Senate Panel Examines EB-5 Targeted Employment Areas

Legislative Activity

Senate Panel Examines EB-5 Targeted Employment Areas

On Wednesday, April 13, 2016, the Senate Judiciary Committee held a hearing titled “The Distortion of EB-5 Targeted Employment Areas: Time to End the Abuse.”  The EB-5 program is designed to bolster the U.S. economy by incentivizing investment from foreigners in exchange for legal permanent residence.  Targeted Employment Areas (TEAs) are rural or high unemployment areas meeting specific criteria in order to lower the threshold of investment required under the program from $1 million to $500,000.  Supporters of TEAs argue the lowered threshold is a critical incentive for investment.  Some critics believe the current system allows developers to “gerrymander” census tracts to use a TEA designation to benefit projects in more affluent areas.

Throughout the hearing, Members repeated a call to “amend, not end” the EB-5 program, which is scheduled to expire on September 30.  Committee Chairman Charles Grassley (R-IA) challenged TEA designations that link lesser affluent census tracts with those that may not otherwise qualify for TEA designation.  Ranking Member Patrick Leahy (D-VT) pledged that he would not support reauthorization of the program with mere “window dressing” reform that does not require transparency and accountability.

The Senate Judiciary Committee heard from two panels.  During the first panel, several House Members provided their thoughts on TEA reform.  Congressman Bob Goodlatte (R-VA), Chairman of the House Judiciary Committee, voiced support for the EB-5 program, but believes it has strayed from Congress’ original intent.  He also criticized the fact that when a project is jointly financed by EB-5 and conventional capital, EB-5 investors get the benefit of counting all the jobs created. His colleague, Ranking Member John Conyers (D-MI), voiced his confidence that Congress will reform the EB-5 program, noting that investors can already seek out projects outside of TEAs at the $1 million investment threshold.  Congressman Mark Amodei (R-NV) described the EB-5 program as a car in need of new tires, but emphasized it has created jobs at basically no cost to the US taxpayer.  He suggested lawmakers not make the perfect the enemy of the good and emphasized that economic activity ultimately goes where there is opportunity. Congressman Amodei also cautioned that piecemeal extensions lead to uncertainty and unpredictability and called on his colleagues to find a path forward, suggesting that they increase investment limits if they believe necessary, but arguing the program has on balance been successful over time.

Next, lawmakers heard from a panel of private sector witnesses who discussed a variety of suggestions for potential TEA reform, including : tightening criteria for priority urban and rural areas; encouraging investments beyond popular commercial real estate projects; creating new incentives for projects in rural areas; increasing oversight by federal agencies over state-led TEA designations; considering whether to continue allowing EB-5 programs to count 100 percent of jobs created even if accounting for only a portion of total investment; and limiting the use of census tracts and commuter traffic patterns.

This Week’s Hearings:

  • Wednesday, April 27: The House Homeland Security Subcommittee on Counterterrorism and Intelligence will hold a hearing titled “ISIS in the Pacific: Assessing Terrorism in Southeast Asia and the Threat to the Homeland.”
  • Thursday, April 28: The House Homeland Security Subcommittee on Oversight and Management Efficiency will hold a hearing titled “Transferring Guantanamo Bay Detainees to the Homeland: Implications for States and Local Communities.”
  • Thursday, April 28: The Senate Judiciary Committee will hold a meeting to consider legislation.

The House Armed Services Committee Marks-Up the NDAA, While the Full House Considers an MTB Reform Bill; A Senate Committee Marks-Up the DIGIT Act, While President Obama is in Germany at the Hanover Messe

President Barack Obama travelled to Saudi Arabia last week, meeting with Saudi officials on Thursday and attending the Gulf Cooperation Council (GCC) Summit on Friday to discuss crises in the Middle East.  The President then travelled to the United Kingdom (UK), where he urged the UK to remain in the EU ahead of its June referendum vote.  He warned that should the UK exit the EU, the country would then be “in the back of the queue” for a possible free trade agreement (FTA) with the United States, adding the U.S. Government has prioritized concluding an FTA with the EU first.

President Obama was in Germany on Sunday to attend the Hanover Messe, of which the United States is the Partner Country for the first-time ever.  He met with Chancellor Angela Merkel while in Germany to discuss the momentum of the Transatlantic Trade & Investment Partnership (TTIP) talks just as negotiators meet this week in New York, New York.

The House Ways and Means Committee marked up a bill (H.R. 4923) last Wednesday that would reform the Miscellaneous Tariff Bill (MTB) process.  The full House will consider the measure this Wednesday under suspension of the rules, which is reserved for non-controversial bills.  The House will also consider the Senate-passed version of the Defend Trade Secrets Act of 2016 (S. 1890) on Wednesday after the House Judiciary Committee unanimously advanced the measure last week.   Meanwhile, the House Armed Services Committee will mark-up its Fiscal Year (FY) 2017 National Defense Authorization Act (NDAA).

TTIP Developments – 13th Round of Negotiations Commences

U.S. and EU negotiators are meeting this week in New York City for the latest round of TTIP negotiations, where they will attempt to consolidate some proposed texts.  While neither side has submitted language on regulatory cooperation yet, reports indicate negotiators may focus on formulating a structure for the text across nine regulatory categories:  autos, pharmaceuticals, medical devices, cosmetics, chemicals, textiles, information communication technology products, pesticides, and engineering.

President Obama discussed the status of the ongoing TTIP talks with German Chancellor Merkel, French President François Hollande, Italian Prime Minister Matteo Renzi and United Kingdom Prime Minister David Cameron in Hannover on Sunday.  The meeting also focused on joint counterterrorism efforts, the campaign against ISIL, migration in Europe, Syria, Ukraine and Libya.

The anti-trade sentiment in the U.S. presidential campaigns is affecting not only the completed Trans-Pacific Partnership (TPP) deal but also the ongoing TTIP negotiations, with many speculating the Obama Administration will be unable to conclude a TTIP deal before the end of this year and the end of President Obama’s presidency.

