House Moves Forward with Financial Services Reform as Banking Looks to Find Its Own Path

Legislative Activity

House Moves CHOICE Act Forward as Senate Banking Committee Discusses Banking Reforms

Last week, the House passed the Financial CHOICE Act of 2017 (CHOICE Act) by a vote of 233-186. The comprehensive deregulatory bill would roll back many of the regulations put in place by the Dodd–Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank). For now, passage of the bill amounts to little more than a messaging exercise from the House GOP, since Senate Republicans do not plan to take up the legislation as written. House Financial Services Committee Chairman Jeb Hensarling (R-TX) – the author of the CHOICE Act – has expressed his hope that at least parts of the bill will become law during this Congress. That said, he has also conceded it is a “long game” with some of the bill’s proposals, recognizing the challenging political obstacles of moving the bill through the Senate. Note that the CHOICE Act vote was along party lines except for one Republican, Rep. Walter Jones (R-NC), who voted against the bill.

Meanwhile, on the other side of Capitol Hill, the Senate Banking Committee held a hearing last week titled “Fostering Economic Growth: The Role of Financial Institutions in Local Communities.” Broadly speaking, the hearing focused on banking regulatory reform – especially as it relates to community banks and credit unions. Relatedly, on Thursday, June 15, the Senate Banking Committee is set to hold a hearing on potential regulatory reforms for mid-sized, regional, and large financial institutions.

This Week’s Hearings:

  • On Monday, June 12, the House Appropriations Subcommittee on Financial Services and General Government has scheduled a Department of Treasury budget hearing.
  • On Tuesday, June 13, the Senate Banking, Housing, and Urban Affairs Committee has scheduled a business meeting to consider the following nominations:
    • Mr. Kevin A. Hassett to be Chairman of the Council of Economic Advisers; and
    • The Honorable Pamela H. Patenaude to be Deputy Secretary of Housing and Urban Development
  • On Wednesday, June 14, the House Financial Services Committee has scheduled a markup to consider the following legislation:
    • H.R. 1422, the “Flood Insurance Market Parity and Modernization Act” (Section-by-Section);
    • H.R. 1558, the “Repeatedly Flooded Communities Preparation Act” (Section-by-Section);
    • H.R. 2246, the “Taxpayer Exposure Mitigation Act of 2017” (Section-by-Section);
    • H.R. 2565, To require the use of replacement cost value in determining the premium rates for flood insurance coverage under the National Flood Insurance Act, and for other purposes. (Section-by-Section);
    • H.R. 2868, the “National Flood Insurance Program Policyholder Protection Act of 2017” (Section-by-Section);
    • H.R. ____, the “National Flood Insurance Program Administrative Reform Act of 2017” (Section-by-Section); and
    • H.R. ____, the “21st Century Flood Reform Act” (Section-by-Section)
  • On Thursday, June 15, the Senate Banking, Housing, and Urban Affairs Committee has scheduled a hearing titled “Fostering Economic Growth: Midsized, Regional, and Large Institution Perspective.”

Regulatory Activity

Trump Nominates Otting to Lead OCC

Last week, President Donald Trump nominated Joseph Otting to be Comptroller of the Currency. Mr. Otting served as CEO of Treasury Secretary Steven Mnuchin’s former bank, OneWest, from 2010 to 2015. House and Senate Democrats wasted no time criticizing the nomination, taking aim at OneWest’s foreclosure practices during the financial crisis – similar to the criticisms they voiced during Secretary Mnuchin’s confirmation process. If confirmed by the Senate, Mr. Otting will play a central role in trying to ease financial rules that the Trump Administration blames for stunting economic growth since Dodd-Frank.

SEC Names Co-Directors of Enforcement

Last week, the Securities and Exchange Commission (SEC) announced that Acting Director of the Division of Enforcement Stephanie Avakian and former federal prosecutor Steven Peikin have been named Co-Directors of the Division of Enforcement. The Division of Enforcement is the agency’s largest unit with more than 1,200 investigators, accountants, trial attorneys, and other professionals.

