief Executive Officer, Dallas/Fort Worth International Airport;
    • Lance Lyttle, Managing Director, Aviation Division, Port of Seattle;
    • Christina Cassotis, Chief Executive Officer, Allegheny County Airport Authority;
    • Lew Bleiweis, Executive Director, Greater Asheville Regional Airport Authority; and
    • Todd McNamee, Director of Airports, County of Ventura, California.
  • On Wednesday, March 1, the House Natural Resources Subcommittee on Water, Power, and Oceans has scheduled a hearing titled “Oversight Hearing on Modernizing Western Water and Power Infrastructure in the 21st” The witnesses will be announced.
  • On Wednesday, March 1, the Senate Environment and Public Works Committee has scheduled a hearing titled “Flood Control Infrastructure: Safety Questions Raised by Current Events.” The witnesses will be announced.
  • On Wednesday, March 1, the Senate Commerce, Science, and Transportation Committee has scheduled a hearing titled “Connecting America: Improving Access to Infrastructure for Communities Across the Country.” The witnesses will be:
    • The Honorable Dennis Daugaard, Governor of South Dakota;
    • The Honorable Philip Levine, Mayor of Miami Beach;
    • The Honorable Carlos Braceras, Executive Director, Utah Department of Transportation; and
    • Ms. Shirley Bloomfield, Chief Executive Officer, NTCA-The Rural Broadband Association.
  • On Thursday, March 2, the Senate Commerce, Science, and Transportation Subcommittee on Communications, Technology, Innovation, and the Internet has scheduled a hearing titled “Exploring the Value of Spectrum to the U.S. Economy.”
    • Mr. Scott Bergmann, Vice President, Regulatory Affairs, CTIA – the Wireless Association;
    • Mr. Roger Entner, Founder, Recon Analytics;
    • Mr. Dave Heiner, Vice President and Deputy General Counsel, Microsoft;
    • Mr. Pat LaPlatney, President and Chief Executive Officer, Raycom Media; and
    • Mr. Tom Stroup, President, Satellite Industry Association;
  • On Thursday, March 2, the House Oversight and Government Reform Committee has scheduled a hearing titled “Transparency at TSA.” The witnesses will be announced.

EU Public Policy February 27 Update

European Parliament approves the EU-Canada Comprehensive Economic and Trade Agreement (CETA)

The European Parliament’s plenary approved on February 15 2017 the EU-Canada Comprehensive Economic and Trade Agreement (CETA), concluding the ratification process of this deal in the EU.

Once the agreement is also ratified by the Canadian side, it will enter into force provisionally. CETA will be fully implemented when EU Member States’ national Parliaments also ratify the deal.

Emissions Trading Reform

On February 15 2017, the European Parliament approved its report on the cost-effective reduction of emissions and low-carbon investments. The plenary approval also provides a negotiating mandate for the Parliament to enter trilogue negotiations with the Council and the European Commission.

Environment Implementation Review

The European Commission adopted on February 6 2017 an Environment Implementation Review. The review includes  country reports for the EU28 Member States identifying the national strengths, opportunities and weaknesses of individual Member States. A Communication was also issued which summarizes the political conclusions of the country reports and proposes recommendations for improvements to all Member States.

The review is aiming to be used as a new tool to improve the implementation gaps and find solutions in areas such as waste management, nature and biodiversity, air quality and water quality.

Corporate Taxation

As part of the EU Corporate Taxation package, the EU28 Finance Ministers reached a General Approach on extending the Anti-Tax Avoidance Directive to hybrid mismatches with third countries at the ECOFIN meeting on February 21 2017. The Council will be now expecting the report from the European Parliament, having a consultative role in this proposal, before formally approving the piece of legislation. The legislation is expected to be implemented on January 1, 2020.

EU Commissioner responsible for Economic and Financial Affairs, Taxation and Customs, Pierre Moscovici welcomed the General Approach and called for further progress on the EU Corporate Taxation proposals.

Cross-border Online Portability Services

A political agreement was achieved on February 7 2017 in the trilogue negotiations between the European Parliament, Council and European Commission on the Regulation on cross-border portability of online content services. The agreed Regulation will give the opportunity to EU citizens to access their digital subscriptions across the EU without any constraints.

