Senate, House Eye Their Exit as Lawmakers Work to Wrap-Up Government Funding

Note from Capital Thinking

Given that we expect all legislative business will wrap-up in Washington this week, this will likely be our last Capital Thinking Blog until Congress returns in November following the Election.

Senate Legislative Activity

The Senate will convene on Monday, September 26, at 3:00pm. Following any Leader remarks, the Senate will resume consideration of H.R.5325, the legislative vehicle for the short-term continuing resolution (CR). There will be no roll call votes on Monday.

The filing deadline for 1st degree amendments to the substitute and underlying bill is 4:00pm today; the 2nd degree amendment filing deadline is set for 12:00pm on Tuesday, September 27.

Senator Mitch McConnell (R-KY) has already offered substitute amendment #5082 (text of short-term CR), filled the amendment tree, and filed cloture on the substitute and the underlying bill. The cloture vote on the substitute amendment will be on Tuesday, September 27, at 2:15pm. Under the rules, if cloture is invoked there would then be up to 30 hours of debate followed by a vote on the amendment; if cloture is not invoked, the cloture motion on the underlying bill would immediately ripen.

House Legislative Activity

On Monday, September 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 suspense on of the rules:

  1. H.R. 1877 – Mental Health First Aid Act of 2016, as amended;
  2. H.R. 3537 – Dangerous Synthetic Drug Control Act of 2016;
  3. H.R. 3779 – To restrict the inclusion of social security account numbers on documents sent by mail by the Federal Government, and for other purposes;
  4. H.R. 5883 – Clarification of Treatment of Electronic Sales of Livestock Act of 2016, as amended;
  5. H.R. 845 – National Forest Trails Stewardship Act, as amended;
  6. H.R. 5943 – Transit Security Grant Program Flexibility Act, as amended;
  7. H.R. 5460 – First Responder Access to Innovative Technologies Act, as amended;
  8. H.R. 5459 – Cyber Preparedness Act of 2016, as amended;
  9. H.R. 5346 – Securing our Agriculture and Food Act, as amended;
  10. House Amendment to S. 2754 – To designate the Federal building and United States courthouse located at 300 Fannin Street in Shreveport, Louisiana, as the “Tom Stagg Federal Building and United States Courthouse”, as amended;
  11. H.R. 5873 – To designate the Federal building and United States courthouse located at 511 East San Antonio Avenue in El Paso, Texas, as the “R.E. Thomason Federal Building and United States Courthouse”;
  12. H.R. 5978 – Coast Guard and Maritime Transportation Amendments Act of 2016, as amended;
  13. H.R. 5162 – Vet Connect Act of 2016;
  14. H.R. 5392 – No Veterans Crisis Line Call Should Go Unanswered Act;
  15. H.R. 5509 – To name the Department of Veterans Affairs temporary lodging facility in Indianapolis, Indiana, as the “Dr. Otis Bowen Veteran House”; and
  16. H.R. 3216 – VET Act

On Tuesday, Wednesday, and Thursday September 27-29, the House will meet at 10:00am for morning hour and at 12:00pm for legislative business. On Friday, September 30, the House will meet at 9:00am for legislative business, with last votes expected by 3:00pm. The following legislation will be considered under suspension of the rules:

  1. S. 1698 – Treatment of Certain Payments in Eugenics Compensation Act;
  2. H.R. 5065 – Bottles and Breast­feed­ing Equipment Screening Act, as amended; and
  3. H.R. 5391 – Gains in Global Nuclear Detection Architecture Act, as amended

The House will also consider:

  1. H.R. 5303 – Water Resources Development Act of 2016, Rules Committee Print (Subject to a Rule); and
  2. Legislation Related to Continuing FY16 Appropriations

The House may also consider additional legislative items.

Child Nutrition Reauthorization

Legislative Activity

Child Nutrition Reauthorization

After months of inaction, S. 3136, the Improving Child Nutrition Integrity and Access Act of 2016, got an unexpected jolt of life on September 15 when the bill was hotlined, boosting the hopes of supporters and removing a hurdle for the bill to be considered by the full Senate. Last week, while most eyes were focused on the heated debates occurring in the Senate surrounding legislation to keep the government funded, deliberations over numerous sticking points in the child nutrition reauthorization bill were also taking place. While it is rumored that many of the disagreements were reconciled last week, there are a handful of issues yet to be resolved. It is not yet clear whether these items will be settled in time for full Senate consideration on the larger package this week; however, the Senate Agriculture Committee’s top members, Chairman Pat Roberts (R-KS) and Ranking Member Debbie Stabenow (D-MI), are both working behind the scenes to quickly advance the bipartisan legislation, making floor action this week within the realm of possibility.

By way of background, on January 20, 2016, the Senate Agriculture Committee voted unanimously to report its child nutrition reauthorization legislation. On May 18, 2016, the House Education and the Workforce Committee marked up its reauthorization bill, H.R. 5003, the Improving Child Nutrition and Education Act of 2016. H.R. 5003 was reported by a vote of 20-14. Although the approaches in the underlying legislation are different, both the Senate and House bills seek to improve school meal policies and make changes to the Special Supplemental Nutrition program for Women, Infants, and Children (WIC).