House to Vote on Additional Health Care Legislation; CMS Revises Requirements for Long-Term Care Facilities; CMS Issues Request for Information

Legislative Activity

House to Vote on Additional Health Care Legislation

This week Majority Leader Kevin McCarthy (R-CA) announced that the House of Representatives is scheduled to vote on two pieces of health care legislation. These bills are part of the third phase of Speaker Paul Ryan’s repeal and replace strategy. H.R. 2579, the Broader Options for Americans Act, was introduced by House Committee on Ways and Means Subcommittee on Health Chairman Pat Tiberi (R-OH), and H.R. 1215, the Protecting Access to Care Act of 2017, was introduced by Rep. Steve King (R-IA). H.R. 2579 amends H.R. 1628, the American Health Care Act (AHCA), as passed by the House of Representatives on May 4, 2017. The bill expands financial support for purchasing health insurance by allowing the health insurance tax credit created in the AHCA to also be available for Americans who have lost their group coverage as a result of losing their job. H.R. 1215 establishes provisions governing health care lawsuits where coverage for care was provided or subsidized by the federal government. The intent of the legislation is to reduce the burden the liability system places on the health care delivery system, lower health care costs, and increase health care access. Both pieces of legislation passed their committees of jurisdiction by party line votes and are scheduled for a vote on the House floor by the end of the week. While these bills could be incorporated into the Senate health care package, it is unlikely H.R. 2579 or H.R. 1215 would pass the Senate as stand-alone bills.

This Week’s Hearings:

  • On Monday, June 12, the House Committee on Rules will hold a meeting to formulate a rule on S. 1094, the Department of Veterans’ Affairs Accountability and Whistleblower Protecting Act; H.R. 2372, the Veterans Equal Treatment Ensures Relief and Access Now (VETERAN) Act; H.R. 2579, the Broader Options for Americans Act; and H.R. 2581, the Verify First Act. The witnesses will be announced.
  • On Tuesday, June 13, the Senate Committee on Health, Education, Labor, and Pensions (HELP) will hold a hearing titled “The Cost of Prescription Drugs: How the Drug Delivery System Affects What Patients Pay.” The witnesses will be:
    • Mr. Dan Mendelson, President, Avalere Health
    • Mr. Allan Coukell, Senior Director of Health Programs, Pew Charitable Trusts
    • Dr. Paul Howard, Ph. D, Senior Fellow and Director of Health Policy, Manhattan Institute
    • Dr. Gerard Anderson, Professor of Medicine, Johns Hopkins University School of Medicine
  • On Tuesday, June 13, The Senate Committee on Indian Affairs will hold a hearing on various legislation including S. 1250, to amend the Indian Health Care Improvement Act to improve the recruitment and retention of employees in the Indian Health Service, restore accountability in the Indian Health Service, improve health services, and for other purposes. The witnesses will be announced.
  • On Tuesday, June 13, the House Committee on Rules will hold a hearing on H.R. 1215, the Protecting Access to Care Act of 2017. The witnesses will be announced.
  • On Wednesday, June 14, the House Committee on Energy and Commerce Subcommittee on Health will hold a hearing titled “Examining the Extension of Safety Net Health Programs.” The witnesses will be announced.
  • On Wednesday, June 14, the House Committee on Foreign Affairs will hold a markup of H.R. 1415, the End Neglected Tropical Diseases Act.
  • On Thursday, June 15, the Senate Committee on Appropriations Subcommittee on Labor, Health and Human Services, Education, and Related Agencies will hold a hearing on proposed budget estimates and justification for FY 2018 for the U.S. Department of Health and Human Services. The witness will be:
    • The Honorable Tom Price, Secretary, U.S. Department of Health and Human Services (HHS)

Regulatory Activity

CMS Revises Requirements for Long-Term Care Facilities

On Monday, June 5, the Centers for Medicare and Medicaid Services (CMS) issued a proposed rule to revise the requirements that Long-Term Care (LTC) facilities must meet to participate in the Medicare and Medicaid programs. The proposed rule removes provisions prohibiting LTC facilities’ use of binding pre-dispute arbitration, reversing a final rule issued by the Obama Administration in September of 2016. Advocates for the elderly believe allowing pre-dispute arbitration puts nursing home residents at risk, while LTC centers argue it prevents needless lawsuits. The proposed rule is consistent with the Administration’s approach to eliminating unnecessary burdens on providers. The proposed rule was posted in the Federal Register on June 8, 2017, and is open for public comment for 60 days.