MTB Developments – House Acts on the Reform Bill

The House Ways & Means Committee held a mark-up of its MTB reform bill last Wednesday, quickly approving the measure (with technical amendment) and advancing it to the full House for consideration this Wednesday.  The National Association of Manufacturers led over 200 business groups and companies in urging Congress to swiftly act on the MTB reform measure.

NDAA – House Committee Markup on Wednesday

The House Armed Services Committee (HASC) is scheduled to mark-up the FY 2017 NDAA (H.R. 4909) on Wednesday.  Chairman Mac Thornberry (R-Texas) released his proposal for H.R. 4909 on Monday.  To view the bill text, click here; to view the bill summary, click here.  The NDAA page of the HASC website will be the hub for all resources related to the FY 2017 NDAA, available here.

Ukraine – Full Implementation of Minsk Agreements Urged, Again

A White House readout of the meeting between German Chancellor Merkel, Presidents Obama and Holland, and Prime Ministers Renzi and Cameron, reported the leaders stressed that full implementation of the Minsk agreements remains crucial, reiterating sanctions against Russia would be lifted only if the Minsk agreements are fully implemented.

Syria – U.S. Authorizes Additional Military Deployment

In a speech while in Hanover that broadly outlined European issues, President Obama explained his authorization of the deployment of an additional 250 U.S. Special Operations forces to Syria:  “They are not going to lead the fight on the ground but help in assisting local forces in pushing Islamic State back.”

Senate Appropriators Approve Increased Funding for USTR, the Commerce Department and for Cyber Security

Last Thursday, the Senate Appropriations Committee voted to increase the Fiscal Year (FY) 2017 budget of the Office of the U.S. Trade Representative to $59.3 million, $4.9 million more than enacted in FY 2016 and matching the Obama Administration’s FY 2017 budget request proposed in February.  The FY 2017 Commerce-Justice-Science (CJS) appropriations bill also included a $70.9 million increase for the Commerce Department, for a total Department budget of $9.3 billion.  These increases reflect strong Senate support for ensuring the two Agencies can enforce U.S. trade laws.

The Senate CJS bill further includes $1 billion to the Justice Department to investigate cyber crimes and $75.7 million to the National Institute of Standards and Technology.  The CJS bill could reach the floor before lawmakers go home for a week in early May.

TPP Developments – Obama Administration Still Explaining Benefits

The Commerce Department released a report on Friday that highlights the benefits U.S. businesses can experience when exporting to the 11 TPP countries.  It further details each market’s top export sectors and explains how existing tariffs will be impacted once the agreement enters into force.  To help determine the tariff reductions for various products to TPP countries upon entry into force, visit the updated Tariff Tool.

Panama Papers – Lawmaker Urges Passage of a Transparency Bill

In a letter last week, Representative Carolyn Maloney (D-New York) urged Congressman Jeb Hensarling (R-Texas), the Chairman of the House Financial Services Committee, to quickly convene a hearing to consider a bill she introduced in February (H.R. 4450) that seeks to increase transparency over the “beneficial owners” involved in shell company structures.   Congresswoman Maloney stated: “It is long past time to end the rampant abuse of anonymous shell companies in the [United States].”

Cyber Security Update

The Senate Commerce Committee is scheduled to mark-up the Developing Innovation and Growing the Internet of Things (DIGIT Act; S. 2607) this Wednesday.  The bill was introduced by Senators Kelly Ayotte (R-New Hampshire), Deb Fischer (R-Nebraska), Cory Booker (D-New Jersey) and Brian Schatz (D-Hawaii) and seeks to have the Commerce Department create an Internet of Things Working Group that would be tasked with reporting to Congress within a year on recommendations to boost connected devices.

Congressional Hearings This Week

Both chambers of Congress are in session this week, with the following hearings scheduled:

International

  • On Tuesday, 26 April, the Senate Foreign Relations Subcommittee on the Western Hemisphere is scheduled to convene a hearing titled, “Review of Resources, Priorities and Programs in the FY 2017 State Department Budget Request.”
  • On Wednesday, 27 April, the House Foreign Affairs Subcommittee on the Western Hemisphere is scheduled to convene a hearing titled, “Examining FY 2017 Funding Priorities in the Western Hemisphere.”
  • On Wednesday, 27 April, the House Foreign Affairs Subcommittee on Africa is scheduled to convene a hearing titled, “South Sudan’s Prospects for Peace and Security.”
  • On Wednesday, 27 April, the House Foreign Affairs Subcommittee on Asia and the Pacific and Subcommittee on the Middle East and North Africa is scheduled to convene a hearing titled, “Advancing U.S. Interests: Examining the President’s FY 2017 Budget Proposal for Afghanistan and Pakistan.”
  • On Wednesday, 27 April, the Senate Foreign Relations Committee is scheduled to convene a hearing titled, “China Relations: Strategic Challenges and Opportunities.”
  • On Thursday, 28 April, the House Foreign Affairs Committee is scheduled to convene a hearing titled, “America as a Pacific Power: Challenges and Opportunities in Asia.”
  • On Thursday, 28 April, the House Foreign Affairs Subcommittee on the Middle East and North Africa is scheduled to convene a hearing titled, “U.S. Policy Toward Lebanon.”
  • On Thursday, 28 April, the Senate Foreign Relations Committee is scheduled to convene a business meeting to consider: S. ____, Department of State Authorization Act, Fiscal Year 2017.

Trade

  • On Wednesday, 27 April, the House Financial Services Subcommittee on Monetary Policy and Trade is scheduled to convene a hearing titled, “How Can the U.S. Make Development Banks More Accountable?”   Under Secretary of the Treasury for International Affairs Nathan Sheets is scheduled to testify.
  • On Wednesday, 27 April, the Senate Judiciary Committee is scheduled to convene a hearing titled, “Counterfeits and Their Impact on Consumer Health and Safety.”
  • On Wednesday, 27 April, the House Agriculture Subcommittee on Biotechnology, Horticulture, and Research is scheduled to convene a hearing titled, “Focus on the Farm Economy: Factors Impacting the Cost of Production.”
  • On Thursday, 28 April, the House Agriculture Subcommittee on Nutrition is scheduled to convene a hearing titled, “Focus on the Farm Economy: Food Prices and the Consumer.”

