Senators Seek Hearing on Sinclair-Tribune Merger

Legislative Activity

Senators Seek Hearing on Sinclair-Tribune Merger

On June 5, a group of senators including Sens. Maria Cantwell (D-WA), Al Franken (D-MN), and Corey Booker (D-NJ) sent a letter to Sen. John Thune (R-SD), Chairman of the Senate Committee on Commerce, Science and Transportation (Senate Commerce Committee) and Sen. Chuck Grassley (R-IA), chairman of the Senate Committee on the Judiciary requesting that both committees “hold hearings to examine the proposed acquisition of Tribune Media (Tribune) by Sinclair Broadcasting (Sinclair),” which was announced in early May. The senators also requested that both committees hold hearings on the Federal Communications Commission’s (FCC) April 2017 Order on Reconsideration (Order) in which it reinstated the “UHF discount,” which allows commercial broadcast television stations to discount the audience reach of its ultra-high frequency television stations (generally those occupying frequencies between 470 MHz and 890 MHz) when calculating compliance with the FCC’s national television ownership rule, which prohibits a single entity from owning television stations that reach more than 39% of the total television households in the country in the aggregate. In the letter, the senators stated that “Sinclair currently owns 173 stations and reaches more than 38% of the nation” while “Tribune has 42 stations . . . and reaches more than 43% of the nation.” The group then argued that the acquisition of Tribune by Sinclair would create “the largest television broadcast company in the United States.” They expressed concerns about allowing such media concentration, including its “impact on the public interest,” worrying that the merger would “harm competition.” Regarding their request for hearings on the FCC’s Order, the group noted that the Order relaxed “the limits on how many stations a TV group could own by revising how the agency calculates the audience reached by broadcasters, thereby paving the way for mergers and acquisitions that would otherwise be barred by regulators.” The group concluded by asking both committees to hold hearings “after the companies have filed the requisite paperwork” with the FCC and the Department of Justice.

This Week’s Hearings:

  • On Tuesday, June 13, the House Energy and Commerce Subcommittee on Digital Commerce and Consumer Protection has scheduled a hearing titled “Disrupter Series: Update on IOT Opportunities and Challenges.” The witnesses will be announced.
  • On Tuesday, June 13, the House Energy and Commerce Subcommittee on Communications and Technology has scheduled a hearing titled “Promoting Security in Wireless Technology.” The witnesses will be announced.
  • On Wednesday, June 14, the Senate Commerce Committee has scheduled a hearing titled “Paving the Way for Self-Driving Vehicles.” The witnesses will be:
    • Mr. Mitch Bainwol, President and CEO, Alliance of Automobile Manufacturers
    • Mr. Rob Csongor, Vice President and General Manager of Automotive Business, NVIDIA Corporation
    • Mr. John Maddox, President and CEO, American Center for Mobility
    • Ms.Colleen Sheehey-Church, National President, Mothers Against Drunk Driving
  • On Tuesday, June 13, the House Judiciary Subcommittee on the Constitution and Civil Justice has scheduled a business meeting to examine lawsuit abuse and the Telephone Consumer Protection Act.

Regulatory Activity

FCC Imposes $975,000 Against ATI for Failure to Make Federal Contributions

On Thursday, June 8, the FCC released a Forfeiture Order against Advanced Tel, Inc. (ATI) — a “California-based non-dominant interexchange carrier that provides interstate, international, and intrastate long distance telecommunications services as a switchless reseller in 25 states.” In the Forfeiture Order, the Commission claims that ATI failed to file data or pay into certain federal programs, including the Universal Service Fund, the Telecommunications Relay Service Fund, and the Local Number Portability cost recovery mechanism. The penalty amount—$975,000—represents a substantial reduction to the $1,588,988 forfeiture proposed in the FCC’s Notice of Apparent Liability for Forfeiture (NAL). In response to the NAL, ATI did not dispute the underlying facts, but the company did claim an inability to pay, and challenged the FCC’s statute of limitations determination, arguing that an expired tolling agreement between the Enforcement Bureau and ATI reduced the scope of the violations. The FCC declined to reach the merits of those arguments, finding that the reduction based on the company’s inability to pay resulted in a lower penalty for ATI than a reduction based on the statute of limitations argument.

FirstNet Expects to Deliver State Plans on June 19

FirstNet held a state plan “kick-off” meeting in Dallas, Texas on June 7-8 and is targeting June 19 for the delivery of its initial state plans for the Radio Access Networks (RANs) for each state. FirstNet is working to deliver a nationwide broadband network dedicated to public safety users through a public-private partnership. The initial state plans will be delivered to states via an online portal. During the state plan review process, states will have 45 days to review the initial state plans and make comments. FirstNet will have 45 days to review and respond to the comments. After that step, the state plans would be made official. Once the final state plans are delivered, states will have 90 days to make a decision to (1) opt-in and have AT&T build the RAN for their state, or (2) opt-out and seek to build their own network. If a state has no comments on the original version of its state plan, it can notify FirstNet and the 90-day period for deciding whether to opt in or out can begin early. A state can notify FirstNet at any point that it wants AT&T to build its RAN.

FY 2018 Transportation Appropriations; Presidential Events on Infrastructure Initiative; President Appoints Deputy FAA Administrator

Legislative Activity

Congress Begins Evaluating FY 2018 Transportation Appropriations

This week, the House and Senate Appropriations Subcommittees on Transportation, Housing and Urban Development, and Related Agencies will hold hearings on FY 2018 appropriations for the U.S. Department of Transportation (DOT). Transportation Secretary Elaine Chao will testify on Tuesday at the Senate Subcommittee hearing and on Thursday at the House Subcommittee hearing.

The President’s FY 2018 Budget Proposal would fully fund highway and transit formula programs at their FAST Act-authorized levels, but would eliminate funding for the Transportation Infrastructure Generating Economic Recovery (TIGER) grant program and limit funding for the Capital Investment Grant (CIG) program, commonly known as New Starts/Small Starts, to current projects. However, there is significant Congressional support for the TIGER grant program and the New Starts/Small Starts program and it is not likely the final FY 2018 appropriations will reflect the FY 2018 Budget Proposal’s elimination of funding for these programs. The Budget also proposes to end all General Fund transfers to the Highway Trust Fund, effectively resulting in a $95 billion cut in surface transportation funding over seven years, starting with FY 2021. This aspect of the 2018 Budget proposal is unrelated to FY 2018 spending decisions, so should be seen more as call for greater fiscal discipline – no more General Fund supplements to the Highway Trust Fund – than as a budget priority for the coming fiscal year.

There is likely not sufficient time before the start of FY 2018 to consider all 12 appropriations bills individually and Congress may move directly to an Omnibus appropriations act for FY 2018. We expect that program funding levels in the Congressional transportation appropriations bills will vary significantly from the President’s FY 2018 Budget Proposal.

President Held Events Focused on Infrastructure Initiative

Last week, President Trump held several events intended to increase Congress’ and the Nation’s focus on the President’s infrastructure proposal.

On Monday, the President held a White House event on air traffic control (ATC) reform, during which he supported a proposal similar to House Transportation and Infrastructure Committee Chairman Bill Shuster’s (R-PA) ATC reform proposal included in the Aviation Innovation, Reform, and Reauthorization (AIRR) Act in 2016. The President’s proposal was met with responses ranging from trepidation to opposition from many stakeholder groups. Opposition to Chairman Shuster’s ATC reform proposal stalled the AIRR Act in the last Congress.

On Tuesday, the President gave a speech about the Nation’s inland waterways. On Thursday the President met with a bipartisan group of mayors and governors to discuss infrastructure. The meeting was intended to be a listening session for the White House, and staff asked the mayors and governors present to discuss the largest federal impediments to completing infrastructure projects. On Friday the President held an event at DOT focused on “Roads and Rail Regulatory Reform.” The President discussed streamlining the environmental and permitting process, announced the development of a council to assist cities and states to navigate the review process, and discussed establishing a “dashboard” to help the public track major infrastructure projects throughout the permitting process.

President Trump Appoints Daniel Elwell as Deputy Administrator at FAA

President Trump is appointing Daniel Elwell to do be the Deputy Administrator of the Federal Aviation Administration (FAA). Elwell previously served as the FAA’s Assistant Administrator for Policy under President George W. Bush.