CMS Issues Request for Information

On Thursday, June, 8, CMS issued a Request for Information (RFI) titled “Reducing Regulatory Burdens and Improving Health Care Choices to Empower Patients.” The RFI seeks feedback from the public on how to create a more flexible regulatory structure for the individual and small group market and follows the Market Stabilization Final Rule released by CMS on April 18, 2017.The goal of the RFI is to identify regulations that are not necessary and may interfere with regulatory reform policies, and revise them to be more patient centered. The RFI will be published in the Federal Register on June 12, 2017, and is open for public comment for 30 days.

House Armed Services Committee Introduces “By Request” NDAA Bill; Mattis and Dunford to Testify at Armed Services and Appropriations Hearings; Trump Administration Considering Expansion of Laptop Ban

Legislative Activity

House Armed Services Committee Introduces “By Request” NDAA Bill

On June 7, House Armed Services Committee Chairman Mac Thornberry (R-TX) and Ranking Member Adam Smith (D-WA) introduced H.R. 2810, the “by request” version of the Fiscal Year 2018 National Defense Authorization Act (NDAA).

This procedural measure is traditionally the first step in the legislative process for the NDAA. The introduced bill only reflects the legislative proposals submitted by the Department of Defense, but Armed Services Committee’s proposals will be incorporated into the bill during its markup.

The Committee is expected to hold its first markup of the legislation on June 28.

Mattis and Dunford to Testify at Armed Services and Appropriations Hearings

This week, Secretary of Defense James Mattis and Chairman of the Joint Chiefs of Staff Gen. Joseph Dunford will testify during four House and Senate hearings on the Department of Defense’s Fiscal Year 2018 budget.

Secretary Mattis and Gen. Dunford will discuss the Pentagon’s budget before the House and Senate Armed Services Committees, as well as the House and Senate Appropriations Subcommittees on Defense.

Their testimony will come as the House and Senate Armed Services Committees prepare to begin consideration of the NDAA in late June.

This Week’s Hearings:

  • On Monday, June 12, the House Armed Services Committee has scheduled a hearing titled “The Fiscal Year 2018 National Defense Authorization Budget Request from the Department of Defense.”
  • On Tuesday, June 13, the Senate Armed Services Committee has scheduled a hearing titled “Department of Defense Budget Posture.”
  • On Tuesday, June 13, the Senate Armed Services Subcommittee on Seapower has scheduled a hearing titled “Navy and Marine Corps Aviation Programs.”
  • On Tuesday, June 13, the House Appropriations Subcommittee on Homeland Security has scheduled a hearing titled “Immigration and Customs Enforcement &Customs and Border Protection FY18 Budget Request.”
  • On Wednesday, June 14, the Senate Homeland Security and Governmental Affairs Committee has scheduled a hearing titled “Ideology and Terror: Understanding the Tools, Tactics, and Techniques of Violent Extremism.”
  • On Wednesday, June 14, the Senate Appropriations Subcommittee on Defense has scheduled a hearing titled “Review of the FY 2018 Budget Request for the U.S. Dept. of Defense.”
  • On Wednesday, June 14, the House Homeland Security Committee has scheduled a markup of H.R. 2825 to amend the Homeland Security Act of 2002 to make certain improvements in the laws administered by the Secretary of Homeland Security and for other purposes.
  • On Thursday, June 15, the House Appropriations Subcommittee on Defense has scheduled a Department of Defense budget hearing.
  • On Thursday, June 15, the Senate Armed Services Committee has scheduled a hearing titled “Posture of the Department of the Navy.”
  • On Friday, June 16, the House Appropriations Subcommittee on Commerce, Justice, Science, and Related Agencies has scheduled a Federal Bureau of Investigation budget hearing.

Executive Branch Activity

Trump Administration Considering Expansion of Laptop Ban

In testimony before the House Homeland Security Committee last week, Homeland Security Secretary John Kelly confirmed that the Trump Administration is considering whether to expand a ban on large electronic devises in airplane cabins to 71 additional airports in Europe, Africa, and the Middle East.  The restrictions, which currently apply to approximately 350 flights a week originating in 10 airports primarily in the Middle East, would expand to up to 400 flights a day, posing significant logistical challenges for airlines and airport administrators around the world.