Defense

  • On Tuesday, 26 April, the Senate Armed Services Committee is scheduled to convene a hearing to examine the F-35 Joint Strike Fighter Program.
  • On Wednesday, 27 April, the House Armed Services is scheduled to mark-up the FY 2017 NDAA.
  • On Wednesday, 27 April, the Senate Appropriations Subcommittee on Defense is scheduled to convene a hearing titled, “FY 2017 Department of Defense Budget Request.”
  • On Thursday, 28 April, the Senate Armed Services Committee is scheduled to convene a hearing titled, “Counter-ISIL (Islamic State of Iraq and the Levant) Operations and Middle East Strategy.”

Cyber

  • On Wednesday, 27 April, the Senate Commerce Committee is scheduled to convene an executive session to mark-up multiple bills, including the DIGIT Act (S. 2607) and the Digital Coast Act of 2015 (S. 2325).

Looking Ahead

Washington is expected to focus on the following upcoming events:

  • 25-29 April: President Obama attends the Hannover Messe in Germany
  • Week of 25 April: TTIP negotiations in New York City
  • 13 May: President Obama hosts the U.S.-Nordic Leaders Summit
  • 18 May: Due date for release of the USITC report on the TPP deal
  • [TBA] May: President Obama travels to Vietnam and Laos
  • 26-27 May: G-7 Summit in Ise-Shima, Japan
  • 8-9 July: NATO Summit in Warsaw, Poland

Senate Continues Debate on Energy-Water Appropriations; House Takes on Fiduciary Rule, Startups, and DC School Scholarships

Senate Legislative Activity

The Senate will convene on Monday, April 25, at 3:00pm. Following any Leader remarks, the Senate will be in a period of morning business until 4:00pm, at which time the Senate will resume consideration of H.R.2028, Energy and Water Development and Related Agencies Appropriations Act of 2016. Under the previous order, at 5:30pm the Senate will vote on Murray amendment #3813 (anchor chains).

On Tuesday, April 26, at 11:00am, the Senate will vote on the following amendments: (1) Merkley SA #3812 (wind energy); (2) Reid SA #3805 (water management); and (3) Flake SA #3820 (environmental infrastructure).

House Legislative Activity

On Monday, April 25, the House will meet in pro forma session at 11:30am. No votes are expected.

On Tuesday, April 26, 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. 4096 – Investor Clarity and Bank Parity Act;
  2. H.R. 5019 – Fair Access to Investor Research Act of 2016;
  3. H.R. 2901 – Flood Insurance Market Parity and Modernization Act;
  4. H.R. 223 – Great Lakes Restoration Initiative Act of 2016;
  5. H.R. 3030 – Baudette Coast Guard Housing Conveyance Act;
  6. House Amendment to S. 1523 – To amend the Federal Water Pollution Control Act to reauthorize the National Estuary Program, and for other purposes, as amended;
  7. H.R. 1684 – Foreign Spill Protection Act of 2016, as amended;
  8. H.R. 4820 – Combating Terrorist Recruitment Act of 2016, as amended;
  9. H.R. 4698 – Securing Aviation from Foreign Entry Points and Guarding Airports Through Enhanced Security Act of 2016, as amended;
  10. H.R. 3583 – PREPARE Act, as amended;
  11. H.R. 2615 – Virgin Islands of the United States Centennial Commission Act;
  12. H.R. 2908 – National Bison Legacy Act;
  13. H.R. 4359 – Administrative Leave Reform Act, as amended;
  14. H.R. 4360 – Official Personnel File Enhancement Act; and
  15. Concur in the Senate Amendment to H.R. 1493 – Protect and Preserve Cultural Property Act

On Wednesday, April 27, the House will meet at 10:00am for morning hour and at 12:00pm for legislative business. The following legislation will be considered under suspension of the rules:

  1. H.R. 4923 – American Manufacturing Competitiveness Act of 2016;
  2. H.R. 4240 – No Fly for Foreign Fighters Act;
  3. H.R. 699 – Email Privacy Act; and
  4. S. 1890 – Defend Trade Secrets Act of 2016

The House will also consider H.R. 4498 – HALOS Act (Subject to a Rule).

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

  1. H.R. 4901 – SOAR Reauthorization Act (Subject to a Rule); and
  2. H.J. Res. 88 – Disapproving the rule submitted by the Department of Labor relating to the definition of the term “Fiduciary” (Subject to a Rule)

Senate Continues Consideration of Appropriations Bills, House Process Delayed

Legislative Activity

Senate Continues Consideration of Appropriations Bills, House Process Delayed

The Senate is expected to pass the FY 2017 Energy and Water Development (Energy-Water) Appropriations bill as early as this week, after considering numerous amendments on the floor last week. In addition to the Energy-Water bill, the Senate may begin consideration of the FY 2017 Military Construction and Veterans Affairs (MilCon-VA) Appropriations Act or the FY 2017 Commerce, Justice, and Science (CJS) Appropriations Act next.

Additionally, the FY 2017 Transportation, Housing and Urban Development, and Related Agencies (THUD) Appropriations Act is ready for floor consideration, though the Senate is expected to take up the MilCon-VA and CJS bills first. The $56.5 billion THUD Appropriations bill would provide $2.3 billion for the Capital Investment Grant program, which funds New Starts, Small Starts, and Core Capacity Improvement projects for transit systems, and $525 million for the Transportation Investment Generating Economic Recovery (TIGER) grant program, a $25 million increase over FY 2016.

Senate Appropriations Committee Chairman Thad Cochran (R-MS) has said a bipartisan deal that would provide funding to support the federal government’s efforts to combat the Zika virus will be offered as an amendment to an appropriations bill in the near future, though it’s unclear whether the measure would be successful in the House. The House has not begun floor consideration of appropriations bills, and likely will not until after May 15 because the House failed to pass a budget.

This Week’s Hearings:

  • Wednesday, April 27: The Senate Budget Committee will hold a hearing titled “Fixing the Budget Process: Better Budgets, Better Results.”