This Week’s Hearings:

  • On Tuesday, June 13, the House Energy and Commerce Subcommittee on Digital Commerce and Consumer Protection has scheduled a hearing titled “Disrupter Series: Update on IOT [Internet of Things] Opportunities and Challenges.” The witnesses will be announced.
  • On Tuesday, June 13, the Senate Appropriations Subcommittee on Transportation, Housing and Urban Development, and Related Agencies has scheduled a hearing titled “Review of the FY2018 Budget Request for the U.S. Dept. of Transportation.” The witness will be:
    • The Honorable Elaine Chao, Secretary, U.S. Department of Transportation
  • On Wednesday, June 14, the Senate Commerce, Science, and Transportation Committee has scheduled a hearing titled “Paving the Way for Self-Driving Vehicles.” The witnesses will be:
    • Mitch Bainwol, President and CEO, Alliance of Automobile Manufacturers
    • Rob Csongor, Vice President and General Manager of Automotive Business, NVIDIA Corporation
    • John Maddox, President and CEO, American Center for Mobility
    • Colleen Sheehey-Church, National President, Mothers Against Drunk Driving
  • On Thursday, June 15, the House Appropriations Subcommittee on Transportation, Housing and Urban Development, and Related Agencies has scheduled a Department of Transportation budget hearing. The witness will be:
    • The Honorable Elaine Chao, Secretary, U.S. Department of Transportation

Senate to Focus on Russia and Nominations in Return from Recess

Senate Legislative Activity

The Senate will next convene at 3:00 pm on Monday, June 5, 2017.

On Monday, following any Leader remarks, the Senate will proceed to the consideration of Calendar #107, S.Res.176, commemorating the 50th anniversary of the reunification of Jerusalem, with the time until 5:30 pm equally divided in the usual form. At 5:30 pm, the Senate will vote on adoption of the resolution.

On Tuesday, June 6th, at 2:15 pm, the Senate will vote on confirmation of Executive Calendar #54, the nomination of Courtney Elwood, of Virginia, to be General Counsel of the Central Intelligence Agency.

Also on Tuesday, following disposition of the Elwood nomination, the Senate will proceed to consideration of S.1094, the Department of Veterans Affairs Accountability Act; agree to the committee-reported substitute amendment; have 3 hours of debate, equally divided; and vote (expected by voice) on passage of the bill, as amended.

Monday June 5th at 5:30 pm – 1 roll call vote

  • Adoption of Calendar #107, S.Res.176, commemorating the 50th anniversary of the reunification of Jerusalem

Tuesday June 6th at 2:15 pm – 1 roll call vote

  • Confirmation of Executive Calendar #54, the nomination of Courtney Elwood, to be General Counsel, CIA

Tuesday June 6th at approximately 6:15 pm – 1 voice vote expected

  • Passage of S.1094, the Department of Veterans Affairs Accountability Act, as amended

House Legislative Activity

On Monday, June 5, the House is not in session. No votes are expected.

On Tuesday, the House will meet at 12:00 pm for morning hour and 2:00 pm for legislative business. Votes will be postponed until 6:30 pm.

The following legislation will be considered under suspension of the rules:

  1. H.Res. 354 – Condemning the violence against peaceful protesters outside the Turkish Ambassador’s residence on May 16, 2017, and calling for the perpetrators to be brought to justice and measures to be taken to prevent similar incidents in the future, as amended (Sponsored by Rep. Ed Royce / Foreign Affairs Committee)
  2. H.R. 390 – Iraq and Syria Genocide Emergency Relief and Accountability Act of 2017, as amended (Sponsored by Rep. Christopher Smith / Foreign Affairs Committee) 
  3. H.Res. 355 – Condemning in the strongest terms the terrorist attacks in Manchester, United Kingdom, on May 22, 2017, expressing heartfelt condolences, and reaffirming unwavering support for the special relationship between our peoples and nations in the wake of these attacks (Sponsored by Rep. Gregory Meeks / Foreign Affairs Committee)

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

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

H.R. 2213 – Anti-Border Corruption Reauthorization Act of 2017 (Subject to a Rule) (Sponsored by Rep. Martha McSally / Homeland Security Committee)

H.R. 10 – Financial CHOICE Act of 2017 (Subject to a Rule) (Sponsored by Rep. Jeb Hensarling / Financial Services Committee)

The following legislation will be considered under suspension of the rules:

  1. H.Con.Res. 33 – Designating the George C. Marshall Museum and George C. Marshall Research Library in Lexington, Virginia, as the National George C. Marshall Museum and Library (Sponsored by Rep. Bob Goodlatte / Education and the Workforce Committee)

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

State Attorneys General June 5 Update

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

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

Advocacy

On June 1, Democratic governors and state AGs launched the “United States Climate Alliance,” which is a group of states committed to upholding the environmental promises established through the Paris Climate Accord. Responding to President Trump’s decision to withdraw from the Paris Climate Accord, Pennsylvania AG Josh Shapiro stated that he is “incredibly distressed and disturbed.” Massachusetts AG Maura Healey voiced her disappointment with President Trump’s recent environmental actions and vowed to “hold the line on important measures that have been put in place to protect our habitat and prevent climate change.” AG Healey went on to suggest that President Trump has placed “hundreds of thousands” of clean energy jobs in jeopardy.  The AGs did not discuss specific legal strategies but emphasized their commitment to continue challenging President Trump’s “unfortunate executive actions.”

Litigation

Ohio AG Mike DeWine sued five major prescription opioid manufacturers alleging that the companies “helped unleash a health care crisis that has had far-reaching financial, social, and deadly consequences in the State of Ohio.” The lawsuit asserts that the drug companies purposefully mislead Ohioans by presenting false marketing information regarding the risks and benefits of prescription opioids. AG DeWine said, “[t]hese drug manufacturers led prescribers to believe that opioids were not addictive, that addiction was an easy thing to overcome or that addiction could actually be treated by taking even more opioids.” The lawsuit alleges that the companies violated the Ohio Consumer Sales Practices Act and falsely inflated the benefits of opioid medication.

In Safetech IoT Settlement, New York Attorney General Outlines Reasonable Security Program

By Christopher M. Hoff and Elliot Golding on June 1, 2017 POSTED IN CYBERSECURITY

In the first state Attorney General action against a wireless security company for failing to implement adequate security in its Internet of Things (IoT) devices, the New York Attorney General recently settled with wireless lock company Safetech.  According to the settlement, there were alleged security shortcomings despite the fact that the company promised “Privacy When You Want It, Security When You Need It” and represented that its locks protected belongings by securing areas.  The Attorney General alleged that the security deficiencies and representations that Safetech made ran contrary to New York state laws that prohibit deceptive acts or practices and false advertising, and that give the Attorney General power to enjoin repeated fraudulent or illegal acts.

The settlement mirrors similar enforcement actions taken by the Federal Trade Commission in the IoT space, such as the D-Link caseASUS case, and TRENDnet case.  These increasingly frequent regulator enforcement actions indicate that IoT device manufacturers should carefully think about security when designing devices.

The Safetech enforcement action started after independent researchers reported in August 2016 that Safetech did not encrypt its users’ passwords when transmitted from a smartphone to the locks.  Moreover, the researchers revealed that Safetech did not force users to reset default passwords, which could be discovered easily by brute force attacks.  The Attorney General subsequently investigated the company and its practices, ultimately alleging that the security deficiencies discovered by the independent researchers could leave consumers susceptible to hacking and physical theft.  According to the settlement, Safetech must now implement a comprehensive security program.  The outline of that program sheds light on what the New York Attorney General may consider “reasonable security” for IoT devices.

The settlement agreement requires Safetech to encrypt all passwords and other security credentials; and prompt users to change the default password during the initial setup process.  Safetech also agreed to establish a written comprehensive security program reasonably designed to accomplish the following objectives: (1) address security risks of devices that use security information, and (2) protect the privacy, security, confidentiality, and integrity of security information. The program must include:

  • Accountable employee designation;
  • Identification of material risks that could lead to unauthorized access to the locks and affect privacy, security, confidentiality, and integrity of security information;
  • Performance of risk assessments on operations including employee training, product design, secure software design, response to third party security vulnerability reports, as well as prevention, detection and response to attacks and other security failures;
  • Implementation of reasonable safeguards against risks identified during the risk assessment;
  • Regular testing of the effectiveness of the safeguards;
  • Reasonable vendor management, including contracts that address security; and
  • Adjustment of the security program in light of testing.

The bottom line is that the FTC is not the only cop on the beat.  Attorneys General are becoming increasingly active in the IoT space.  Companies should carefully consider the security they implement and take into account recommendations issued by regulators.

International Food Assistance Programs in the Farm Bill

Legislative Activity

International Food Assistance Programs in the Farm Bill

On Wednesday, the House Agriculture Committee is scheduled to hold a full committee hearing focused on international food assistance programs under the committee’s jurisdiction. Three major food aid programs authorized under past farm bills are the Food for Peace Act, which is administered by the U.S. Agency for International Development (USAID); the Food for Progress Program, which is administered by the United States Department of Agriculture’s (USDA) Foreign Agricultural Service (FAS); and the McGovern-Dole International Food for Education and Child Nutrition Program, which is also administered by USDA’s FAS. Additionally, farm bill legislation has historically authorized programs that seek to promote U.S. agricultural products on global markets.