Secretary Kelly confirmed that Deputy Homeland Security Secretary Elaine Duke will attend a conference in Malta next week where the US Government will present proposed security standards in an effort to mitigate the security risk posed by these electronics.

Pentagon’s BRAC Proposal Includes New Savings Requirement

The Defense Department’s Fiscal Year 2018 budget proposal requests authority from Congress to conduct a new round of base realignment and closures (BRAC) in 2021. Peter Potochney, the Acting Assistant Secretary of Defense for Energy, Installations, and the Energy, reassured the Senate Appropriations Subcommittee on Military Construction, Veterans Affairs, and Related Agencies in a hearing last week that the proposal includes a requirement that the Secretary certify savings will follow within 5 years of the recommendations.  He also noted that the recommendation would limit the Defense Secretary’s ability to recommend proposals that do not show cost savings within 20 years.

According to the Government Accountability Office, the up-front costs of the Defense Department’s 2005 BRAC round have increased from $21 billion to approximately $35.1 billion by 2011, a fact that some lawmakers have cited to argue against a new BRAC round.

During his testimony, Potochney also said that the proposal would not be limited to closing facilities on existing bases, but could also include the closure of entire facilities, adding “[e]verything’s on the table.”

Congressional Hearings Will Focus on the State and Defense Department’s FY 2018 Budgets, While the Senate Focuses on an Iran Sanctions Bill

Most of Washington was focused on last Thursday’s Senate Intelligence Committee hearing, where former Director of the Federal Bureau of Investigation (FBI) James Comey testified about circumstances that may have contributed to his termination.  President Trump announced on Wednesday that he was nominating Christopher Wray to serve as Director of the Federal Bureau of Investigations (FBI).

Both chambers of Congress are in session this week.  The Senate will resume debate of S. 722, an Iran sanctions bill, on Monday evening.  A final vote on the bill is expected before the 4 July recess.

The White House announced last Friday that President Trump will soon travel to Poland.  The White House said the trip “will reaffirm America’s steadfast commitment to one of [its] closest European allies and emphasize the Administration’s priority of strengthening NATO’s collective defense.”  Also Friday, President Trump announced his intent to nominate Jeffrey Gerrish to serve as Deputy U.S. Trade Representative for Asia, Europe, the Middle East & Industrial Competitiveness, and Nathan Alexander Sales to serve as Coordinator for Counterterrorism at the State Department, among other nominations.

Qatar – Gulf Dispute Regarding Terrorism Financing

Egypt, Saudi Arabia, Bahrain and the United Arab Emirates severed diplomatic ties with Qatar last week, after accusing the country of supporting terrorism.

At a joint press conference with Romanian President Klaus Iohannis on Friday, President Trump spoke of his recent trip to the Middle East and Europe, where he said the focus of the trip was on strengthening alliances in order to fight terrorism. He said of countering terrorism financing:  “I addressed a summit of more than 50 Arab and Muslim leaders, a unique meeting in the history of nations, where key players in the region agreed to stop supporting terrorism, whether it be financial, military or even moral support.”  He added:

“The nation of Qatar, unfortunately, has historically been a funder of terrorism at a very high level.  And in the wake of that conference, nations came together and spoke to me about confronting Qatar over its behavior.”

President Trump said that one of his priorities is to get countries to stop facilitating terrorism financing.  He said:  “For Qatar, we want you back among the unity of responsible nations.  We ask Qatar and other nations in the region to do more and do it faster.”  President Trump also spoke with President Abdel Fattah Al Sisi of Egypt on Friday; Crown Prince Mohamed bin Zayed Al Nahyan of the United Arab Emirates on Wednesday; Amir Sheikh Tameem bin Hamad Al Thani of Qatar on Wednesday; and the Custodian of the Two Holy Mosques King Salman bin Abdulaziz Al Saud of Saudi Arabia on Tuesday.