Senate Scheduled to Vote on Continuing Resolution on Tuesday; Conservative House Members Introduce 40-Day Spending Extension

Legislative Activity

The text of the Fiscal Year  2017 continuing resolution (CR) was released by Senate Majority Leader Mitch McConnell (R-KY) on September 22. The $1.067 trillion spending legislation would provide full fiscal year funding for the Military Construction and Veterans Administration programs and run through December 9, 2016.  The bill includes $1.1 billion for  emergency Zika aid and eliminates a previous provision that would have barred federal funds for the Planned Parenthood affiliate in Puerto Rico.  While $500 million in emergency spending for flood assistance to Louisiana is included, funding for the troubled water system in Flint, Michigan is not.  Other controversial proposals that had previously been under discussion- including provisions making changes to the Export-Import Bank, and jurisdiction over Internet regulation- are absent. Majority Leader McConnell has “filled the amendment tree” which in effect means no amendments will be allowed on the Senate floor, putting Members in a “take it or leave it” position.  Senator Barbara Mikulski (D-MD), the Ranking Member of the Senate Committee on Appropriations, termed this legislation a “Republican only bill” and said she would not support it.

When asked if the President would sign the proposal currently under review, White House press secretary Josh Earnest said, “it’s not at all clear to me he’s prepared to sign this bill.” The White House Office of Management and Budget (OMB) has begun discussing contingency plans should Congress be unable to pass a CR before the current fiscal year ends on Friday.

On the House side, Speaker Paul Ryan (R-WI) would like to take up the Senate bill when it comes to his chamber, describing that path as “low drama.”  He has assuaged concerns about the omission of funding for Flint, noting that the Water Resource Development Act (HR 5303) was a more appropriate vehicle. Additionally, Representative Jim Jordan (R-OH) and Representative Mark Meadows (R-NC) have signaled introduction of legislation this week that would trigger an automatic 40-day extension of current funding levels if Congress does not pass a spending bill in December when they return for the “lame duck” session.  As members of the conservative House Freedom Caucus, they believe this would help prevent legislation at the end of the year that would bust budget caps and allow conservatives to “negotiate in good faith.”

Perkins Re-Authorization Stalled; Legislation Introduced to Delay Overtime Rule; Department of Labor Sued by States on Overtime Rule

Legislative Activity

Perkins Reauthorization Halted in the Senate

After receiving overwhelming bipartisan support in the House, the Perkins Reauthorization which governs federal support for career and technical education, has been stopped in the Senate. Senator Lamar Alexander (R-TN), Chairman of the Senate Committee on Health, Education, Labor, and Pensions (HELP), originally scheduled a vote on the bill for Wednesday, September 21, but cancelled the vote on Monday when the Senate returned. Senator Alexander wants the law to restrict the Education Secretary’s authority because of concerns stemming from implementation of the Every Student Succeeds Act (ESSA), passed last year to replace No Child Left Behind. Democrats are opposed to restricting the secretary’s authority, pointing out the language was not included in the House bill, where the legislation passed 405-5.

Senator Alexander believes the bill will be passed by the end of the year, with staff from his office saying he hopes to resolve the issues and hold a markup during the lame duck session after the election.

New Legislation to Delay Department of Labor Overtime Rule

Representative Tim Walberg (R-MI), Chairman of House Subcommittee on Workforce Protections, introduced the Regulatory Relief for Small Businesses and Nonprofits Act (H.R. 6094) on September 21. The bill seeks to delay the implementation date of the Department of Labor’s overtime rule by six months, which is set to take effect on December 1, 2016.

Representative Walberg has said that small businesses, nonprofits, and institutions of higher education have urged the administration to take a more moderate approach on updating the overtime rules. He has asked the Administration to reconsider the rule altogether, but is now encouraging them to delay the rule to provide relief to small businesses, small colleges, and nonprofits.  Representative John Kline (R-MN), Chairman of the House Committee on Education and the Workforce, has said the administration ignored concerns of students, small businesses, and entry-level workers and applauded Representative Walberg for introducing the legislation.

Representative Walberg has also introduced the Protecting Workplace Advancement and Opportunity Act (H.R. 4773) to ensure administrations to pursue a more balanced approach when updating the federal overtime rules. The legislation would require the department to fully and accurately consider the economic impact of the rule on small businesses, nonprofits, and colleges and universities.

House Education Chairman Sends Letter to Department of Education about End of Term Plans

Representatives John Kline (R-MN), House Committee on Education and the Workforce Chairman, Virginia Foxx (R-NC), and Todd Rokita (R-IN), sent a September 20 letter to Education Secretary John King asking for information on the Administration’s end of term regulatory plans. They also share concerns about the possibility of Department of Education employees “burrowing in,” where political appointees switch to careers in civil service as the administration changes over. Representative Kline has sent a similar letter to the Department of Labor.

Senators Coons and Isakson Introduce Higher Education Accountability Bill

Senators Chris Coons (D-DE) and Johnny Isakson (R-GA) unveiled the Access Success and Persistence In Reshaping Education Act on September 21, aimed at holding colleges and universities more accountable for the federal money they receive by tying federal student aid to new accountability metrics. The legislation provides incentives to increase graduates rates by rewarding schools that expand access and improve completion rates and gives more resources to schools serving high numbers of Pell Grant recipients but have struggled to graduate them. The senators also released a report that examines access to colleges and completion rates.

Representative Barbara Lee Introduces Computer Science for All Bill

Representative Barbara Lee (D-CA) on September 21 introduced the Computer Science for All Act that would authorize $250 million in grant funding for programs over five years. This initiative was introduced by President Obama during his final State of the Union address this year, and seeks to expand access to science, technology, engineering, and mathematics (STEM) education. Specifically, the program emphasizes bringing more girls and underrepresented minorities into the field.

House Democrats Address Sexual Harassment in STEM

House Democrats are addressing a claim that sexual harassment is so common in science, technology, engineering, and mathematics (STEM) research fields it is driving women out of the area. According to research from 2014 at the University of Illinois, 25% of women surveyed had been sexually assaulted while performing scientific fieldwork. A group of House Democrats, led by Representative Jackie Speier (D-CA) have introduced H.R. 6161, which would require universities to disclose “substantiated” findings of sexual abuse by a professor to all federal agencies that have awarded research grants to the school within the last 10 years. The colleges must also report incomplete investigations that have been ongoing for more than six months, but the schools don’t have to name the accused. The federal agencies would then be required to “consider” this information when deciding whether to award research grants – but would not be prohibited from giving these schools money.