Senate Appropriations Committee FY 2017 Budget Hearings

  • Wednesday, April 27: The Senate Appropriations Committee Defense Subcommittee will hold a hearing on the FY 2017 budget request and funding justification for the Defense Department.

Prospects for Energy Bill Before Summer Recess; House to Scrutinize Methane Emissions; Senate Hears Challenges for Oil and Gas; EPA Looking At Fuel and NAAQs

Legislative Action

Senate Energy Policy Modernization Act

Last week the Senate voted to pass S. 2012 the Energy Modernization Act of 2016 with a strong, almost unheard of bi-partisan vote of 85-12, including numerous amendments impacting a majority of the United States. Senate Energy and Natural Resources Committee Chairman Lisa Murkowski (R-AK) has since been in contact with House Energy and Commerce Chairman Fred Upton (R-MI) about conferencing the comprehensive Senate bill with the more bare-bones House-passed bill, H.R. 8, which was carried largely on party lines. The two pieces of legislation are fairly far apart, and the White House issued a statement of administrative policy threatening a veto of  the House bill. Still, Chairman Murkowski is pressing for a completed bill prior to the summer recess. 

Methane

On Wednesday, April 27, the House Natural Resources Committee, Subcommittee on Energy and Mineral Resources, will hold a hearing on the  Bureau of Land Management’s efforts regarding methane emissions.

Oil and Gas

On Tuesday, April 26, the Senate Energy and Natural Resources Committee will hold its rescheduled oversight hearing to examine oil and gas development in differing price environments.

Hydro

On Wednesday, April 27, the House Natural Resources Committee, Subcommittee on Water, Power, and Oceans, will hold a hearing to consider “Realizing the Potential of Hydropower as a Clean, Renewable and Domestic Energy Resource.”

WOTUS

On Wednesday, April 27, the Senate Small Business and Entrepreneurship Committee will hold a hearing concerning the Waters of the U.S. Rule and the Regulatory Flexibility Act. The Committee will hear testimony from Darryl DePriest, Chief Counsel for the Office of Advocacy at the U.S. Small Business Administration.

Federal Lands

On Thursday, April 28, the House Natural Resources Committee, Subcommittee on Federal Lands, will hold a hearing to discuss the proposed “Locally-Elected Officials Cooperating with Agencies in Land Management Act” (LOCAL Management Act). 

Pebble Mine

On Thursday, April 28, the House Science, Space, and Technology Committee will hold a hearing it titles “Examining EPA’s Predetermined Efforts to Block the Pebble Mine, Part II.” The Committee will hear testimony from Dennis McLerran, the Administrator of the U.S. Environmental Protection Agency Region 10.

Invasive Species

On Thursday, April 28, the Senate Energy and Natural Resources Committee, Subcommittee on Public Lands, Forests, and Mining, will hold a hearing to examine the impacts of invasive species on land and water resources. In addition, the Subcommittee will hear testimony from Senator Barrasso (R-WY) on his proposed bill, the Federal Land Invasive Species Control, Prevention, and Management Act (S. 2240).

Regulatory Action

Fuel and Fuel Additives

EPA has announced that it is planning to submit an Information Collection Request (ICR) for approval concerning, “Registration of Fuels and Fuel Additives—Health-Effects Research Requirements for Manufacturers.” The development of health-effects data is the subject of this ICR. Comments are due June 13.

NAAQs

EPA has made available for public review and comment the agency’s plan for setting Particulate Matter (PM) standards in the National Ambient Air Quality Standards (NAAQS). The document titled “Draft Integrated Review Plan for the National Ambient Air Quality Standards for Particulate Matter” contains the agency’s plans for the review of the air quality criteria. Comments are due by June 23.

Fiduciary Rule and Puerto Rico in Focus for Financial Services Lawmakers; SEC, CFTC, FDIC to Hold Meetings

Legislative Activity

Congressional Republicans Place DOL’s Fiduciary Rule in Crosshairs

Last week, on April 19, just one day after Senate Republicans introduced a resolution to disapprove and nullify the Department of Labor’s (DOL) Fiduciary Rule, House Republicans introduced a companion resolution also targeting the rulemaking. Two days later, on April 21, the House Education and the Workforce Committee marked-up and approved the resolution along party lines by a vote of 22-14. This week, on Thursday, April 28, the full House is expected to vote on and pass the resolution. Nevertheless, President Obama has indicated that he will veto any such legislation.

Note too, these resolutions are in addition to other bills introduced earlier this year that would disapprove of DOL’s Fiduciary Rule and replace it instead with a congressionally-mandated fiduciary standard. Specifically, H.R. 4293/S. 2502, Affordable Retirement Advice Protection Act, would amend the Employee Retirement Income Security Act of 1974 (ERISA) and H.R. 4294/S. 2505, Strengthening Access to Valuable Education and Retirement Support Act, would amend the Internal Revenue Code (Code). While both bills in the House have been marked-up at the committee level (House Education and the Workforce and House Ways and Means, respectively) and are awaiting a vote by the full House, neither Senate bill has been marked-up – nor has a markup been scheduled.

Importantly, facing mounting pressure from lawmakers and industry, Securities and Exchange Commission (SEC) staff have reportedly submitted a draft Fiduciary Rule to SEC Commissioners for review. This comes as the Commission has two vacant commissioner positions that have nominees pending congressional approval. However, following the recent Senate Banking Committee meeting on these and other nominees during which it became clear that there is less than overwhelming support for the nominees and the vote was postponed, no further nomination votes have been scheduled.

As May Deadline Looms, Lawmakers Still Negotiating Puerto Rico Fix

After postponing a markup of H.R. 4900, Puerto Rico Oversight, Management, and Economic Stability Act (PROMESA), last week passed without a clear, unified solution to address the Commonwealth’s fiscal crisis. However, while a markup has yet to be scheduled this week, it appears that Republicans and Democrats are making advances towards coming together on a solution, including on the scope of the restructuring authority, the breadth of powers given to the fiscal oversight board, and potentially on other issues, including the need for economic and other incentives. With the Treasury Department working closely with Congress, it appears likely that a solution will be agreed upon in the near-term, though doing so by Speaker Paul Ryan’s (R-WI) May 1 deadline is growing increasingly unlikely.