The House and Senate Agriculture Committees, which are charged with reauthorizing farm bill programs before the current farm bill’s expiration date of September 30, 2018, will undoubtedly face  policy battles over the fate of certain international food aid programs, as they did during the two-and-a-half years leading up to the enactment of the 2014 Farm Bill.

For example, there were several internal arguments over the jurisdiction of specific international food aid programs. House Foreign Affairs Committee leadership made clear its argument that the Food for Peace Act and other export promotion measures included in Title III of the farm bill fell within its legislative jurisdiction. On June 19, 2013, during the House floor debate of the farm bill (H.R. 1947), an amendment was offered by Reps. Edward Royce (R-CA) and Eliot Engel (D-NY), Chairman and Ranking Member of the House Foreign Affairs Committee, that would have modified the Food for Peace Program to allow up to 45 percent of program funding to be sent overseas to be used as part of the local and regional purchase program, cash transfers, or vouchers in lieu of providing U.S. commodities. Chairman Royce and Ranking Member Engel, along with other proponents of the amendment, argued that modifications to the program were needed to reach more people in need, in a more efficient manner. Opponents of the amendment, such as House Transportation and Infrastructure Committee leadership and several major farm organizations, including the American Farm Bureau Federation, the American Soybean Association, the National Association of Wheat Growers, and the National Corn Growers Association, argued that there would be no accountability, transparency, or requirement that the money was actually being spent on food. Additionally, opponents alleged the amendment would reduce U.S. agricultural exports, as well as the number of U.S. flagged vessels involved in international trade. Ultimately, the Royce/Engel amendment to modify the Food for Peace Program was narrowly defeated by a margin of 203-220.

Differences in opinions between certain legislators and the administration surrounding the McGovern-Dole Food for Education Program may also to emerge, as President Trump’s Fiscal Year 2018 Budget Request, released on May 23, 2017, proposed to eliminate the program. Specifically, the Budget Request explained that the McGovern-Dole Food for Education Program “is duplicative of U.S. Agency for International Development (USAID) programs, lacks evidence that it is being effectively implemented, and has unaddressed oversight and performance monitoring challenges.”

This week’s hearing will allow the committee to debate the future of existing programs and recommend ways to maintain the United States’ leadership role in addressing hunger, enhancing global food security, and promoting U.S. agricultural commodities.

This Week’s Hearings:

  • On Wednesday, June 7, the House Agriculture Committee has scheduled a hearing titled “The Next Farm Bill: The Future of International Food Aid and Agricultural Development.”
  • On Thursday, June 8, the House Agriculture Committee’s Subcommittee on Nutrition has scheduled a hearing titled “The Next Farm Bill: SNAP Technology and Modernization.”

With a Passing Glance at the President’s Request, Congress Continues Work on FY 2018 Appropriations

Legislative Activity

With a Passing Glance at the President’s Request, Congress Continues Work on FY 2018 Appropriations

President Trump’s FY 2018 budget request, which was released on May 23, was received in Congress with reservation by Democrats and Republicans alike. The $4.09 trillion federal budget request, entitled “A New Foundation for American Greatness,” proposes cutting federal spending by $3.6 trillion over 10 years. In addition to the anticipated backlash from Congressional Democrats, Republican members seemed to somewhat disregard the President’s request: “The president’s budget, as we all know, is a recommendation,” Senate Majority Leader Mitch McConnell (R-KY) noted, “what I do like about it is it clearly focuses on increased defense spending, which is important given the threats that we face.”

Congress is continuing its work on FY 2018 appropriation bills, despite the fact that budget committees have yet to produce a budget resolution to provide topline spending levels for the upcoming fiscal year. Appropriators will likely begin construction of the FY 2018 appropriations legislation using the discretionary spending cap of $1.065 trillion mandated by the Budget Control Act of 2011 (BCA/P.L. 112-25), commonly referred to as sequestration-level funding.

The House and Senate budget committee chairmen are pledging to move forward with FY 2018 budget resolutions that will achieve a balanced budget within 10 years. However, as the reconciliation instructions included in the FY 2017 budget resolution are being utilized to address healthcare reform, the FY 2018 budget resolution cannot be put up for a final vote until the House and Senate finalize a healthcare package (passage of a new budget resolution would invalidate the previous budget resolution).

Rep. Tom Graves (R-GA), who serves on the House Appropriations Committee, along with fellow House Republicans, are exploring the possibility of combining all 12 appropriations bills for FY 2018 into a single omnibus in order to ensure funding legislation is passed and sent to the Senate before the August recess. This would be a challenging task, as the House only has 31 days in session before the August recess and has yet to release any draft bills or schedule any markups. The lower chamber’s rush to pass legislation for FY 2018 appropriations before the end of the current fiscal year will only be further complicated by the absence of a FY 2018 budget resolution and the need for bipartisanship in order to win over several Democrats once it is passed over to the Senate.

This Week’s Hearings:

House Appropriations Committee

  • On Wednesday, June 7, the House Appropriations Subcommittee on Labor, Health and Human Services, Education, and Related Agencies has scheduled a budget hearing for the Department of Labor. The witness will be:
    • The Honorable R. Alexander Acosta, Secretary, Department of Labor
  • On Wednesday, June 7, the House Appropriations Subcommittee on Commerce, Justice, Science, and Related Agencies has scheduled a hearing titled “National Science Foundation Budget Hearing.” The witness will be:
    • Dr. France Cordova, Director, National Science Foundation
  • On Thursday, June 8, the House Appropriations Subcommittee on Interior, Environment, and Related Agencies has scheduled a budget hearing. The witness will be:
    • The Honorable Ryan Zinke, Secretary, Department of the Interior
  • On Thursday, June 8, the House Appropriations Subcommittee on Transportation, Housing and Urban Development, and Related Agencies has scheduled a Department of Housing and Urban Development budget hearing. The witness will be:
    • The Honorable Ben Carson, Secretary, Department of Housing and Urban Development
  • On Thursday, June 8, the House Appropriations Subcommittee on Agriculture, Rural Development, Food and Drug Administration, and Related Agencies has scheduled a hearing titled “Commodity Futures Trading Commission – Budget Hearing.” The witness will be:
    • J. Christopher Giancarlo, Acting Chairman, Commodity Futures Trading Commission
  • On Thursday, June 8, the House Appropriations Subcommittee on Commerce, Justice, Science, and Related Agencies has scheduled a hearing titled “National Aeronautics and Space Administration – Budget Hearing.” The witness will be:
    • Robert M. Lightfoot, Jr., Acting Administrator, NASA
  • On Friday, June 9, the House Appropriations Subcommittee on Homeland Security has scheduled a hearing titled “Immigration and Customs Enforcement &Customs and Border Protection FY18 Budget Request.” The witnesses will be:
    • Thomas D. Homan, Acting Director, Immigration and Customs Enforcement
    • Todd C. Owen, Executive Assistant Commissioner, Customs and Border Protection
    • Carla L. Provost, Acting Chief, United States Border Patrol

House Budget Committee

  • On Wednesday, June 7, the House Budget Committee has scheduled a hearing titled “The Economic and Fiscal Benefits of Pro-Growth Policies.” The witnesses will be:
    • Douglas J. Holtz-Eakin, Ph.D., President, American Action Forum
    • John W. Diamond, Ph.D., Edward A. and Hermena Hancock Kelly Fellow in Public Finance, Rice University’s Baker Institute for Public Policy
    • Jason Furman, Ph.D., Senior Fellow, Peterson Institute for International Economics