Regulatory Activity

States Sue Department of Labor on Overtime Rule

On September 20, 21 states, led by Texas and Nevada, filed suit in the Eastern District of Texas to challenge the U.S. Department of Labor’s overtime exemption rule changes. The suit alleges DOL has overstepped its authority to establish a federal minimum salary for white collar workers. Further, they claim the new rule will force state and local governments to substantially increase employment costs, ultimately forcing governments to cut services or lay off employees.

On May 18 of this year, DOL issued the final version of the overtime exemption rule, which raises the minimum salary threshold required to qualify for the Fair Labor Standards Act’s (FLSA) “white collar” exemption to $47,476 per year. The final rule will also raise the overtime eligibility threshold for highly compensated workers from $100,000 to about $134,000. It is set to take effect on December 1, 2016.

The lawsuit names DOL and its wage and hour division, Secretary of Labor Thomas Perez and two administrators for the wage and hour division, who will all be represented by the U.S. Department of Justice. The states in the suit are represented by their respective attorneys general and include Texas, Nevada, Alabama, Arizona, Arkansas, Georgia, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Michigan, Mississippi, Nebraska, New Mexico, Ohio, Oklahoma, South Carolina, Utah, and Wisconsin.

The case is Nevada et al. v. U.S. Department of Labor et al., case number 1:16-cv-00407, in the U.S. District Court for the Eastern District of Texas.

Federal Government to Track Value of College Degree

In an innovative partnership, the U.S. Census Board is teaming up with the University of Texas System to track where graduates work and how much they earn.  The Census Bureaus will provide the Texas University System information from its Longitudinal Employer-Household Dynamics program.  The University System already tracks information on students who stay in Texas through the state’s workforce commission, but the 10-year program with the Census Bureau will also provide information on those who leave the state. The Census data includes earnings, region, employment industry, migration pattern, and career pathways for UT graduates from 2003 to present. This data will help better estimate the value of a college degree by creating transparency in how much graduates earn and what industries they join.

This new program could mean the Census Bureau is willing to help track college outcomes as a growing number of education advocates have called on the federal government to track students after they graduate college. Currently the Higher Education Act prohibits the government from tracking students through a “student unit record” system.

House to Take Up WRDA; House and Senate Conference Continues on Energy Bill

Legislative Activity

WRDA

The House is expected this week to take up H.R. 5303, the “Water Resources Development Act of 2016” (WRDA). The Senate recently passed its version of the bill, S. 2848, on September 15. Unlike the Senate, the House legislation does not include funding for drinking water and wastewater infrastructure or for emergency aid for the lead-contaminated drinking water crisis in Flint, MI. House Democrats have expressed reluctance to vote for the bill unless aid for Flint is included. Republicans have countered saying they would be open to adding that language in conference. House Democrats are also opposed to the bill due to the recent elimination of a bipartisan measure that would have made the Harbor Maintenance Trust Fund mandatory spending.

Energy Bill Conference

With regard to conference of the comprehensive energy bill, S. 2012, the ‘‘North American Energy Security and Infrastructure Act of 2016,’’staff from both the House and Senate continue to work together and have been making progress reaching agreement on selected sections of the energy bill, including energy efficiency provisions. Staff are expected to meet regularly throughout October to continue to ready the bill for negotiation. Member-level meetings on the more controversial provisions and actual votes on the bill are not expected until after the November elections.

This Week’s Hearings:

  • On Monday, September 26, the House Committee on Rules will hold a meeting to ready the House WRDA bill (H.R. 5303) for floor action which is expected this week.
  • On Thursday, September 29, the House Committee on the Judiciary, Subcommittee on Regulatory Reform, Commercial and Antitrust Law, will hold an oversight hearing titled “Monitoring the Activities of the Justice Department’s Civil, Tax and Environment and Natural Resources Divisions and the U.S. Trustee Program.”

Regulatory Activity

EPA Plans for Water Treatment Facilities

The EPA, Office of Water, is planning to issue a “mandatory census” of all publicly owned water treatment works (POTWs) in the U.S. The agency has stated that this information is being collected in order to help EPA execute a study intended to help States and POTWs “to set realistic nutrient load reduction targets for wastewater treatment facilities…and provide information on the time and costs needed to make enhancements in operation and maintenance procedures.” The multi-phase, long-term study will examine nutrient pollution, which the EPA maintains “remains the single greatest challenge to our Nation’s water quality, and presents a growing threat to public health and local economies—contributing to toxic harmful algal blooms, contamination of drinking water sources, and costly impacts on recreation, tourism and fisheries.” The full study is expected to be conducted over the course of four to five years. This initial phase of the study will require facilities to identify all of the secondary treatment or equivalent facilities in the U.S.

NAAQs for Nitrogen Dioxide (NO2)

EPA has released for comment its “Draft Policy Assessment for the Review of the Primary National Ambient Air Quality Standards for Nitrogen Dioxide.” Comments on the draft are intended to inform the agency’s ongoing review of the NAAQS. Comments are due December 8.