This Week’s Hearings:

  • Wednesday, April 27: The House Financial Services Subcommittee on Monetary Policy and Trade will hold a hearing titled “How Can the U.S. Make Development Banks More Accountable?”
  • Thursday, April 28: The House Agriculture Subcommittee on Commodity Exchanges, Energy, and Credit will hold a hearing to review the impact of capital margin requirements on end-users.

Regulatory Activity

SEC to Meet, Hold Meeting of Equity Market Structure Advisory Committee

On Tuesday, April 26, the SEC will hold a meeting of its Equity Market Structure Advisory Committee to discuss the: (1) Regulation National Market System (NMS) Subcommittee recommendations to the Committee regarding the framework for potential access fee pilot; (2) Trading Venues Regulation Subcommittee recommendations to the Committee regarding recommendations relating to trading venues regulation; (3) Market Quality Subcommittee status report to the Committee; and (4) Customer Issues Subcommittee status report to the Committee.

Additionally, on Wednesday, April 27, the SEC will meet to discuss whether to publish for comment a proposed NMS plan to create, implement, and maintain a consolidated audit trail (CAT), submitted pursuant to Rule 613 of Regulation NMS.

CFTC to Hold Meeting of Market Risk Advisory Committee

On Tuesday, April 26, the Commodity Futures Trading Commission (CFTC) will hold a meeting of its Market Risk Advisory Committee to discuss how derivatives markets are currently functioning, including the impact and implications of the evolving structure of these markets on the movement of risk across market participants.

FDIC to Meet on Incentive-Based Compensation Arrangements and Deposit Insurance Assessments

On Tuesday, April 26, the Federal Deposit Insurance Corporation (FDIC) will meet to discuss: (1) a notice of proposed rulemaking for incentive-based compensation arrangements; and (2) deposit insurance assessments for small banks.

House Committee on Energy and Commerce to Advance 12 Bills Addressing the Opioid Epidemic; Senate to Consider Emergency Supplemental Funding for the Zika Virus; CMS Releases Proposed Rule on Inpatient and LTCH Prospective Payment Systems

Legislative Activity

House Committee on Energy and Commerce to Advance 12 Bills Addressing the Opioid Epidemic

The House Committee on Energy and Commerce announced the committee will consider 22 bills April 26 and April 27, including 12 bills focused on combatting the opioid crisis that passed the Subcommittee on Health last week. The health bills being considered include: H.R. 1818, the Veteran Emergency Medical Technician Support Act of 2015, which provides grants to states to streamline state requirements and procedures for veterans with military emergency medical training to become civilian emergency medical technicians; H.R. 3250, the DXM Abuse Prevention Act of 2015, which amends the Federal Food, Drug, and Cosmetic Act to prevent the abuse of dextromethorphan (DXM); H.R. 3680, the Co-Prescribing to Reduce Overdoses Act of 2015, to provide for the Secretary of Health and Human Services to carry out a grant program for co-prescribing opioid overdose reversal drugs ; H.R. 3691, the Improving Treatment for Pregnant and Postpartum Women Act of 2015, to amend the Public Health Service Act to reauthorize the residential treatment programs for pregnant and postpartum women and to establish a pilot program to provide grants to state substance abuse agencies to promote innovative service delivery models for women; H.R. 4586, Lali’s Law, to amend the Public Health Service Act to authorize grants to states developing standing orders and educating health care professionals regarding the dispensing of opioid overdose reversal medication without person-specific prescriptions; H.R. 4599, the Reducing Unused Medications Act of 2016, to amend the Controlled Substances Act to permit certain partial fillings of prescriptions; H.R. 4641, to provide for the establishment of an inter-agency task force to review, modify, and update best practices for pain management and prescribing pain medication, and for other purposes; H.R. 4969, the John Thomas Decker Act, to amend the Public Health Service Act to direct the Centers for Disease Control and Prevention to provide for informational materials to educate and prevent addiction in teenagers and adolescents who are injured playing youth sports and subsequently prescribed an opioid; H.R. 4976, the Opioid Review Modernization Act, to require the Commissioner of Food and Drugs to seek recommendations from an advisory committee of the Food and Drug Administration before approval of certain new drugs that are opioids without abuse-deterrent properties; H.R. 4978, the Nurturing and Supporting Healthy Babies Act this legislation would require the Comptroller General of the United States to issue a report one year after enactment on neonatal abstinence syndrome (NAS). ; H.R. 4981, the Opioid Use Disorder Treatment Expansion and Modernization Act, to amend the Controlled Substances Act to improve access to opioid use disorder treatment; and H.R. 4982, Examining Opioid Treatment Infrastructure Act of 2016, to direct the Comptroller General of the United States to evaluate and report on the in-patient and outpatient treatment capacity, availability, and needs of the United States. Chairman Fred Upton (R-MI) expects the bills to be considered on the House Floor at the beginning of May. The opioid bills being considered will act as House companion legislation to S. 524, the Comprehensive Addiction and Recovery Act (CARA), which passed the Senate in March.

Senate to Consider Emergency Supplemental Funding for the Zika Virus

Senate Republicans are hoping to include a Zika supplemental funding package in the appropriations bill being considered on the floor this week. The amount requested is unknown, but it is not expected to meet the President’s $2 billion request. House Appropriators did not include the $1.9 billion request for Zika supplemental funding in the FY 2017 Agriculture Bill that was forwarded to the House Floor last week and instead directed the Administration to use unobligated funds to address the Zika virus.