Senate Appropriations Committee

  • On Tuesday, June 6, the Senate Appropriations Subcommittee on Labor, Health and Human Services, Education, and Related Agencies has scheduled a hearing titled “Review of the FY2018 Budget Request for the U.S. Department of Education.” The witness will be:
    • The Honorable Betsy DeVos, Secretary, U.S. Department of Education
  • On Tuesday, June 6, the Senate Appropriations Subcommittee on Military Construction, Veterans Affairs, and Related Agencies has scheduled a hearing titled “Review of the FY2018 Budget Request for Military Construction & Family Housing.” The witnesses will be:
    • Mr. Peter J. Potochney, Acting Assistant Secretary Of Defense For Energy, Installations And Environment
    • Lieutenant General Gwendolyn Bingham, U.S. Army, Assistant Chief of Staff for Installation Management
    • Vice Admiral Dixon R. Smith, U.S. Navy, Deputy Chief of Naval Operations for Fleet Readiness and Logistics
    • Major General John J. Broadmeadow, U.S. Marine Corps, Commander, Marine Corps Installations Command, Assistant Deputy Commandant, Installations and Logistics (Facilities)
    • Major General Timothy S. Green, U.S. Air Force, Director of Civil Engineers, Deputy Chief of Staff for Logistics, Engineering and Force Protection
  • On Wednesday, June 7, the Senate Appropriations Subcommittee on the Department of the Interior, Environment, and Related Agencies has scheduled a hearing titled “Review of the FY2018 Budget Request for the U.S. Forest Service.” The witnesses will be:
    • Mr. Tom Tidwell, Chief, U.S. Forest Service
    • Ms. Sheri Elliot, Acting Director, Office of Strategic Planning, Budget and Accountability, U.S. Forest Service
  • On Wednesday, June 7, the Senate Appropriations Subcommittee on Defense has scheduled a hearing titled, “Review of the FY2018 Budget Request for the U.S. Army.” The witnesses will be:
    • The Honorable Robert M. Speer, Acting Secretary Of The Army
    • General Mark A. Milley, Chief Of Staff, U.S. Army
  • On Wednesday, June 7, the Senate Appropriations Subcommittee on Energy and Water Development has scheduled a hearing titled “Review of the FY2018 Budget Request for the Nuclear Regulatory Commission.” The witnesses will be:
    • The Honorable Kristine Svinicki, Commissioner, U.S. Nuclear Regulatory Commission
    • The Honorable Jeff Baran, Commissioner, U.S. Nuclear Regulatory Commission
    • The Honorable Stephen G. Burns, Commissioner, U.S. Nuclear Regulatory Commission
  • On Wednesday, June 7, the Senate Appropriations Subcommittee on Transportation, Housing and Urban Development, and Related Agencies has scheduled a hearing titled, “Review of the FY2018 Budget Request for the U.S. Department of Housing & Urban Development.” The witness will be:
    • The Honorable Ben Carson, Secretary, U.S. Department of Housing and Urban Development
  • On Wednesday, June 7, the Senate Appropriations Subcommittee on the Legislative Branch has scheduled a hearing titled “Review of the FY2018 Budget Requests for the Library of Congress, Architect of the Capitol.” The witnesses will be:
    • The Honorable Carla D. Hayden, Librarian Of Congress, The Library of Congress
    • The Honorable Stephen T. Ayers, Architect Of The Capitol
  • On Thursday, June 8, the Senate Appropriations Subcommittee on Commerce, Justice, Science, and Related Agencies has scheduled a hearing titled “Review of the FY2018 Budget Request for the U.S. Department of Commerce.” The witness will be:
    • The Honorable Wilbur Ross, Secretary, U.S. Department of Commerce
  • On Thursday, June 8, the Senate Appropriations Subcommittee on Labor, Health and Human Services, Education, and Related Agencies has scheduled a hearing titled “Review of the FY2018 Budget Request for the U.S. Department of Labor.” The witness will be:
    • The Honorable R. Alexander Acosta, Secretary, U.S. Department of Labor

Senate Budget Committee

  • On Wednesday, June 7, the Senate Budget Committee has scheduled a hearing titled “Nomination Hearing for Deputy Director of White House Budget Office.” The witness will be:
    • Russell Vought to be Deputy Director, White House Office of Management and Budget

Secretary DeVos to Testify on Education Budget; New Hires at Department of Education

Legislative Activity

Secretary DeVos to Testify on Budget

Education Secretary Betsy DeVos is scheduled to testify before the Senate Committee on Appropriations Subcommittee for Labor-Health and Human Services and Education on June 6. She will face tough questions from Democrats on the proposed 13 percent budget cut and school choice measures proposed in President Trump’s budget.

Senator Patty Murray Questions Ethics Official

Sen. Patty Murray (D-WA) sent a letter to the Department of Education’s ethics official questioning a decision to allow Secretary DeVos to speak at the American Federation for Children’s (AFC) national summit in May. Secretary DeVos formerly served as chairwoman of AFC, which advocates for tax credit scholarships and vouchers. Earlier this year, she signed an ethics agreement saying that for a period of one year following her resignation from the organization and its charitable arm, “I will not participate personally and substantially in any particular matter involving specific parties in which I know that entity is a party or represents a party, unless I am first authorized to participate.”

Sen. Murray notes in her letter that between 2005 and 2015, the Dick and Betsy DeVos Family Foundation “donated at least $600,000 to AFC and other related organizations.” She questioned when the Department’s ethics official was approached about the summit and wants to see their analysis as to why Secretary DeVos’ appearance did not present “the appearance of or an actual conflict of interest.” Murray also wants to know whether Secretary DeVos has received any ethics waivers since her confirmation. The letter can be found here.

Senator Elizabeth Warren Launches DeVos Watch Site

Sen. Elizabeth Warren (D-MA) has added a new page to her website, dedicated to holding Secretary Betsy DeVos “accountable to the public.” So far, what Warren is calling “DeVos Watch” is just a list of partisan press releases, a comment form for submitting “whistleblower tips” to the Senator about student loan issues, and links for submitting complaints about student loans to the Consumer Financial Protection Bureau and state attorneys general.

This Week’s Hearings:

  • On Tuesday, June 6, the Senate Appropriations Subcommittee on Labor, Health and Human Services, Education, and Related Agencies has scheduled a hearing titled “Review of the FY2018 Budget Request for the U.S. Department of Education.” The witness will be:
    • The Honorable Betsy DeVos, Secretary, U.S. Department of Education

Regulatory Activity

New Hires at the Department of Education

Secretary DeVos formally announced four new Education Department hires late Wednesday, May 31. They include Kathleen Smith, as a senior advisor to the Assistant Secretary for the Office of Postsecondary Education and will be acting Assistant Secretary for the Office of Postsecondary Education; Steven Menashi, who has been appointed deputy general counsel for postsecondary service and has been delegated the authority to perform the duties of the general counsel; Nathan Bailey , who will serve as communications director with the authority to perform the duties of the assistant secretary for communications and outreach; and José Viana, who will serve as assistant deputy secretary and director of the Office of English Language Acquisition.

Department of Energy To Cut Energy Development Regulations; EPA Stays Landfill Rules; Senate To Consider Nominations for DOE, EPA, DOI and Nuclear Regulatory Commission

Regulatory Activity

Department of Energy Cutting Energy Development Regulations

This follows our earlier report highlighting the Trump Administration’s recent memo with specifics as to how the President expects agencies to carry out his previously issued energy Executive Order (EO) 13783 – “Promoting Energy Independence and Economic Growth”. EO 13783 directs agencies to identify regulations that would “burden the development or use of domestically produced energy resources, with particular attention to oil, natural gas, coal, and nuclear energy. The President’s memo clarifies the EO and adds renewable energy to the group defined as domestically produced energy resources. The Department of Energy is seeking to identify any existing DOE rules that are obsolete, unnecessary, unjustified, or simply no longer make sense and is soliciting written comments on or before July 14, 2017.

EPA Stays Landfill Emissions Rules 

The Environmental Protection Agency (EPA) has imposed a 90-day stay until August 29 on subparts of two final rules concerning landfill performance standards and emissions reductions. 

Legislative Activity

This Week’s Hearings:

  • On Tuesday, June 6, the Senate Committee on Energy and Natural Resources will hold a hearing to consider the following agency nominations:
    • The Honorable David Bernhardt to be Deputy Secretary of the Interior
    • The Honorable Dan Brouillette to be Deputy Secretary of Energy
    • Mr. Neil Chatterjee to be a Member of the Federal Energy Regulatory Commission
    • The Honorable Robert Powelson to be a Member of the Federal Energy Regulatory Commission
  • On Wednesday, June 7, the House Committee on Natural Resources, Subcommittee on Energy and Mineral Resources, will hold a hearing titled “Oversight Hearing on the Office of Surface Mining Reclamation and Enforcement’s Abandoned Mine Lands Program.”
  • On Wednesday, June 7, the Senate Committee on Environment and Public Works will hold a hearing to consider the following agency nominations:
    • Kristine Svinicki to be reappointed as Chairman of the U.S. Nuclear Regulatory Commission
    • Annie Caputo and David Wright to be Members of the U.S. Nuclear Regulatory Commission
    • Susan Bodine to be Assistant Administrator of the Office of Enforcement and Compliance Assurance of EPA
  • On Thursday, June 8, the House Natural Resources Subcommittee on Federal Lands has scheduled a hearing titled “Oversight Hearing on Burdensome Litigation and Federal Bureaucratic Roadblocks to Manage our Nation’s Overgrown, Fire-Prone National Forests.” The witnesses will be announced.
  • On Thursday, June 8, the House Appropriations Subcommittee on Interior, Environment, and Related Agencies has scheduled a budget hearing. The witness will be:
    • The Honorable Ryan Zinke, Secretary, Department of the Interior
  • On Thursday, June 8, the Senate Committee on Energy and Natural Resources will hold a hearing to study cost reductions in emerging energy technologies.  The witnesses will be announced.
  • On Saturday, June 10, the Senate Committee on Energy and Natural Resources will hold a field hearing in Cordova, Alaska titled “Innovation in Action – Microgrids and Hybrid Energy Systems.”