House to Consider Bipartisan Public Health Legislation; Ways and Means Committee to Hold Hearing on Health Care Fraud; SAMHSA Final Rule on MAT for Opioid Use Disorders Reporting Requirements

Legislative Activity

House to Consider Bipartisan Public Health Legislation

This week, House Majority Leader Kevin McCarthy announced the consideration of two additional pieces of bipartisan health legislation. H.R. 1877, the Mental Health First Aid Act of 2016, introduced by Rep. Lynn Jenkins (R-KS), amends the Public Health Service Act to require the Substance Abuse and Mental Health Services Administration (SAMHSA) to award grants to initiate and sustain mental health first aid training programs. Mental health first aid programs are public education programs that train parents, first responders, teachers, veterans, public safety officers, and others to accomplish safe de-escalation of crisis situations, recognize the signs and symptoms of mental illness, and encourage referral to mental health services. H.R. 3537, Dangerous Synthetic Drug Control Act of 2016, introduced by Rep. Charlie Dent (R-PA), would place a number of synthetic drug compounds on Schedule I of the Controlled Substances Act (CSA). This legislation is another step in combatting the nation’s drug abuse crisis through targeting manufacturers and distributors of synthetic drugs. The House of Representatives plans to pass the bills on Monday, now that they have been reported by the House Committee on Energy and Commerce.

Ways and Means Committee to Hold Hearing on Health Care Fraud

Subcommittee Chairman Rep. Peter Roskam (R-IL) announced the House Committee on Ways and Means Subcommittee on Oversight will hold a hearing on Wednesday, September 28, titled “Health Care Fraud Investigations.” The hearing will focus on how the federal government investigates and prosecutes fraud and improper payments in the Medicare program.

This Week’s Hearings:

  • Wednesday, September 28: The House Committee on Ways and Means Subcommittee on Oversight will hold a hearing titled “Health Care Fraud Investigations.”

Regulatory Activity

SAMHSA Final Rule on MAT for Opioid Use Disorders Reporting Requirements

On Friday, September 23, the Department of Health and Human Services (HHS) Substance Abuse and Mental Health Services Administration (SAMHSA) released a final rule titled “Medication Assisted Treatment (MAT) for Opioid Use Disorders Reporting Requirements.”  This rule, developed to assist HHS in ensuring compliance with the final rule on MAT for opioid use disorders published in July, provides yearly reporting requirements for practitioners who can treat up to 275 patients with covered medications in an office-based setting. The rule will be published in the Federal Register on September 27, 2016, and it is effective 30 days thereafter.

McCaul Unveils Counterterrorism Strategy, Including TSA Overhaul; Lawmakers Advance TSA and Counterterrorism Measures

Legislative Activity

McCaul Unveils Counterterrorism Strategy, Including TSA Overhaul

On Tuesday, September 20, House Homeland Security Committee Chairman Michael McCaul (R-TX) unveiled a counterterrorism strategy containing over 100 policy prescriptions and principles designed to combat the rise of global terrorism. The 35-page document, “A National Strategy to Win the War Against Islamist Terror,” follows on a number of recent terrorism scares, including a stabbing spree in St. Cloud, Minnesota, for which the Islamic State has claimed responsibility.

The strategy criticizes the Obama Administration’s approach to counterterrorism and describes an increasingly severe terror threat environment facing the United States. The document cites a “decline in U.S. leadership on the world stage,” suggesting its proposed response would “keep pace with an evolving enemy.”  The proposal follows on a national security agenda revealed by House Republican leadership in June and focuses on a number of priorities to enhance the resilience of local governments, improve preparedness among the public, and expand law enforcement’s capacity to defend the homeland against the threat of terrorism.

Chairman McCaul specifically targeted the Transportation Security Administration (TSA) for comprehensive overhaul, stating that the agency “has failed to provide the level of security and efficiency the flying public deserves” and calling for “sweeping reform at TSA.”  His strategy calls for more severe consequences for screening failures, improving the screening of foreign visitors, and the use of enhanced technologies and intelligence, including social media analysis, to keep terrorists from infiltrating the United States. Representative McCaul also stressed the need for improved vetting processes for TSA employees and a “greater effort to detect insider threats.” He similarly called for increased aviation security overseas and stronger security requirements for foreign airports with direct flights to the United States.

Lawmakers Advance TSA and Counterterrorism Measures

This week, the House of Representatives passed the Community Counterterrorism Preparedness Act (H.R. 5859), which would require the U.S. Department of Homeland Security (DHS) to carry out a grant program for emergency responders to enhance preparedness for active shooter scenarios and other attacks. The bill, which was sponsored by Chairman McCaul, was passed by a wide margin on a 395-30 vote and has been referred to the Senate Homeland Security and Government Affairs Committee.

Senate Commerce, Science and Transportation Committee Chairman John Thune (R-SD) and Ranking Member Bill Nelson (R-FL) introduced legislation, the Surface Transportation and Maritime Security Act (S. 3379), requiring TSA to assess the risk of terrorist attacks on surface transportation facilities and take steps to ensure rail safety receives adequate attention. S. 3379 would direct the TSA to implement a risk-based security model for protecting surface transportation facilities, authorize an additional 70 canine explosive detection units to enhance surface transportation safety, and provide grant funding for the use of increased passenger manifest data to better identify rail passengers in an emergency.

This Week’s Hearings:

  • On Tuesday, September 27, the House Judiciary Subcommittee on Immigration and Border Security will hold a hearing titled “New Orleans: How the Crescent City Became a Sanctuary City.”
  • On Tuesday, September 27, the Senate Homeland Security and Governmental Affairs Committee will hold a hearing titled “Fifteen Years After 9/11: Threats to the Homeland.”
  • On Thursday, September 29, the Senate Homeland Security and Governmental Affairs Subcommittee on Regulatory Affairs and Federal Management will hold a hearing titled “Understanding the Millennial Perspective in Deciding to Pursue and Remain in Federal Employment.”
  • On Wednesday, September 28, the Senate Judiciary Subcommittee on Immigration and the National Interest will hold a hearing titled “Oversight of the Administration’s FY 2017 Refugee Resettlement Program.”