This Week’s Hearings:

  • Tuesday, April 26: The Senate Committee on the Judiciary will hold a hearing titled “The Need for More Timeliness and Transparency: Oversight of the Public Safety Officers’ Benefits (PSOB) Program.”
  • Tuesday, April 26 and Wednesday, April 27: The House Committee on Energy and Commerce will hold a markup of a number of bills including H.R. 4978, Nurturing and Supporting Healthy Babies Act; H.R. 4641, to provide for the establishment of an inter-agency task force to review, modify, and update best practices for pain management and prescribing pain medication; H.R. 3680, Co-Prescribing to Reduce Overdoses Act of 2015; H.R. 3691, Improving Treatment for Pregnant and Postpartum Women Act; H.R. 1818, Veteran Emergency Medical Technician Support Act of 2015; H.R. 4981, Opioid Use Disorder Treatment Expansion and Modernization Act; H.R. 3250, DXM Abuse Prevention Act of 2015; H.R. 4969, John Thomas Decker Act of 2016; H.R. 4586, Lali’s Law; H.R. 4599, Reducing Unused Medications Act of 2016; H.R. 4976, Opioid Review Modernization Act of 2016; and H.R. 4982, Examining Opioid Treatment Infrastructure Act of 2016.
  • Wednesday, April 27: The Senate Committee on the Judiciary will hold a hearing titled “Counterfeits and Their Impact on Consumer Health and Safety.”
  • Wednesday, April 27: The Senate Committee on Commerce, Science, and Transportation will hold a markup of several bills including S. 2508, Youth Sports Concussion Act.
  • Wednesday, April 27: The Senate Committee on Indian Affairs will hold a markup of several bills including S. 2205, Tribal Healing and Wellness Courts Act.
  • Wednesday, April 27: The Senate Special Committee on Aging will hold a hearing titled “Valeant Pharmaceuticals’ Business Model: the Repercussions for Patients and the Health Care System.”
  • Thursday, April 28: The Senate Committee on the Judiciary will hold a markup of three bills including S. 2348, Rapid DNA Act.
  • Thursday, April 28: The Senate Committee on Finance will hold a hearing titled “Mental Health in America: Where Are We Now?”
  • Thursday, April 28: The House Committee on the Judiciary Subcommittee on the Constitution and Civil Justice will hold a hearing titled “Oversight of the False Claims Act.”
  • Friday, April 29: The House Committee on Veterans’ Affairs Subcommittee on Health will hold a markup of pending legislation.
  • Friday, April 29: The House Committee on Energy and Commerce Subcommittee on Commerce, Manufacturing, and Trade will hold a hearing titled “The Pet Medication Industry: Issues and Perspectives.”

Regulatory Activity

CMS Releases Proposed Rule on Inpatient and LTCH Prospective Payment Systems

The Department of Health and Human Services (HHS) Centers for Medicare & Medicaid Services (CMS) released a proposed rule to update the FY 2017 Medicare payment policies and rates under the Inpatient Prospective Payment System (IPPS) and the Long-Term Care Hospital (LTCH) Prospective Payment System (PPS). The proposed rule would apply to approximately 3,330 acute care hospitals and approximately 430 LTCHs and would affect discharges occurring on or after October 1, 2016. It includes policies that continue to shift Medicare payments from volume to value. This proposed rule seeks to change payment rates under IPPS; make IPPS rate adjustments for documentation, coding, and the two midnight policy; address Medicare Uncompensated Care Payments; update the Hospital Acquired Conditions (HAC) Reduction Program; update the reporting policy for Hospital Readmissions Reduction Program (HRRP); address notification procedures for outpatients receiving observation services; enact requirements for the Electronic Health Record Incentive Programs and Quality Reporting; require Electronic Health Record Incentive Programs and quality reporting; make changes to the Hospital Inpatient Quality Reporting (IGR) Program; implement updates to the Hospital Value-Based Purchasing (VBP) Program; update the PPS-Exempt Cancer Hospital Quality Reporting Program; update the Inpatient Psychiatric Facility Quality Reporting (IPFQR) Program; implement changes under the Long-Term Care Hospital Prospective Payment System; and make changes to the Long Term Care Hospital Quality Reporting Program (LTCH QRP).

CMS has stated that it will accept comments until June 16, 2016, and will respond to comments in the final rule to be issued by August 2016.

Senate Takes on Business Tax Reform; Treasury to Have “Intense Comment Period” for Inversion Regulations

Legislative Activity

Senate to Consider Business Tax Reform Proposals

Following multiple hearings on tax reform thus far this year in the House Ways and Means Committee, this week the Senate Finance Committee will hold a hearing on business tax reform. During the hearing, the difference between Republican and Democrat approaches to taxing corporate income, including what the top rate on corporations should be, will be on full display. In advance of the hearing, the Joint Committee on Taxation (JCT) has released an overview of various proposals for business tax reform, including: (1) the President’s framework; (2) reforms that both maintain and change the structure of the current business tax regime; and (3) proposals to shift to a consumption-based regime. As part of the Committee’s efforts on business tax reform, Senator Orrin Hatch (R-UT) last week reaffirmed his commitment to move forward with his “corporate integration” proposal by the end of June, noting that he is still awaiting a score from JCT before proceeding. For his part, Senate Finance Committee Ranking Member Ron Wyden (D-OR) this week is expected to introduce a proposal that would modify current corporate depreciation schedules – something former Senate Finance Committee Chairman Max Baucus (D-MT) also did during his time in the Senate.

As for tax reform efforts in the House, Ways and Means Committee Chairman Kevin Brady (R-TX) has announced his plans to release a comprehensive tax reform “blueprint” by June of this year as part of Speaker Paul Ryan’s (R-WI) Tax Reform Task Force efforts, while Representative Charles Boustany (R-LA) is expected to continue with his efforts on international tax reform – though whether we will see any action this year on his plan remains to be seen.

Notably, as both House and Senate tax-writers debate the best path forward for tax reform, Republicans lawmakers are pushing for the adoption of Representative Bob Goodlatte’s (R-VA) plan (H.R. 29, Tax Code Termination Act) that would repeal the Internal Revenue Code by 2019 and require Congress to approve a new system of taxation by July of that year. While the future of this legislation is uncertain – and no Senate counterpart exists – there are presently more than 130 co-sponsors in the House.

This Week’s Hearings:

  • Tuesday, April 26: The Senate Finance Committee will hold a hearing titled “Navigating Business Tax Reform.”