House Set to Vote on CHOICE Act; Agency Nominations, Budgets, and Rulemakings Under Review

Legislative Activity

House Set to Choose Path for CHOICE Act as Senate Holds Hearing on Community Banking

This week, the House is set to vote on H.R. 10, the Financial CHOICE Act of 2017 (CHOICE Act). After a contentious markup in the House Financial Services Committee last month, the bill was favorably voted out of the Committee along party lines, with all 34 Republicans voting in favor and all 26 Democrats voting against. Democrats offered 19 amendments to the CHOICE Act, all of which were voted down. The three-day markup highlighted the partisan disagreements over whether the Dodd–Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank) has had a positive impact on the economy and whether the CHOICE Act would effectively reform the financial regulatory system. Republicans insisted that the CHOICE Act would help reduce burdensome requirements that they believe stifle growth for small businesses and community banks; Democrats opposed the CHOICE Act and made several procedural maneuvers during the markup to delay the Committee’s vote. Note, in advance of this week’s House vote on the CHOICE Act, Chairman Jeb Hensarling (R-TX) introduced a substitute amendment that eliminates a repeal of the “Durbin Amendment” – a provision in Dodd-Frank that limits transaction fees imposed upon merchants by debit card issuers (a summary of other amendments is available here). Though we expect the House will pass the bill, it is unlikely that the CHOICE Act – at least in its present form – could pass the Senate. Indeed, last month, Senator Majority Leader Mitch McConnell (R-KY) expressed his doubts that the Senate will act on the sweeping financial deregulatory bill.

On the other side of Capitol Hill, the Senate Banking Committee will hold a hearing on Thursday to examine the role of financial institutions in local communities. The hearing comes amid calls on both sides of the aisle to revisit whether the $50 billion threshold resulting in a financial institution’s designation as systemically important is appropriate. In a recent hearing, Treasury Secretary Steven Mnuchin told the Senate Banking Committee that banks with $50 billion in assets do not pose the same risks as banks that have “$750 billion or $2 trillion” in assets, for example. This week’s hearing will likely provide an indication as to the Committee’s next steps in this arena.

This Week’s Hearings:

  • On Tuesday, June 6, the Senate Banking Committee has scheduled a hearing to consider the following nominations:
    • Kevin Hassett to be Chairman of the Council of Economic Advisers; and
    • Pamela Patenaude to be Deputy Secretary of Housing and Urban Development
  • On Wednesday, June 7, the Senate Finance Committee has scheduled a hearing to consider the following nominations:
    • David Malpass to be an Under Secretary of the Treasury;
    • Brent James McIntosh to be General Counsel of the Treasury; and
    • Eric Hargan to be Deputy Secretary of Health and Human Services
  • On Wednesday, June 7, the House Financial Services Committee has scheduled a hearing titled “Flood Insurance Reform: A Taxpayer’s Perspective.”
  • On Thursday, June 8, the Senate Banking Committee has scheduled a hearing titled “Fostering Economic Growth: The Role of Financial Institutions in Local Communities.”
  • On Thursday, June 8, the House Appropriations Transportation, Housing and Urban Development, and Related Agencies Subcommittee has scheduled a hearing titled “Review of the FY2018 Budget Request for the U.S. Department of Housing & Urban Development.”
  • On Thursday, June 8, the House Appropriations Agriculture, Rural Development, Food and Drug Administration, and Related Agencies Subcommittee has scheduled a hearing titled “Commodity Futures Trading Commission – Budget Hearing.”
  • On Thursday, June 8, the House Financial Services Subcommittee on Terrorism and Illicit Finance has scheduled a hearing titled “Virtual Currency: Financial Innovation and National Security Implications.”
  • On Thursday, June 8, the House Energy and Commerce Subcommittee on Digital Commerce and Consumer Protection has scheduled a hearing titled “Disrupter Series: Improving Consumer’s Financial Options With FinTech.”

Regulatory Activity

CFTC Budget in the Spotlight This Week

On Thursday, June 8, the House Agriculture, Rural Development, Food and Drug Administration, and Related Agencies Subcommittee will hold a hearing to examine the budget of the Commodity Futures Trading Commission (CFTC). Acting Chairman Christopher Giancarlo is set to testify before the Subcommittee and is seeking a $31.5 million boost to the CFTC’s current $250 million budget. The extra funding would be used to devote more resources to analyze the economic costs and benefits of the agency’s rules, boost compliance examinations of clearing houses, and further advance its newly unveiled financial technology (FinTech) initiatives (further discussed here). In contrast, the Trump Administration’s Fiscal Year 2018 budget proposal called for the agency’s budget to remain flat at $250 million.

Federal Reserve to Increase Transparency on Bank Stress Test Process

Last week, Federal Reserve (Fed) Governor Jerome Powell identified ways the Fed will aim to make annual stress testing for banks more transparent. Governor Powell said the Fed will publish how the central bank’s models treat different types of loans. Thus far, the central bank has not provided much information about its modeling to prevent institutions from being able to game the tests, which are designed to measure how well banks will be able to withstand a severe economic crisis.

SEC Seeking Public Input on Fiduciary Standard

Last week, the Securities and Exchange Commission (SEC) invited public comment on how the agency could develop standards of conduct for investment advisers and brokers. SEC Chairman Jay Clayton called for an updated assessment of the: (1) current regulatory framework; (2) current state of the market for retail investment advice; (3) and market trends in order to enhance the SEC’s ability to evaluate the range of potential regulatory actions. Relatedly, note that last month Secretary of Labor Alexander Acosta announced that the Department of Labor (DOL) has no legal basis to delay the June 9 applicability date for its Fiduciary Rule aimed at brokers who offer retirement investment advice. That said, DOL may yet seek to make significant changes to the rule as part of President Trump’s Executive Order requiring a review of the rulemaking

CFPB’s Consumer Advisory Board to Meet This Week

On Thursday, June 8, the Consumer Financial Protection Bureau’s (CFPB) Consumer Advisory Board (CAB) will meet to discuss credit visibility, credit products, trends and themes, and small business lending. The meeting will feature remarks from Director Richard Cordray and discussion with CAB members. The CAB is designed to help inform the CFPB about emerging practices or trends in the consumer finance industry.

Secretary Price to Testify on HHS Budget Request

Legislative Activity

Secretary Price to Testify on HHS Budget Request

This Thursday, June 8, Department of Health and Human Services (HHS) Secretary Tom Price will appear before the Senate Committee on Finance and the House Committee on Ways and Means to defend the President’s FY 2018 Budget titled “A New Foundation for American Greatness.” The President’s FY 2018 Budget, largely matches the Skinny Budget released earlier this year and calls for cutting federal spending by $3.6 trillion over 10 years. Because of its proposed cuts, the Skinny Budget received significant opposition from stakeholder groups and Members of Congress.  The FY 2018 Budget, released on May 23, 2017, received a similar reception. The committee hearings will be the first opportunity for Members of Congress to question the President’s FY 2018 HHS budget request, which proposes drastic changes to the Medicaid program and cuts billions of dollars from public health programs and biomedical research.  Secretary Price will likely discuss proposals within committee jurisdiction including those that affect the Medicare program, health programs under the Affordable Care Act (ACA), and health care reform. While the hearings have yet to be announced, Secretary Price is also expected to testify before the Senate Committee on Health, Education, Labor, and Pensions (HELP) and the House Committee on Energy and Commerce.