Congress Focuses on a Short-Term CR and Possibly Overriding the JASTA Veto; Washington Hosts the AGOA Summit This Week

President Barack Obama addressed the U.N. General Assembly last week, giving his final speech to the Assembly. He also participated in the Leaders’ Summit on Refugees and the U.S.-Africa Business Forum events in New York City. The White House released a fact sheet last Wednesday on U.S.-Africa cooperation with respect to trade and investment during the Obama Administration. The President returned to Washington later on Wednesday and vetoed a bill on Friday afternoon that may result in Congress voting to override the veto, possibly this week.

Today, Washington will host the annual African Growth & Opportunity Act (AGOA) Forum. The Office of the U. S. Trade Representative will hold a public hearing this Friday in preparation of its annual report to Congress on Russia’s World Trade Organization (WTO) obligations. Meanwhile, Congress is expected to work on advancing a short-term Continuing Resolution (CR) this week in order to prevent a Federal Government shutdown at midnight on 30 September.

JASTA – Veto Override Vote Ahead

President Obama formally vetoed the Justice Against Sponsors of Terrorism Act (JASTA; S. 2040) last Friday, setting the stage this week for the Senate to possibly schedule a vote to override the veto.  While Senator Charles Schumer (D-New York) and Representative Peter King (R-New York) have assured the necessary two-thirds votes to override a veto exist in both chambers, the White House continues to advocate for Members of Congress to consider broader foreign policy and national security implications associated with the bill.  House Armed Services Committee Chairman Mac Thornberry (R-Texas) sent House Republicans a letter last Friday saying:

“[A]s tempting as it may be to override President Obama’s veto for the first time, please take a moment to study the consequences of S. 2040, the ‘Justice Against Sponsors of Terrorism Act.’”

Senate Majority Leader Mitch McConnell (R-Kentucky) said on Friday that the Senate will remain in session until the veto override vote is done.

AGOA Summit – Africa On the Agenda

African heads of state and high-level delegations are expected to be in Washington to attend the AGOA Forum at the U.S. Department of State today (26 September). The Civil Society Forum was held 22-23 September, bringing together non-governmental and African diaspora organizations to reinforce collective AGOA-related efforts.

U.S. Trade Representative Michael Froman will host a Trade Investment Framework Agreement (TIFA) meeting with the Economic Community of West African States (ECOWAS) on Tuesday.

Iran – House Acts on Bill, While Treasury Grants Boeing, Airbus Licenses to Sell Airplanes

Last week, the House of Representatives passed the Prohibiting Future Ransom Payments to Iran Act (H.R. 5931), a bill that would prohibit future cash payments from the United States to Iran for any reason.  This Tuesday, 27 September, the House Foreign Affairs Subcommittee on Terrorism, Nonproliferation, and Trade is scheduled to hold a markup of H.R. 3693, IRGC [Islamic Revolutionary Guard Corps] Terrorist Sanctions Act of 2015.

The Treasury Department also granted licenses to Boeing and Airbus to export commercial planes to Iran last week, essentially approving a potential deal for Boeing to sell IranAir 80 commercial passenger aircraft with a total list price of $17.6 billion. Representatives Pete Roskam (R-Illinois) and Jeb Hensarling (R-Texas) sent a letter last Thursday to Treasury’s Office of Foreign Assets Control, requesting more information about the security implications of the delivery of such aircraft to Iran.

Israel – A New Bill to Modify the Military Aid Package

Republican lawmakers introduced the Emergency Supplemental Appropriations Act for the Defense of Israel, 2016 (S. 3363) last Tuesday. The bill would modify the $38 billion military aid agreement with Israel by providing more money and easing controls on how it is spent.  U.S. and Israeli officials signed the agreement on 14 September and the aid package is the largest in U.S. history.

Syria – Ceasefire Stumbles

The United States and Russia failed to renew their agreement to impose a ceasefire in Syria last Friday, after a week of discussions at the U.N. General Assembly. Both countries originally agreed on 9 September to a deal aimed at putting Syria’s peace process back on track, but the agreement collapsed last week after a humanitarian aid convoy was attacked.  Russian Foreign Minister Sergei Lavrov said a revival of a ceasefire in Syria depends on all sides involved and not only on Russia’s unilateral concessions.  The United States characterized Russia’s actions in Syria as “barbarism,” while Moscow’s U.N. representative said ending the war “is almost an impossible task now.”  U.S. Ambassador to the United Nations Samantha Power added:

“It is time to say who is carrying out those air strikes and who is killing civilians. Russia holds a permanent seat on the U.N. Security Council, this is a privilege and it is a responsibility. Yet in Syria and in Aleppo, Russia is abusing this historic privilege.”

On Thursday, 29 September, the Senate Foreign Relations Committee is scheduled to hold a hearing titled, “Regional Impact of the Syria Conflict: Syria, Turkey and Iraq.”

UNGA Recap – Leaders’ Refugee Summit

President Obama gave his final address to the U.N. General Assembly last Tuesday, recapping progress over the past eight years.  He also addressed global leaders at the Refugee Summit later that afternoon, saying:

“[W]e are facing a crisis of epic proportions. More than 65 million people have been driven from their homes — which is more than any time since the Second World War. Among them are more than 21 million refugees who have fled their countries — everything and everyone they’ve ever known, fleeing with a suitcase or the clothes on their back.”

The Leaders released a joint statement at the conclusion of the Summit.  The White House also released a fact sheet on the refugee crisis.