Secretary of State Rex Tillerson gave brief remarks to the press on Friday regarding the situation in the Middle East.  He said:

“We ask that there be no further escalation by the parties in the region.  We call on Qatar to be responsive to the concerns of its neighbors.  Qatar has a history of supporting groups that have spanned the spectrum of political expression, from activism to violence.  The emir of Qatar has made progress in halting financial support and expelling terrorist elements from his country, but he must do more and he must do it more quickly.  Others must also continue to eliminate factions of support for violent organizations within their own borders.  Again, that was a commitment made by all at the summit.  We call on the Kingdom of Saudi Arabia, the United Arab Emirates, Bahrain, and Egypt to ease the blockade against Qatar.”

During a Senate Armed Services Committee hearing last week, Air Force Secretary Heather Wilson and Chief of Staff Gen. David Goldfein testified U.S. operations at the Al Udeid Air Base will continue without interruption, despite the diplomatic feud between Qatar and other Arab states. Both officials noted, however, that the Pentagon has backup plans in place, if necessary.

Syria – U.S. Shoots Down Unmanned Aircraft That Fired on Coalition Troops

Officials confirmed that a U.S. aircraft shot down an armed pro-Syrian government unmanned aerial vehicle (UAV) last Thursday after it had fired on coalition forces in southern Syria. This incident was the first time that pro-Assad forces in southeastern Syria have fired on U.S.-backed fighters and their coalition advisers.

The pro-regime UAV was shot down after it dropped a weapon near a position occupied by coalition personnel. In a statement, the U.S. Central Command clarified that it was focused on fighting ISIS and not interested in confronting the Assad regime or its allies, but noted that the “coalition will take appropriate measures to protect our forces.”

NATO – President Trump Reaffirms U.S. Commitment to Collective Defense

During a joint press conference with the Romanian president on 9 June, President Trump provided reassurance that the U.S. remains committed to defending other members of NATO. Responding to a question from a reporter, President Trump said, “[y]es, absolutely I’d be committed to Article 5,” but noted that NATO allies should increase their military spending to ensure that NATO remains a “very, very strong force.”

The White House later reaffirmed the commitment in a statement announcing the President Trump’s plans to visit Poland next month. The President drew criticism last month when he failed to mention U.S. commitment to Article 5 during a speech to NATO leaders.

Canada – Boeing Moves Forward with Trade Complaint

U.S. aerospace company, Boeing, is moving ahead with its complaint against Montreal-based Bombardier after a U.S. International Trade Commission preliminary finding that Bombardier’s trade practices are causing injury to Boeing and the U.S. aircraft sector. Boeing has accused the Canadian company of selling its new C-Series aircraft to Delta Airlines below the price of production. Boeing is also arguing that Bombardier benefits from unfair subsidies from the Canadian government.

This case could heighten trade tensions between the U.S. and Canada. After the U.S. initiated the Bombardier investigation last month, Canadian Foreign Minister Chrystia Freeland announced that the government would review military procurement that relates to Boeing. In a defense policy report released last week, the Canadian government deferred its decision to purchase eighteen of Boeing’s F/A-18E/F Super Hornet fighter jets, stating that it was “continuing to explore” the acquisition of an interim fighter aircraft.

Indonesia – Maritime Security Discussed

Last week, Secretary of Defense James Mattis met with Indonesian Coordinating Minister for Maritime Affairs, Luhut Pandjaitan. According to a Pentagon spokesperson, Secretary Mattis and Minister Pandjaitan exchanged views on the regional maritime security environment in Southeast Asia, countering violent extremism, and the threat posed by returning foreign fighters. The two also discussed the importance of supporting Indonesia’s defense modernization efforts through strengthening bilateral training, interoperability, and defense trade.