This Week’s Hearings:

  • On Wednesday, June 7, the Senate Committee on Finance will hold a hearing on the various nominations including the nomination of Eric Hargan to be deputy Department of Health and Human Services Secretary.
  • On Wednesday, June 7, the House Committee on Veterans’ Affairs will hold a hearing titled “Overcoming PTSD: Assessing VA’s Efforts to Promote Wellness and Healing.” The witnesses will be announced.
  • On Wednesday, June 7, the Senate Committee on Veterans’ Affairs will hold a hearing titled “Examining the Veterans Choice Program and the Future of Care in the Community.” The witnesses will be announced.
  • On Thursday, June 8 the Senate Committee on Finance will hold a hearing titled “The President’s FY 2018 Budget.” The witness will be:
    • The Honorable Tom Price, MD, Secretary, United States Department of Health and Human Services
  • On Thursday, June 8, the House Committee on Ways and Means Subcommittee on Health will hold a hearing titled “Department of Health and Human Services’ FY 2018 Budget Request.” The witness will be:
    • The Honorable Tom Price, MD, Secretary, United States Department of Health and Human Services
  • On Thursday, June 8, the House Committee on Agriculture Subcommittee on Nutrition will hold a hearing titled “The Next Farm Bill: SNAP Technology and Modernization.” The witnesses will be announced.
  • On Thursday, June 8, the House Committee on Energy and Commerce Subcommittee on Oversight and Investigations will hold a hearing titled “Examining the Role of the Department of Health and Human Services in Health Care Cybersecurity.” The witnesses will be announced.
  • On Thursday, June 8, the Joint Economic Committee will hold a hearing titled “Economic Aspects of the Opioid Crisis.” The witnesses will be:
    • Professor Sir Angus Deaton, Laureate of the Nobel Prize in Economic Sciences, Senior Scholar and Dwight D. Eisenhower Professor of Economics and International Affairs Emeritus, Woodrow Wilson School of Public and International Affairs and Economics Department, Princeton University
    • The Honorable Mike DeWine, Ohio Attorney General
    • Lisa N. Sacco, Crime Policy Analyst, Congressional Research Service, Library of Congress
    • Richard G. Frank, Margaret T. Morris Professor of Health Economics, Department of Health Care Policy, Harvard Medical School

President Trump Welcomes the Romanian President To the White House; Montenegro Formally Joins NATO; Secretaries Tillerson and Mattis Attend AUSMIN; Congress Remains Focused on Russia, As Former FBI Director Comey Testifies

President Donald Trump spoke by phone on Thursday with Chancellor Angela Merkel of Germany, President Emmanuel Macron of France, Prime Minister Justin Trudeau of Canada, and Prime Minister Theresa May of the United Kingdom, where he explained his decision to withdraw the United States from the Paris Climate Accord on Thursday.  He further reassured the United States remains committed to the Transatlantic alliance and to robust efforts to protect the environment.

President Trump spoke again with British Prime Minister May on Sunday morning after a terrorist attack Saturday evening at the London Bridge resulted in seven dead and 48 injured.  He condemned this “heinous” attack and offered U.S. assistance as the British investigate and seek to bring to justice the perpetrators.  This is the third terrorist attack in three months in the United Kingdom.

President Trump decided against moving the U.S. Embassy from Tel Aviv to Jerusalem on Thursday, citing the need to allow space for Israel and Palestine to negotiate a peace agreement.  President will welcome Romanian President Klaus Iohannis to the White House on 9 June.

President Trump welcomed Prime Minister Nguyen Xuan Phuc of Vietnam to the White House on Wednesday.  The two released a joint statement for enhancing the Comprehensive Partnership  In sum, President Trump expressed his support for Vietnam in successfully hosting APEC 2017 and noted that he looks forward to visiting Vietnam and attending the APEC Leaders’ meeting in November.  Regarding the South China Sea, both leaders reaffirmed the importance of freedom of navigation and “highlighted the importance that parties refrain from actions that would escalate tensions, such as the militarization of disputed features.”  President Trump also “stressed that the United States will continue to fly, sail, and operate anywhere international law allows.”

Secretary of State Rex Tillerson is in Sydney, Australia with Secretary of Defense James Mattis from 5-6 June to participate in the 2017 Australia-U.S. Ministerial Consultations (AUSMIN) hosted by Australian Foreign Minister Julie Bishop and Australian Defense Minister Marise Payne.  Secretary Tillerson will travel next to New Zealand to reaffirm strong bilateral ties and to discuss coordination on shared strategic interests with Prime Minister Bill English and Foreign Minister Gerry Brownlee.  Secretary Mattis arrived in Singapore over the weekend and addressed the Shangri-La Dialogue, an Asia-focused defense summit of ministers and delegates from more than 50 countries, on Saturday.  He will join Secretary Tillerson in Australia for the AUSMIN.

Both chambers of Congress are in session this week.  There is currently a bipartisan push underway in Congress to tighten sanctions on Russia.  The Senate Banking Committee on Thursday announced a bipartisan agreement on legislation that would strengthen and expand sanctions against Moscow as it pertains to Ukraine and Syria.

North Korea – New U.N. Sanctions Approved; U.S. Tests Missile Defense System

U.S. Ambassador to the United Nations Nikki Haley spoke after the U.N. Security Council approved additional sanctions against North Korea on Friday.  She said:  “The United States will work tirelessly to make sure that the international community never gets used to North Korea’s violations or looks the other way.  And North Korea must understand that the international community will never accept the regime’s development and testing of nuclear weapons.”

Meanwhile, the Missile Defense Agency confirmed the U.S. military successfully intercepted a mock ballistic missile target over the Pacific Ocean in a test of a missile-defense system on 30 May.  The test was aimed at protecting the United States from the type of ballistic missiles North Korea is developing.  Vice Adm. Jim Syring, Director of the Missile Defense Agency, explained that “[t]his test demonstrates that we have a capable, credible deterrent against a very real threat.”

The mock ICBM-class target was fired from the Ronald Reagan Ballistic Missile Test Site in the Marshall Islands.  An interceptor, launched from the Vandenberg Air Force Base in California, successfully locked on the target and brought it down.  The test is the first of the ground-based, mid-course defense system against an ICBM-class target.

While North Korea has conducted an “unprecedented” number of tests and launches over the past year, Pentagon spokesman Capt. Jeff Davis told reporters that the test was not in direct response to tensions with North Korea, explaining that the country “is not the only reason why we have this capability and why we test this capability.”

Shangri-La Dialogue

U.S. Defense Secretary James Mattis arrived in Singapore on Friday to attend the Shangri-La Dialogue from 2-4 June.  The summit, which includes bilateral meetings and sessions on security in the Asia-Pacific, comes at a time of heightened tensions in the region with China and North Korea.

This marks Secretary Mattis’s second visit to Asia since taking office in January.  During his speech on Saturday, Secretary Mattis emphasized that while the United States appreciates Chinese cooperation on North Korea, it will not accept Beijing’s militarization of islands in the South China Sea.  While speaking at the forum, Secretary Mattis also eased concerns for allies in the Asia-Pacific, providing reassurance that the region remains a priority and that the United States remains fully engaged with its partners.

Gen. Joe Dunford, the Chairman of the Joint Chiefs of Staff, was also in Singapore for the dialogue.  On 2 June, Singapore’s President Tony Tan Keng Yam presented Gen. Dunford with Singapore’s Military Distinguished Service Order medal for his unwavering support of the U.S.-Singaporean partnership.  After the ceremony, Gen. Dunford and Secretary Mattis met with Singaporean government leaders before returning to the dialogue.

Asia-Pacific:  U.S., Japanese, South Korean Army Leaders Discuss Security Cooperation

Army Gen. Robert B. Brown, the U.S. Army Pacific commander, held a trilateral meeting on 23 May with South Korean Army Chief of Staff Gen. Jang Jun-Gyu and Japan Ground Self-Defense Force Chief of Staff Gen. Toshiya Okabe.  The three leaders agreed that cooperation between the U.S., Japan, and South Korea remains a priority in in the light of the threat posed by North Korea.

Gen. Brown noted that such meetings are significant because “they enable cooperation among regional powers in Northeast Asia.”  The three leaders agreed to a follow-up meeting at the Pacific Armies Chiefs Conference/Pacific Armies Management Seminar, which will be co-hosted by South Korea and the United States in September.

Syria, Iraq – Strikes Continue Against ISIS Targets

On 1 June, Army Col. Ryan Dillon, spokesman for Combined Joint Task Force Operation Inherent Resolve, confirmed that Iraqi forces are closing in on the final terrorist-held areas in western Mosul, while partnered forces in Syria are only a few kilometers from Raqqa.  In the past week, the coalition has conducted 21 strikes in support of the Iraqi security forces’ efforts, hitting mortars, machine guns, multiple vehicle-borne improvised explosive devices and factories where they are made.

While the Iraqi government has instructed civilians to evacuate Mosul’s Old City, Army Col. Dillon noted that the terrorists are targeting fleeing civilians, explaining that citizens have been “victims of ISIS-emplaced bombs and bobby traps as they attempt to flee.”