TPP – Window Narrows for Congressional Consideration

Senator Jeff Flake (R-Arizona) encouraged Members of Congress to support passing the TPP deal this year. He said at an event last week:

“We’re in a difficult situation, and I hope that when we get to the lame-duck session I would hope that Members can still find a way, with a tweak here or there, to say ‘I can support [trade], particularly TPP.’”

In an interview last week, House Ways & Means Committee Chairman Kevin Brady (R-Texas) said of a lame-duck prospect:

“It depends on whether the president is successful in that push to attract more Democrats to support TPP and whether his trade agency … can address Members’ concerns about the agreement.”

On Tuesday, 27 September, the House Ways and Means Committee is scheduled to hold a hearing titled, “Effective Enforcement of U.S. Trade Laws.”

TTIP – EU Says No Deal Imminent

After an informal meeting last week of EU trade ministers in Bratislava, Slovakia, EU ministers indicated the Transatlantic Trade and Investment Partnership (TTIP) negotiations will not be concluded before President Obama’s term ends in January.

  • On Wednesday, 28 September, the House Financial Services Subcommittee on Housing and Insurance is scheduled to hold a hearing titled, “The Impact of U.S.-EU Dialogues on U.S. Insurance Markets.”

Cyber Security – Election Concerns

In a joint statement last week and after briefings they have received, the top Democrats of the Senate and House Intelligence Select Committees concluded that Russia is seeking to influence the U.S. elections. Senator Dianne Feinstein (D-California) and Representative Adam Schiff (D-California) said:

“At the least, this effort [alleged hacking] is intended to sow doubt about the security of our election and may well be intended to influence the outcomes of the election – we can see no other rationale for the behavior of the Russians.”

The Obama Administration has yet to publicly identify suspected perpetrators behind the hacking breaches of the Democratic National Committee and Democratic Congressional Campaign Committee reported earlier this summer.

  • On Wednesday, 28 September, the House Oversight and Government Reform Subcommittee on Information Technology is scheduled to hold a hearing titled, “Cybersecurity: Ensuring the Integrity of the Ballot Box.”

At a congressional hearing last week, Secretary of Defense Ash Carter addressed rumors of an impending decision to elevate U.S. Cyber Command to an independent combatant command, saying:

“That’s not a decision we’ve taken yet, but I think that’s going to be a natural evolution for us and is going to be part of the natural evolution of our cyber force.”

EB-5 Visa Program – Provision Included in the Continuing Resolution

The short-term CR that Congress is expected to consider this week includes a provision to extend the EB-5 Regional Center Program through 9 December 2016. Some note the extension would provide additional time for Congress to consider new proposals to reform the program.

NDAA – Senate Bill Language Trips Up the JSTARS RFP Process

The U.S. Air Force is working with Congress over concerns that language in the yet-to-be-reconciled Fiscal Year 2017 National Defense Authorization Act (H.R. 4909, S. 2943) would force the service to pursue a fixed-price contract to replace the aging Joint Surveillance Target Attack Radar System (JSTARS) fleet.  The Senate NDAA measure contains the fixed-price contract language, which would move the Air Force away from its current “hybrid” approach that uses both fixed-price and cost-plus elements.  Notably, Senate Armed Services Committee (SASC) Chairman John McCain (R-Arizona) opposes cost-plus programs that have the government bearing the burden of cost overruns.  Instead of releasing a final request for proposals (RFP), the Air Force has released another draft version.  The final RFP could be delayed by three to six months.

Japan – State Department Approves $1.9B Arms Sale

The U.S. State Department has approved a potential $1.9 billion sale of KC-46A refueling tankers to Japan last Wednesday. The proposed deal includes four KC-46A aircraft, the associated Pratt & Whitney Model 4062 engines needed to power the plane, as well as one additional spare. As a part of the agreement, Japan would also receive training and support.

SASC Approves Hyten Nomination

The Senate Armed Services Committee (SASC) approved by voice vote, as part of a package of 40 military nominations, the nomination of Air Force Gen. John Hyten to lead the U.S. Strategic Command (StratCom) last Thursday, advancing the nomination to the Senate floor. If confirmed, Gen. Hyten will take over StratCom from Adm. Cecil Haney.

Congressional Hearings This Week

  • On Tuesday, 27 September, the House Foreign Affairs Subcommittee on Terrorism, Nonproliferation, and Trade is scheduled to hold a hearing titled, “Libya’s Terrorist Descent: Causes and Solutions.”
  • On Tuesday, 27 September, the House Foreign Affairs Subcommittee on Asia and the Pacific is scheduled to hold a hearing titled, “The U.S.-Republic of Korea-Japan Trilateral Relationship: Promoting Mutual Interests in Asia.”
  • On Tuesday, 27 September, the House Science, Space, and Technology Subcommittee on Space is scheduled to hold a hearing titled, “Are We Losing the Space Race to China?”
  • On Tuesday, 27 September, the House Armed Services Subcommittee on Strategic Forces is scheduled to hold a hearing titled, “National Security Space: 21st Century Challenges, 20th Century Organization.”
  • On Tuesday, 27 September, the House Judiciary Subcommittee on Immigration and Border Security is scheduled to hold a hearing titled, “New Orleans: How the Crescent City Became a Sanctuary City.”
  • On Tuesday, 27 September, the Senate Homeland Security and Governmental Affairs Committee is scheduled to hold a hearing titled, “Fifteen Years After 9/11: Threats to the Homeland.”
  • On Wednesday, 28 September, the Senate Judiciary Subcommittee on Immigration and the National Interest is scheduled to hold a hearing titled, “Oversight of the Administration’s FY 2017 Refugee Resettlement Program.”
  • On Wednesday, 28 September, the House Armed Services Subcommittee on Emerging Threats and Capabilities is scheduled to hold a hearing titled, “Department of Defense Laboratories: Innovation through Science and Engineering in Support of Military Operations.”
  • On Wednesday, 28 September, the Senate Foreign Relations Subcommittee on East Asia, the Pacific, and International Cybersecurity Policy is scheduled to hold a hearing titled, “The Persistent Threat of North Korea and Developing an Effective U.S. Response.”
  • On Thursday, 29 September, the House Foreign Affairs Committee is scheduled to hold a hearing titled, “Advancing U.S. Interests in Latin America and the Caribbean.”