Regulatory Activity

Treasury Open to “Intense Comment Period” on Inversion Regulations

Following intense scrutiny and pushback from industry, last week Treasury Deputy Assistant Secretary Bob Stack acknowledged that Treasury “may have missed things” in its latest rulemaking targeting  inversions and the ability of multinational corporations to engage in so-called “earnings-stripping” practices. This acknowledgement comes at the same time that 18 former Treasury officials sent a strongly-worded letter to Treasury Secretary Jack Lew urging his Department to focus on reforming the tax Code, not on inversions as a standalone issue.

In looking ahead, Mr. Stack has promised that Treasury “will have an intense comment period, [and] be listening to taxpayers.” He also suggested that Treasury “want[s] to do things that are both right from a policy point of view and also minimize burdens on companies…[but] [t]he answer to inversions is not to join the race to the bottom so that we have ultimately a zero tax rate.” Notably, Internal Revenue Service (IRS) Commissioner John Koskinen has indicated that the IRS does not intend to put out any “significant” regulations past Labor Day, which creates a rather tight timeframe for Treasury to digest the responses to its proposed regulations and still finalize the regulations this year.

Separately, partly spurred by fallout from the “Panama Papers” fiasco, the Treasury Department has announced that it also soon plans to finalize rules proposed in 2014 that would require the beneficial owners of single-member LLCs to identify themselves to the IRS. According to Treasury Secretary Lew, this, along with widespread implementation of the Organisation for Economic Co-operation and Development’s (OECD) Base Erosion and Profit Shifting (BEPS) Project and its proposal to require country-by-country reporting of certain tax information by large multinational corporations will help combat tax evasion.

House Encryption Working Group Releases Roadmap

Legislative Activity

House Bi-Partisan Encryption Working Group Releases Roadmap

On April 21, the U.S. House of Representatives (House) Bi-Partisan Encryption Working Group (Working Group) announced its roadmap following a meeting to discuss the group’s goals. The Working Group, first announced in March 2016, is charged with examining the legal and policy issues surrounding the use of encryption and identifying potential solutions that both preserve the privacy of consumers and allow law enforcement reasonable tools to prevent crime and protect the public safety. According to the roadmap, members of the Working Group will conduct meetings with federal, state, and local governments, private industry, and trade associations, among other constituencies. In addition, the Working Group encouraged the general public to submit articles, papers, or testimony that may assist it in its efforts. The Working Group also intends to participate in site visits to conduct meetings and receive technical briefings. Finally, the Working Group intends to complete its task by the end of the current Congress, which will include providing its findings and recommendations to the House.

House Commerce Subcommittee Approves Seven Communications Bills

On April 19 the Subcommittee on Communications and Technology (Communications Subcommittee) of the House Energy and Commerce Committee (House Commerce Committee) approved seven communications bills following an April 13 hearing on those bills. The seven bills, previously discussed in greater detail here, are as follows:

  • H.R.2031, the Anti-Swatting Act of 2015, which enhanced penalties for those who use false or misleading caller identification (caller ID) information;
  • H.R.3998, the Securing Access to Networks in Disasters Act (SANDy Act), which would require mobile service providers to ensure that consumers have access to networks during disasters and also require the Federal Communications Commission (FCC) and the Government Accountability Office (GAO) to examine the resiliency of networks during such disasters;
  • H.R.4190, the Spectrum Challenge Prize of 2015 that creates a prize program through the National Telecommunications & Information Administration to award up to $5 million to participants who develop innovative and cost-effective solutions to maximize spectrum efficiency;
  • H.R.4111, the Rural Healthcare Connectivity Act of 2015, which would allow skilled nursing facilities to apply for support from the Universal Service Fund’s Rural Health Care Program (RHCP);
  • H.R.4167, Kari’s Law Act of 2015, which would require multi-line telephone systems, usually found in schools, offices, hotels, or hospitals to connect directly to 911 when dialed even in situations where the phone requires the user to dial another number to get an outside line;
  • H.R.4884, the Controlling the Unchecked and Reckless Ballooning of Lifeline (CURB) Act of 2016, which would reform the FCC’s Lifeline program by capping the fund at $1.5 billion, prohibiting the use of the subsidy for devices, and phasing out the subsidy for voice only mobile service; and
  • H.R.4889, the Kelsey Smith Act of 2016 that would require telecommunications carriers to share call location information with law enforcement in emergency situations.

The bills now go to the full House Commerce Committee for consideration.

Regulatory Activity

FCC Releases Final Agenda for April 28 Open Meeting

On April 21, the FCC released its final agenda for the agency’s April 28 Open Meeting. The FCC will consider the following items:

  • Transition from TTY to Real-Time Text Technology. The FCC will consider a Notice of Proposed Rulemaking that “seeks comment on proposals to support real-time text communications over Internet Protocol communications networks, to improve the accessibility of these networks for consumers who are deaf, deaf-blind, and speech disabled.”
  • Business Data Services in an Internet Protocol Environment. The FCC will consider a Tariff Investigation Order and a Further Notice of Proposed Rulemaking “proposing a new regulatory framework for the provision of business data services.”
  • Amendment of the Commission’s Rules with Regard to Commercial Operations in the 3550-3650 MHz Band. The FCC will consider an Order on Reconsideration and a Second Report and Order that “will finalize rules for the innovative spectrum sharing regime it created for making 150 MHz available in the 3.5 GHz band.” For more information on this item, see our blog post discussing the FCC’s 2015 Report and Order and Second Further Notice of Proposed Rulemaking in this docket.

FCC Seeks Additional Comment on Petition to Allocate the 1675-1680 MHz Band for Non-Federal Terrestrial Mobile Use

On November 2, 2012, LightSquared Subsidiary LLC (LightSquared, now Ligado) filed a petition asking the FCC to “initiate a rulemaking proceeding to . . . permit[] non-Federal terrestrial mobile use of the 1675-1680 MHz band” on a shared basis with federal users. LightSquared states that grant of its petition would serve the public interest by increasing the spectrum available for mobile broadband services. The company proposes that the “additional use of the 1675-1680 band” would be permitted “only if such use is coordinated to protect government systems that will remain in the band, including the critical weather and predicting operations of the National Oceanic and Atmospheric Administration.” Per an April 22 Public Notice (PN), the FCC sought comment on LightSquared’s petition in 2012, and is now seeking to “update and refresh the record” (the PN notes that LightSquared has made a number of related filings subsequent to its original petition, and seeks comment on those filings as well). In the PN, the FCC states that it is specifically seeking comment on “potentially providing a primary terrestrial non-federal mobile service allocation in the 1675-1680 MHz band and establishing terrestrial service rules for shared federal/non-federal operations in this band.” Comments are due June 21, and reply comments are due July 21.