In Syria, the Syrian Democratic Forces continue to close in on ISIS targets around Raqqa.  “The coalition is dedicated and focused on the defeat of ISIS.  Our partnered forces are dedicated and focused on the defeat of ISIS,” Army Col. Dillon shared, adding that “all parties in southern Syria should remain focused on the defeat of ISIS, which is our common enemy and the greatest threat to the region and worldwide peace and security.”

  • On Thursday, 8 June, the Senate Foreign Relations Committee is scheduled to hold a hearing titled “Beyond Iraq and Syria: ISIS’ Global Reach.”

NATO – Montenegro, The Newest Member

On Monday, 5 June, Under Secretary Thomas Shannon will accept Montenegro’s instrument of accession to the North Atlantic Treaty (NATO).  Montenegro’s Prime Minister Duško Marković will officially deposit the instrument at the ceremony, making Montenegro the twenty-ninth NATO Ally.  NATO Secretary-General Jens Stoltenberg will also participate in the ceremony to welcome Montenegro as the Alliance’s newest member.  On June 7, Montenegro’s flag will fly over NATO Headquarters for the first time.

European Reassurance Initiative – FY 2018 Defense Budget Request Includes $4.7 Billion for ERI

Last week, Air Force Maj. Gen. David W. Allvin, the U.S. European Command (EUCOM) Director of Strategy, Plans and Policy, shared that the Department of Defense’s Fiscal Year (FY) 2018 budget request includes nearly $4.8 billion for the ERI to enhance deterrence and defense and improve the readiness of forces in Europe.  Gen. Allvin explained that the funding “is one of our nation’s commitments to Europe” and “demonstrates our strong dedication to the trans-Atlantic bond and the defense of our allies.”

In a news release last week, EUCOM Commander Army Gen. Curtis M. Scaparrotti said that the funding “increases our joint capabilities to deter and defend against Russian aggression,” adding that these investments will “further galvanize U.S. support to the collective defense of our NATO allies and bolster the security and capacity of our U.S. partners.”

Following Russia’s invasion of Ukraine in 2014, the United States authorized ERI at $985 million in 2015, $789 million in 2016, and $3.4 billion in 2017. The FY 2018 ERI budget request also includes $150 million to continue efforts to build Ukraine’s capacity to conduct internal defense operations to defend its sovereignty and territorial integrity.

Congressional Hearings This Week

  • On Monday, 5 June, the Senate Foreign Relations Committee is scheduled to hold a closed hearing titled “Beyond Iraq and Syria: ISIS’ Global Reach.”
  • On Tuesday, 6 June, the Senate Commission on Security and Cooperation in Europe is scheduled to hold a hearing to examine Austria’s chairmanship of the Organization for Security and Co-operation in Europe, focusing on priorities and challenges.
  • On Wednesday, 7 June, the House Foreign Affairs Subcommittee on Western Hemisphere is scheduled to hold a hearing titled “Energy Opportunities in North America.”
  • On Thursday, 8 June, the House Foreign Committee is scheduled to hold a hearing titled “Attacking Hezbollah’s Financial Network: Policy Options.”
  • On Thursday, 8 June, the Senate Intelligence Committee is scheduled to hold a hearing titled “Former Director James Comey, FBI.”

Looking Ahead

Washington is expected to focus on the following upcoming events:

  • 9 June: President Trump welcomes Romanian President Klaus Iohannis to the White House
  • 12 June: USTR deadline for written comments re: NAFTA
  • 18-20 June: SelectUSA Investment Summit in National Harbor, Maryland
  • 27 June: USTR hearing on NAFTA
  • Before August: Congress to vote on the raising the debt ceiling

Tax-Writers, Treasury Talk Tax Reform

Legislative Activity

Pressing Forward with Tax Reform

Prior to last week’s Memorial Day recess, both the House Ways & Means and Senate Finance Committees held hearings, which focused on the state of tax reform. First, in their hearings reviewing the President’s FY 2018 Budget Proposal, tax-writers focused on various issues, including: (1) the timing and approach to tax reform; (2) revenue neutrality; (3) the border adjustment tax (BAT); (4) full and immediate expensing; (5) interest deductibility; (6) tax credits and deductions; (7) pass-throughs; and (8) simplicity. Generally, the hearings reinforced the notion that the Trump Administration is still in the early stages of the tax reform process; though Treasury Secretary Steven Mnuchin appeared before both tax-writing committees on consecutive days to discuss the budget and the Administration’s approach to tax reform, he did not provide many new details on key tax policy proposals. Republican lawmakers commended the Secretary on his active involvement in tax reform discussions, while Democrats criticized the slow pace thus far and lack of details from the White House.

Additionally, the House Ways and Means Committee held a hearing, which examined the border adjustment tax (BAT) and international tax modernization as “core elements of comprehensive tax reform and the implications of these policies for increasing jobs, investment, and economic growth.” Overall, the hearing confirmed that advancing the Blueprint past the Committee, despite its Republican majority, remains challenging; during the hearing, three GOP tax-writers voiced their concerns – or outright disapproval – of the BAT as proposed; at least four tax-writers have publicly expressed concern about the proposal. Though all parties recognized the need for tax reform, divisions among Committee Republicans materialized, highlighting disagreements over how the BAT will impact American consumers.  Meanwhile, Democrats focused their efforts on pushing for a more bipartisan tax reform effort, highlighting how a tax overhaul could benefit the middle class.  Notably, Chairman Brady closed the hearing by reaffirming his support for the BAT, suggesting that “thoughtful transition” planning could sufficiently address concerns raised by the proposal’s critics.  However, Treasury Secretary Mnuchin criticized the BAT on the same day as the hearing, noting that “one of the problems…is that it does not create a level playing field.”

While a firm timeline for additional hearings or the release of legislative text have not been announced, recent discussions suggest that much of the negotiations will be done behind the scenes over the next several months, with details likely coming after the August recess. That said, it was clear during the most-recent round of hearings that Republicans in the House, Senate, and White House are working closely together to fill in the gaps of a comprehensive tax reform proposal.

This Week’s Hearings:

  • On Wednesday, June 7, the Senate Finance Committee has scheduled a hearing to consider the following nominations:
    • David Malpass, to Be An Under Secretary of the Treasury, United States Department of the Treasury; and
    • Brent James McIntosh, to Be General Counsel For the Department of the Treasury, United States Department of the Treasury

FCC’s Tentative Agenda for June 22 Open Meeting Includes Broadband and Public Safety Items

Legislative Activity

Senators Seek Probe of Cyber Attacks on FCC’s Website

On May 31, Sens. Brian Schatz (D-HI), Al Franken (D-MN), Patrick Leahy (D-VT), Edward Markey (D-MA), and Ron Wyden (D-OR) wrote a letter to Andrew McCabe, Acting Director of the Federal Bureau of Investigation (FBI), asking agency to “prioritize” an investigation into cyber-attacks that affected the Federal Communications Commission (FCC) in early May. The attacks, which the FCC announced on May 8, are believed to have been distributed denial-of-service (DDos) attacks. A DDos attack is an attempt to make an online service unavailable by overwhelming it with traffic from multiple sources. According to the FCC’s announcement, the attacks were “deliberate attempts by external actors to bombard the FCC’s comment system with a high amount of traffic to [the FCC’s] commercial cloud host.” The FCC further stated that “[w]hile the comment system remained up and running the entire time, the[] DDos events tied up the servers and prevented them from responding to people attempting to submit comments.” In their letter, the senators noted that the “public comment period associated with the FCC’s rulemaking authority is a critical part of the regulatory process and the primary way for the America people to make their voices heard.” They called the cyber-attack “extremely troubling given that it threatens to stifle the public’s ability to weigh in on” important issues. The senators noted that a congressional inquiry regarding the attacks has already been sent to the FCC and requested that the FBI “investigate the source of this attack” and to provide a briefing to the group on the matter by June 23.