Looking Ahead

Washington is expected to focus on the following upcoming events:

  • 26 September: African Growth & Opportunity Act (AGOA) Forum in Washington
  • 30 September: Fiscal Year 2016 Concludes – U.S. Federal Government Funding Deadline
  • 3-7 October: 15th Round of TTIP Negotiations in New York City
  • By 15 October: ITC to publish a Federal Register notice related to MTB petitions
  • 8 November: U.S. Elections
  • 10 November: Squire Patton Boggs Hosts Post-Election Analysis Event
  • 19-20 November: Asia-Pacific Economic Cooperation (APEC) Summit in Peru

Tax-Writers Focused, Looking Toward 2017 for Large-Scale Reforms; Treasury Set to Move on Section 385 Regulations

Legislative Activity

Lawmakers Look at Specific Tax Policy Priorities with an Eye Toward Tax Reform in 2017

With the House last week having passed various targeted pieces of tax legislation, it is clear that much of the rest of this Congress will be devoted to more narrow asks, though continued efforts in anticipation of tax reform next year are expected.

In particular, lawmakers on both sides of the aisle continue to examine the appropriate response to the Treasury Department’s proposed debt-equity regulations under section 385 of the tax Code. Moreover, Republican lawmakers appear poised to ramp up their efforts on recently-proposed regulations under section 2704 of the tax Code, which would make various changes to Estate Tax rules, including as relates to valuation practices.

Additionally, last week, EU Commissioner Margrethe Vestager was in Washington for meetings with various U.S. officials, including leadership of the Senate and House tax-writing committees, to address the ongoing fallout from the Commission’s recent decision in the Apple EU State aide case. By way of follow-up to his meeting with Commissioner Vestager, House Ways and Means Committee Chairman Kevin Brady (R-TX) took the opportunity to underscore that the decision as yet another reason why tax reform is necessary. On the Senate side, however, while Senate Finance Committee Chairman Orrin Hatch and others on his Committee also agreed that this action by the Commission highlights the need for tax reform, they also hinted at the possibility of a legal challenge via European Courts or the World Trade Organization (WTO).

With regard to tax reform, as the legislative days continue to tick away, tax-writers appear to be preparing themselves for an all-out tax reform effort in 2017. In fact, just last week, Todd Metcalf, former Senate Finance Committee Chief Tax Counsel to Ranking Member Ron Wyden (D-OR) discussed his former boss’s approach. In particular, he confirmed that Ranking Member Wyden’s approach to international reform is not limited solely to anti-inversion proposals, but is broader and makes various larger scale changes to the tax Code. Given the increased attention to finding funding for infrastructure spending (via repatriation), it is quite possible that Senator Wyden may soon reveal more details about his preferred approach.

How Senator Wyden’s proposal will mesh with the House Republican Blueprint (and Senate Finance Committee Chairman Orrin Hatch’s (R-UT) yet-to-be-released “corporate integration”) remains to be seen; however, such a proposal will no doubt serve as a place marker for Democrats in the 115th Congress as lawmakers make another go at tax reform.

Senate Finance Moves Forward with Pension Reform

On Thursday, September 21, the Senate Finance Committee held a markup of two bills: (1) Miners Protection Act of 2016 (The Miners Act); and (2) Retirement Enhancement and Savings Act of 2016 (The Retirement Act).

The Miners Act addresses the impending loss of health care and pension benefits to tens of thousands of mineworkers by permitting unspent funds from the Abandoned Mine Land Fund to cover the health care benefit and pension liabilities of the United Mine Workers of America pension fund. Committee members discussed the importance of the bill while also raising concerns about the precedential impact of using taxpayer money to shore up a private pension fund. The Miners Protection Act of 2016 was voted out of Committee and favorably reported to the full Senate with bipartisan support (18 votes in favor and 8 votes (all Republican) against).

The Retirement Act’s goal is to increase participation by Americans in retirement savings plans. Specifically, it includes a measure to expand employer-sponsored retirement plans including with respect to small businesses. It includes various changes to individual retirement accounts (IRAs) and seeks to improve the portability of retirement and annuity accounts. The legislation also includes a provision to allow multiple employer plans to be open to participation by unrelated employers (Open MEPs). After adjourning the executive session to continue debate about the bill off the Senate floor, the Retirement Act was voted out of Committee and favorably reported to the full Senate in a unanimous vote (26-0).

Looking ahead, it is important to note that Senate Majority Leader Mitch McConnell (R-KY) blocked the Mine Workers bill last year and seems unlikely to move forward with legislation that some Republicans have called a “bailout.” According to his office: “Leader McConnell has met with Kentucky UMWA retirees on a number of occasions to discuss this and other matters impacting the coal industry, and has long been convinced it is an issue that deserves open, transparent debate through regular order.  To that end, he appreciates the Finance Committee considering the legislation tomorrow. As for next steps, there are no scheduling announcements at this time.” Given that the Miners Act is likely a necessary prelude to movement on the Retirement Act, timing on next steps remains unclear for both bills.

Regulatory Activity

Treasury Moves Forward on Section 385 Regulations

With the Obama Administration’s tenure coming to a close in short-order, the Treasury Department remains focused on finalizing its debt-equity regulations under section 385 of the tax Code. Recently, Deputy Assistant Treasury Secretary (International) Bob Stack emphasized that Treasury “wants to get it right” and thus cannot precisely identify the timing of the final regulations.