The Council approved the trilogue agreement on February 15 2017. Once the European Parliament also approves the trilogue agreement and the procedural steps are finalized, the piece of legislation will be published at the Official Journal of the EU.

State Attorneys General February 20 Update

Squire Patton Boggs’ State Attorneys General Practice Group is comprised of lawyers who have served at senior levels in state AG offices around the country and whose practices focus, to one degree or another, on representing clients before these increasingly assertive and powerful, yet often overlooked, government agencies, as explained in detail here.

In these updates, we will call attention to the most noteworthy state AG news or developments emerging in the previous week.

Litigation

Illinois AG Lisa Madigan has announced a settlement with BNSF Railway Company to “resolve[] environmental concerns that arose in 2015 when a BNSF train derailed, spilling a large amount of crude oil that ignited near Galena, Ill.,” according to an Illinois AG Press Release. The Press Release states that “[f]ollowing the spill, Madigan’s office obtained an agreed court order to require BNSF to clean up the crash site and monitor it for crude oil contamination,” and BNSF spent “more than $10.5 million, including reimbursements to state and local authorities for costs incurred,” to “clean up the site.” BNSF also continued to monitor the site, “spent approximately $50,000 to repair unrelated storm damage” at the request of the city of Galena, and agreed to pay “$50,000 in civil penalties,” according to the Press Release.

Texas AG Ken Paxton has announced that his office, along with the Texas Commission on Environmental Quality, has filed petitions with the US Courts of Appeals for the Fifth and D.C. Circuits “asking the courts to review the Environmental Protection Agency’s (EPA) Final Rule regarding air quality standards for sulfur dioxide,” according to a Texas AG Press Release. The Press Release states that “[i]n making the sulfur dioxide air quality designations for Texas, EPA ignored the State of Texas’ recommended designations for these areas—designations that were made based on actual monitoring results,” and the EPA instead relied on “third-party modeling information.” The EPA’s approach had the effect of “essentially ignoring [Texas’] statutory role in the air quality designation process established by the federal Clean Air Act,” according to the Press Release. AG Paxton issued a statement that: “[t]his Rule requires expensive and excessive restrictions that will damage not only our economy, but the livelihood of citizens across the state with little to no effect on the environment.”

Regulation

On February 15, Maryland’s state legislature enacted a resolution to give “Maryland’s attorney general broad authority to bypass the governor and sue the federal government on a range of issues, an unprecedented expansion of power for the office,” according to an article in the Baltimore Sun. The article states that the bill – the Maryland Defense Act of 2017 – “allows Democratic Attorney General Brian E. Frosh to challenge the administration of Republican President Donald J. Trump without first obtaining approval from Republican Gov. Larry Hogan or the Democrat-led General Assembly” on certain issues. Prior to the resolution, “the governor and [the Maryland] General Assembly reserved the right to decide when to sue the federal government,” according to the article. The resolution “allows [AG] Frosh to initiate a lawsuit against the government for a long list of action or inaction that the attorney general deems an infringement of Marylanders’ rights to health care, civil liberties, economic security, environment, immigration or international travel.” The article notes that “[AG] Frosh had sought [Governor] Hogan’s permission to challenge the constitutionality of Trump’s travel ban,” however, “[t]he governor did not respond to the request.” Maryland lawmakers are also “weighing whether to give Frosh’s office an additional $1 million a year and five more attorneys to fight the federal government,” a proposal Maryland lawmakers say is “modeled” on Oklahoma AG Scott Pruitt’s “Federalism Unit,” a “five-attorney unit” that Pruitt created in 2010 to “challenge federal regulations, [including] to sue the Environmental Protection Agency repeatedly,” according to the article.

Advocacy

New York AG Eric Schneiderman is leading a coalition of 10 states that have sent a letter to Senators Mitch McConnell and Charles Schumer “strongly urging opposition to the Commercial Vessel Incidental Discharge Act, legislation that would dramatically weaken clean water protections by preventing New York and other states from limiting the discharge of biological pollution by commercial shipping vessels into their waters,” according to a New York AG Press Release. According to the Press Release, the bill would “take the radical step of exempting these discharges from the federal Clean Water Act.” AG Schneiderman issued a statement that: “[t]his legislation would undercut the independence of states in fighting harmful biological pollution from commercial shipping, which causes serious damage to our environment and our economy in New York.”

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