Regulatory Activity

FCC Announces Tentative Agenda for June 22 Open Commission Meeting

The FCC has announced that the following items are tentatively on the agenda for consideration at the agency’s Open Commission Meeting on Thursday, June 22:

  • New Emergency Alert System (EAS) Event Code for Blue Alerts. The FCC will consider a Notice of Proposed Rulemaking that would amend its EAS rules to add a dedicated event code, “BLU,” for Blue Alerts, “so that EAS alerts can deliver actionable information to the public when a law enforcement officer is killed, seriously injured, missing in connection with his or her official duties, or if there is an imminent and credible threat to a law enforcement officer.”
  • First Responder Network Authority (FirstNet). The FCC will consider a Report and Order that would establish “the procedures and standards the Commission will use to review alternative plans submitted by states seeking to ‘opt-out’ of the FirstNet network and to build their own Radio Access Networks that are interoperable with FirstNet.”
  • Exemption to Calling Number Identification Service. The FCC will consider a Notice of Proposed Rulemaking that “would amend the Caller ID rules to allow disclosure of blocked Caller ID information to aid law enforcement in investigating threatening calls and continue the waiver of those rules that is currently in effect for Jewish Community Centers.”
  • OneWeb Market Access Request. The FCC will consider an Order and Declaratory Ruling that would recommend “granting OneWeb’s request to be permitted to access the U.S. market using its proposed global non-geostationary satellite constellation for the provision of broadband communications services in the United States.”
  • Improving Competitive Broadband Access to Multiple Tenant Environments. The FCC will consider a Notice of Inquiry that would seek “comment on ways to facilitate greater consumer choice and enhance broadband deployment in multiple tenant environments such as apartment buildings, condominium buildings, shopping malls, or cooperatives.” The Notice of Inquiry also would seek “comment on the current state of broadband competition in such locations and whether additional Commission action in this area is warranted to eliminate or reduce barriers faced by broadband providers that seek to serve the occupants of multiple tenant environments.”
  • Electronic Annual Notice Declaratory Ruling. The FCC will consider a Declaratory Ruling that “would clarify that the ‘written information’ that cable operators must provide to their subscribers via annual notices pursuant to Section 76.1602(b) of the Commission’s rules may be provided via e-mail.”
  • Modernization of Payphone Compensation Rules. The FCC will consider a Notice of Proposed Rulemaking and Order that “(1) proposes to eliminate the requirement that carriers that complete payphone calls conduct an annual audit of their payphone call tracking systems and file an associated annual audit report with the Commission, and (2) waives the annual audit and associated reporting requirement for 2017.”
  • Enforcement Bureau Action. The FCC will consider an enforcement action.

The FCC has released draft versions of the non-enforcement items, which are available here.

The FCC’s Open Commission Meeting will be held on June 22 at 10:30 a.m. in the Commission Meeting Room at the FCC’s headquarters at 445 12th Street S.W., Washington, D.C. 20554, and will be streamed live at www.fcc.gov/live.

President to Highlight Infrastructure Initiative This Week; FAA Reauthorization Update

Legislative Activity

President to Highlight Infrastructure Initiative This Week

President Trump will hold several events this week intended to increase support for his Infrastructure Initiative presumably by providing more details about the proposal.

On Monday, the President will make an announcement at the White House with House Transportation and Infrastructure Committee Chairman Bill Shuster (R-PA) about the President’s air traffic control (ATC) reform proposal. The proposal was also included in the President’s FY 2018 Budget Proposal released on May 23; a three-page fact-sheet released by the Administration is available here. Very generally, the President proposes to shift day-to-day air traffic management responsibilities from the Federal Aviation Administration to a non-governmental, non-profit corporation.

On Wednesday, the President will travel to Ohio and Kentucky to give a speech about the Nation’s waterways and rural areas. The speech will reportedly include more information on how the Administration plans to support rural and transformative projects.

On Thursday, the President will meet with a bipartisan group of mayors and governors from across the country at the White House to discuss infrastructure issues.

The week will end with a Friday address by the President at the Department of Transportation that will focus on overhauling regulations impacting highway and rail infrastructure projects, including changes to the Federal government’s permitting and approval processes to advance projects more quickly.

The Administration released a six-page fact sheet on the President’s Infrastructure Initiative with his FY 2018 Budget Proposal; the fact-sheet is available here.

FAA Reauthorization Update

The Senate Commerce, Science, and Transportation Committee and the House Transportation and Infrastructure (T&I) Committee will hold hearings on FAA reauthorization this week in anticipation of an FAA reauthorization effort later this year. Secretary of Transportation, Elaine Chao, will testify at both the Senate Commerce Committee hearing on Wednesday, June 7, and the House T&I Committee hearing on Thursday, June 8.

The current FAA authorization expires September 30, and Congress is expected to consider legislation during the summer months. Recently, Senate Commerce Committee Chairman John Thune (R-SD) said he intends to have the Committee mark up an FAA reauthorization bill in June and hopes to secure floor consideration in July. However, Chairman Thune also noted that he would like to see the House act on legislation first.

House T&I Committee Chairman Bill Shuster (R-PA) is expected to advocate for fundamental ATC reform again this Congress, though he has indicated there may be some changes from his proposal in the last Congress that are intended to gain additional support from aviation stakeholders, such as the general aviation community. Chairman Shuster has found some increased support for his ATC reform proposal from the Trump White House, and we anticipate that Secretary Chao may offer support for ATC reform in her testimony before both Committees this week.

This Week’s Hearings:

  • On Wednesday, June 7, the Senate Commerce, Science, and Transportation Committee has scheduled a hearing titled “FAA Reauthorization: Administration Perspectives.” The witness will be:
    • The Honorable Elaine Chao, Secretary, U.S. Department of Transportation.
  • On Wednesday, June 7, the House Transportation and Infrastructure Subcommittee on Coast Guard and Maritime Transportation has scheduled a hearing titled “Building a 21st Century Infrastructure for America: Coast Guard Sea, Land, and Air Capabilities.” The witnesses will be:
    • Vice Admiral Charles W. Ray, Deputy Commandant for Operations, United States Coast Guard;
    • Vice Admiral Sandra L. Stosz, Deputy Commandant for Mission Support, United States Coast Guard;
    • Ms. Marie A. Mak, Director, Acquisition Sourcing & Management Team, Government Accountability Office; and
    • Ms. Cari Thomas, National Executive Director, Navy League of the United States.
  • On Thursday, June 8, the Senate Commerce, Science, and Transportation Committee has scheduled a nomination for three candidates to fill positions subject to Senate confirmation. The witnesses will be:
    • Derek Kan, of California, to be Under Secretary of Transportation for Policy;
    • David J. Redl, of New York, to be Assistant Secretary for Communications and Information, Department of Commerce; and
    • Robert L. Sumwalt, III, of South Carolina, to be Member of the National Transportation Safety Board (NTSB) for a 5-year term expiring December 16, 2021, and to be designated Vice Chairman for a term of 2 years.
  • On Thursday, June 8, the House Transportation and Infrastructure Committee has scheduled a hearing titled “Building a 21st Century Infrastructure for America: Federal Aviation Administration Authorization.” The witness will be:
    • The Honorable Elaine Chao, Secretary, U.S. Department of Transportation.

States Attorneys General May 29 Update

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

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

Advocacy

Led by California AG Xavier Becerra and District of Columbia AG Karl Racine, 15 AGs are demanding that U.S. AG Jeff Sessions rescind the Department of Justice’s harsh sentencing guidelines. In a May 10 memorandum, AG Sessions urged federal prosecutors to “charge and pursue the most serious, readily provable offense” and follow “mandatory minimum sentences.” AG Racine said, “There is simply no evidence to support the notion that these kinds of tough-on-crime guidelines are effective at anything other than ballooning prison populations and budgets.” Thirty current and former state and local prosecutors disagree with the AG’s directive by writing, “although there are no certain benefits to the newly announced policy, there are definitive and significant costs. The increased use of mandatory minimum sentences will necessarily expand the federal prison population and inflate federal spending on incarceration.” Many state leaders are calling Sessions’ directive a step in the wrong direction and one that should be quickly corrected.

Six attorneys general are asking for new federal regulations that would place restrictions on crude oil transported by rail through their states. New York AG Eric Schneiderman noted the danger of these trains traveling through densely populated areas without any limit on explosiveness or flammability. Much of the concern comes in response to a 2013 tanker explosion that killed 47 people in Quebec.

Wisconsin AG Brad Schimel asked the U.S. Supreme Court to block a ruling that would require state legislators to develop new electoral maps by November 1, 2017. Schimel said,  “Wisconsin should not be required to invest the considerable time, effort and taxpayer resources required to redraw district maps, especially when the case is likely to be reversed.”

Litigation

Attorneys General from 47 states and the District of Columbia reached a settlement with Target for $18.5 million. The settlement comes in response to a security breach that compromised 70 million customers’ personal information, including their names and credit card numbers. Wyoming, Wisconsin, and Alabama were the only states not included in the settlement agreement. The awards will be distributed based largely on a state’s population; California will receive the largest award of $1.4 million. According to the company’s most recent annual statement, Target has spent over $202 million in legal fees attempting to resolve the data breach issue.

A federal court indefinitely stayed litigation over an Obama administration methane rule for new oil and gas operations to give the current Environmental Protection Agency time to review the rule. West Virginia AG Patrick Morrisey said the decision is a victory for West Virginia families. He went on to say, “we appreciate the Trump Administration’s willingness to review the devastating impact of the oil and gas rule and look forward to hearing the new administration’s take on this unlawful regulation.”

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