In response to the numerous comments received from industry, it appears that Treasury is working to address six major concerns as relate to: (1) cash pooling; (2) foreign-to-foreign transactions; (3) regulated financial entities; (4) passthrough entities; (5) documentation requirements; and (6) earnings and profits. Treasury Secretary Jack Lew, who testified last week before the House Financial Services Committee, argued that “[c]ritics of the rule quickly asked us to add enough time to the comment period so that it would be impossible to do a final rule, and we did not want to do that…we got a lot of comments. The comments kind of circle around half a dozen issues…We’ve been working on each of those issues to try to come up with policy solutions that address what might be peripheral or unintended impacts, protecting the core objective of the rule. We’re making very good progress.”

It presently appears as though the final rule could come as early as October, despite the fact that it is now the subject of a legal challenge.

FCC’s Agenda for September Open Meeting Includes Set-Top Boxes, Wireless Emergency Alerts, Foreign Ownership, and Independent Programming Items

Legislative Activity

House Commerce Committee Passes Anti-Spoofing Act

On September 21, the House Energy and Commerce Committee approved H.R.2669, the Anti-Spoofing Act of 2015, by voice vote. The bill, previously discussed here, here, and here, targets the practice of caller identification (caller ID) “spoofing.” Spoofing is a practice whereby callers falsify or disguise their caller ID information to make it appear as though they are calling from a different entity such as a government agency, bank, police department, or hospital. The practice is frequently used to trick or elude consumers or law enforcement officials. The bill proposes various amendments to the existing prohibition against caller ID spoofing contained in Section 227(e) of the Communications Act that are meant to clarify and expand the prohibition against spoofing. For example, the current language of the prohibition applies only to persons within the United States. One amendment contained in the bill would expand that prohibition to any persons outside of the United States if the recipient of the communication is within the United States. The bill now goes to the full House of Representatives for consideration.

Regulatory Activity

FCC Releases Final Agenda for September 29 Open Meeting

The FCC has announced that the following items are on the agenda for the FCC’s Thursday, September 29 Open Meeting:

  • Improving Wireless Emergency Alerts (WEA). The FCC will consider a Report and Order and Further Notice of Proposed Rulemaking that would “leverage advancements in technology to improve wireless emergency alert content, delivery and testing, while seeking comment on further measures to ensure effective alerts.”
  • Review of Foreign Ownership Policies. The FCC will consider a Report and Order that “extends to broadcast licensees the same streamlined rules and procedures that common carrier wireless licensees use to seek approval for foreign ownership, with appropriate broadcast-specific modifications. The item also establishes a framework for a publicly traded common carrier or broadcast licensee or controlling U.S. parent to ascertain its foreign ownership levels.”
  • Independent Programming. The FCC will consider a Notice of Proposed Rulemaking (NPRM) that “proposes the steps the [FCC] can take to promote the distribution of independent and diverse programming to consumers.”
  • Expanding Consumer Choice. The FCC will consider a Report and Order that “modernizes the [FCC’s] rules to allow consumers to use a device of their choosing to access multichannel video programming instead of leasing devices from their cable or satellite providers.”

FCC Chairman Wheeler discussed the agenda items in a post to the FCC Blog, and released a Fact Sheet describing the “Expanding Consumer Choice” Report and Order (which is discussed further in our post here) on September 8.

The FCC’s Open Meeting will commence September 29 at 10:30 a.m. in the Commission Meeting Room of the FCC’s headquarters at 445 12th St. SW, and will be streamed live at fcc.gov/live.

Siemens to Pay $175,000 for Failing to Disclose Felony Convictions in FCC License Application

The FCC announced in a September 22 News Release that Siemens Corporation and Siemens Medical Solutions “have agreed to pay $175,000 to resolve a [FCC] investigation into whether the companies failed to disclose corporate felony convictions as required by the [FCC’s] rules.” According to the News Release, an FCC Enforcement Bureau (EB) investigation found in part that “in 2008, Siemens AG, the parent company of Siemens and Siemens Medical, pleaded guilty to criminal charges of violating the internal accounting provisions of the Foreign Corrupt Practices Act,” (FCPA) and that some Siemens AG subsidiaries “also pleaded guilty to criminal charges for conspiracy to violate provisions of the FCPA arising from bribes and kickbacks paid to foreign government officials to secure government contracts for projects.” The FCC explains in the News Release that “wireless license holders . . . are required to disclose any felony convictions in their license applications,” and that “Siemens, Siemens Medical, and some of their subsidiaries failed . . . to timely disclose its felony conviction on [license] applications filed between 2007 and mid-2015.”

Siemens Corporation and Siemens Medical Solutions will pay a $175,000 fine under the terms of a Consent Decree and Order, and will “adopt a compliance plan to prevent future failures to disclose the felonies at issue or any other material factual information” in future FCC license applications, according to the News Release. The News Release also states that “Siemens and Siemens Medical fully cooperated with the [FCC Enforcement Bureau’s] investigation.”

FCC Reaches $450,000 Settlement with AT&T for Unauthorized Wireless Operations

On September 23, the FCC announced in a News Release that the FCC’s EB had reached a $450,000 settlement with AT&T “to resolve an investigation into whether AT&T operated fixed wireless stations without authorization or without filing required license modification notices.” As part of the settlement, which was detailed in an Order and Consent Decree released with the News Release, AT&T has agreed to implement a compliance plan that will guide the company in conducting reviews of wireless fixed microwave stations acquired in future transactions to ensure compliance with the FCC’s rules.

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