FCC to Hold Broadband Health Conference in Houston, Texas on May 18

The FCC has announced that on May 18, the agency’s “Connect2Health Task Force will travel to Houston, Texas to highlight how broadband-enabled health technologies can improve access to mental health care and to discuss associated policy issues,” per an April 22 Public Notice (PN). The Connect2Health Task Force was created by the FCC in 2014 to “accelerate the adoption of health care technologies by leveraging broadband and other next-gen communications services,” according to a 2014 FCC News Release. The conference, titled “Broadband Prescriptions for Mental Health,” will be hosted by the University of Houston Law Center’s Health Law & Policy Institute. Featured speakers include “FCC Commissioner Mignon Clyburn; University of Houston Law Center Dean Leonard M. Baynes; Former Astronaut and CEO of Vesalius Ventures Dr. Bernard A. Harris, Jr.; University of Texas Rio Grande Valley School of Medicine Dean Francisco Fernandez; and the Connect2Health Task Force, among others.” A detailed agenda will be released at a later date, and details will be posted to the Connect2Health website, according to the PN.

Unclear How House Will Proceed on FAA Reauthorization; Senate Appropriations Committee Passes THUD Appropriations Bill, Unclear When it Will Hit Senate Floor

Legislative Activity

Unclear How House Will Proceed on FAA Reauthorization

After the Senate overwhelmingly approved its Federal Aviation Administration (FAA) reauthorization legislation on April 19 by a vote of 95 to 3, it remains unclear how the House will proceed on its own FAA reauthorization legislation, which continues to be stalled due to objections on both sides of the aisle to the contentious House Transportation and Infrastructure (T&I) Committee proposal, the Aviation Innovation, Reform, and Reauthorization (AIRR) Act (H.R.4441), that would move air traffic control operations out of the FAA to a non-profit corporation.

House T&I Committee Chairman, Bill Shuster (R-PA) has very publicly said he will continue pushing for the air traffic control (ATC) reforms included in the AIRR Act, including in an op-ed recently published in The Hill newspaper. However, the proposal has faced significant opposition from House and Senate Democrats in addition to Republican Appropriators, and this week the Senate Appropriations Committee included language in the Committee Report accompanying the FY 2017 Transportation, Housing, and Urban Development (THUD) Appropriations bill saying the Committee would prohibit any funding to implement any legislation removing air traffic control operations from the FAA.

The current FAA short-term reauthorization expires on July 15, 2016, giving Congress just a few months to reauthorize FAA programs. Further complicating the process is the shortened legislative schedule in the election year and the Senate’s current focus on passing Appropriations bills. Some have suggested another short-term reauthorization through the end of the year, and beyond the election, or through early next year is likely. The Senate’s FAA Reauthorization Act would reauthorize FAA programs through September 2017, while the AIRR Act would reauthorize programs through FY 2022.

Senate Appropriations Committee Passes THUD Appropriations Bill, Unclear When it Will Hit Senate Floor

Last week, the Senate Appropriations Committee Transportation, Housing and Urban Development, and Related Agencies Subcommittee passed the $56.5 billion FY 2017 Transportation, Housing and Urban Development, and Related Agencies (THUD) Appropriations Act. It is unclear when the full Senate will consider the THUD Appropriations bill on the floor, though it is likely to be after the Senate considers the Military Construction and Veterans Affairs Appropriations bill and the Commerce, Justice, Science Appropriations bill.

The Senate THUD Appropriations bill would provide $2.3 billion for the Capital Investment Grant program, which funds New Starts, Small Starts, and Core Capacity Improvement projects for transit systems, and $525 million for the Transportation Investment Generating Economic Recovery (TIGER) grant program, a $25 million increase over FY 2016.

The Committee followed the Fixing America’s Surface Transportation (FAST) Act’s treatment of Amtrak grants, splitting Amtrak funding into two accounts, one for the profitable Northeast Corridor and the other for the rest of the National Network. However, the Committee provided significantly lower funding for the Northeast Corridor, $345 million (the FAST Act authorized $469 M), and $1 billion for the National Network.

This Week’s Hearings:

  • Wednesday, April 27: The House Oversight and Government Reform Committee will hold a hearing titled “Examining Management Practices and Misconduct at TSA (Transportation Security Administration): Part I.”
  • Wednesday, April 27: The Senate Commerce, Science, and Transportation Committee will vote on nominations for promotion in the United States Coast Guard and Andrew Read to be a member of the Marine Mammal Commission, and hold a markup of the following pieces of legislation:
    • 2644, the “FCC Reauthorization Act of 2016”;
    • 421, the “Federal Communications Commission Process Reform Act of 2015”;
    • 2607, the “Developing Innovation and Growing the Internet of Things (DIGIT) Act”;
    • 2508, the “Youth Sports Concussions Act”;
    • 2829, the “Maritime Administration Authorization and Enhancement Act for FY2017”;
    • 2325, the “Digital Coast Act of 2015”;
    • 2817, the “Space Weather Research and Forecasting Act”; and
    • 787, the “NTIS Elimination Act.”
  • Thursday, April 28: The House Homeland Security Committee will hold a markup of the following pieces of legislation:
    • R.1887, to amend certain appropriation Acts to repeal the requirement directing the Administrator of General Services to sell Federal property and assets that support the operations of the Plum Island Animal Disease Center in Plum Island, New York;
    • R.4743, the “National Cybersecurity Preparedness Consortium Act of 2016”; and
    • The “Airport Perimeter and Access Control Security Act of 2016.”
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