Congressional Hearings This Week

  • On Monday, 12 June, the House Armed Services Committee is scheduled to hold a hearing titled “The Fiscal Year 2018 National Defense Authorization Budget Request from the Department of Defense.”
  • On Tuesday, 13 June, the Senate Armed Services Committee is scheduled to hold a hearing titled “Department of Defense Budget Posture.”
  • On Tuesday, 13 June, the Senate Foreign Relations Subcommittee on International Cybersecurity Policy is scheduled to hold a hearing titled “State-Sponsored Cyberspace Threats: Recent Incidents and U.S. Policy Response.”
  • On Tuesday, 13 June, the House Foreign Affairs Subcommittee on the Middle East and North Africa is scheduled to hold a hearing titled “Challenges and Opportunities for the U.S.-Saudi Relationship.”
  • On Tuesday, 13 June, the Senate Appropriations State-Foreign Operations Subcommittee is scheduled to hold a hearing titled “Review of the Fiscal Year (FY) 2018 Budget for the U.S. Department of State.” Secretary of State Tillerson is expected to testify.
  • On Tuesday, 13 June, the Senate Foreign Relations Committee is scheduled to hold a hearing titled “Review of the FY 2018 State Department Budget Request.” Secretary Tillerson is expected to testify.
  • On Wednesday, 14 June, the House Appropriations State-Foreign Operations Subcommittee is scheduled to hold a hearing on the Department of State’s budget. Secretary Tillerson is expected to testify.
  • On Wednesday, 14 June, the House Foreign Affairs Committee is scheduled to hold a budget hearing for the State Department’s FY 2018 budget. Secretary Tillerson is expected to testify.
  • On Wednesday, 14 June, the House Foreign Affairs Subcommittee on Global Health is scheduled to hold a markup of H.R. 1415, the End Neglected Tropical Diseases Act.
  • On Wednesday, 14 June, the House Foreign Affairs Subcommittee on Global Health is scheduled to hold a hearing titled “Africa’s Current and Potential Famines.”
  • On Wednesday, 14 June, the Senate Foreign Relations Subcommittee on Europe and Regional Security Cooperation is scheduled to hold a hearing titled “Southeast Europe: Strengthening Democracy and Countering Malign Foreign Influence.”
  • On Wednesday, 14 June, the Senate Homeland Security and Governmental Affairs Committee is scheduled to hold a hearing titled “Ideology and Terror: Understanding the Tools, Tactics, and Techniques of Violent Extremism.”
  • On Wednesday, 14 June, the Senate Security and Cooperation in Europe Commission is scheduled to hold a hearing titled “The Romanian Anti-Corruption Process: Success and Excesses.”
  • On Wednesday, 14 June, the Senate Appropriations Subcommittee on Defense is scheduled to hold a hearing titled “Review of the FY 2018 Budget Request for the U.S. Dept. of Defense.”
  • On Thursday, 15 June, the House Appropriations Defense Subcommittee is scheduled to hold a hearing on the Department of Defense’s budget. Secretary of Defense Jim Mattis and Joint Chiefs of Staff Gen. Joseph Dunford are expected to testify.
  • On Thursday, 15 June, the House Foreign Affairs Subcommittee on Terrorism, Nonproliferation, and Trade has scheduled a hearing titled “Foreign Military Sales: Process and Policy.”
  • On Thursday, 15 June, the House Foreign Affairs Subcommittee on the Middle East and North Africa is scheduled to hold a hearing titled “Russia’s Strategic Objectives in the Middle East and North Africa.”
  • On Thursday, 15 June, the House Foreign Affairs Subcommittee on Asia and the Pacific is scheduled to hold a markup of H.R. 535, the Taiwan Travel Act; H.R. 2061, the North Korean (DPRK) Human Rights Reauthorization Act of 2017; and H.R. 2397, the DPRK Act of 2017.
  • On Thursday, 15 June, the House Foreign Affairs Subcommittee on Asia and the Pacific is scheduled to hold a hearing titled “Renewing Assurances: Strengthening U.S.-Taiwan Ties.”
  • On Thursday, 15 June, the House Judiciary Committee is scheduled to hold a hearing titled “Data Stored Abroad: Ensuring Lawful Access and Privacy Protection in the Digital Era.”
  • On Thursday, 15 June, the House Judiciary Subcommittee on Regulatory Reform, Commercial and Antitrust Law is scheduled to hold a hearing titled “Recent Trends in International Antitrust Enforcement.”

Looking Ahead

Washington will focus on the following upcoming events:

  • 12 June: USTR deadline for written comments re: NAFTA
  • 18-20 June: SelectUSA Investment Summit in National Harbor, Maryland
  • 19 June: President Trump will welcome Panamanian President Juan Carlos Varela to the White House
  • 27 June: USTR hearing on NAFTA
  • Before August: Congress to vote on the raising the debt ceiling

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
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