President Obama Addresses the Chief of Missions Conference; Iran’s Ballistic Missile Tests Continue to be Scrutinized; Ambassador Froman Heads to Brussels

By Squire Patton Boggs on Posted in Data Privacy & Cybersecurity, Defense & Homeland Security, US Executive Branch

President Barack Obama hosted Canadian Prime Minister Justin Trudeau at the White House last week for an official Head of State Visit, marking the close bilateral relationship between the two countries.  President Obama will visit the State Department today to deliver remarks at the Chief of Missions Conference.  Meanwhile, U.S. Trade Representative Michael Froman heads to Belgium later this week to attend the German Marshall Fund’s 2016 Brussels Forum.

The Senate was in session last week, while the House of Representatives was in recess.  Both chambers of Congress will be in session this week, with a number of state-foreign operations and defense-related budget hearings scheduled.

Canada – Head of State Visit

President Obama and First Lady Michelle Obama hosted Prime Minister Justin Trudeau and Mrs. Sophie Grégoire Trudeau in Washington on 10 March for an Official Visit and a State Dinner at the White House.  In a fact sheet released by the White House, the United States and Canada announced plans to join forces on an initiative to increase participation by North and South American nations in the G-8’s 24/7 Network, which seeks to connect national law enforcement in the battle against high-tech crime.  The fact sheet also details bilateral trade, climate change, mutual national security interests, the Global Health Security Agenda, and collaboration on the Obama Administration’s Power Africa initiative.

Iran – Ballistic Missile Tests Continue; Senate Threatens to Act

Senator Bob Corker (R-Tennessee), Chairman of the Senate Foreign Relations Committee, issued a statement last Wednesday, after reports of Iran launching ballistic missiles for a second straight day.  He observed Iran has reaped the rewards of sanction relief from the Joint Comprehensive Plan of Action (JCPOA) and is deliberately testing the will of the United States and the international community.  Chairman Corker added:

“The Obama Administration and the U.N. Security Council must wake up and impose costs on Iran because clearly the current ballistic missile sanctions regime is ineffective.  Failing to do so risks further aiding the regime’s attempts to discredit international efforts to contain their ballistic missile program and exposes real vulnerabilities when it comes to dealing with nuclear violations if they occur.  There is already a strong bipartisan movement in the Senate to act.”

That same day, President Obama made a routine renewal of some existing non-nuclear sanctions related to Iran, declaring that certain actions and policies of the Iranian Government continue to pose “an unusual and extraordinary threat” to U.S. national security.  His transmittal statement to Congress made clear the extension of these sanctions do not violate the JCPOA.

TPP Developments

White House Press Secretary Josh Earnest signaled last week that President Obama is close to a decision on moving forward with his plan to seek a congressional vote this year on the Trans-Pacific Partnership (TPP).

TTIP Developments

EU Commissioner for Trade Cecilia Malmström was in Washington last week, meeting with Ambassador Froman and discussing the Transatlantic Trade and Investment Partnership (TTIP) negotiations.  At an event at the Peterson Institute, Commissioner Malmström expressed confidence TTIP negotiations could conclude by the end of the year.

Ambassador Froman’s Schedule This Week

Ambassador Froman is scheduled to attend the kick-off meeting today for the TPP Coalition at the U.S. Chamber of Commerce in Washington.  On Tuesday, he is scheduled to deliver remarks to the Chiefs of Mission Conference at the Department of State.  Ambassador Froman will travel to Belgium later in the week to attend the German Marshall Fund’s 2016 Brussels Forum and meet again with EU Commissioner Malmström.

Congressional Hearings This Week

  • On Tuesday, 15 March:
    • The Senate Foreign Relations Committee is scheduled to hold a hearing titled, “Ukrainian Reforms Two Years After the Maidan Revolution and the Russian Invasion.”  Assistant Secretary of State for Europe and Eurasian Affairs Victoria Nuland is scheduled to testify before the Committee.
    • The House Foreign Affairs Committee is scheduled to hold a hearing titled, “Review of the Fiscal Year (FY) 2017 Foreign Assistance Budget: Aligning Interests, Ensuring Effectiveness and Transparency.”
    • The House Appropriations Subcommittee on State, Foreign Operations, and Related Programs is scheduled to hold a budget hearing to examine the Department of Treasury’s International Programs.
    • The Senate Armed Services Subcommittee on Readiness and Management Support is scheduled to hold a hearing titled, “Current State of Readiness of U.S. Forces.”
    • The House Armed Services Subcommittee on Readiness is scheduled to hold a hearing titled, “The U.S. Transportation Command FY 2017 Readiness Posture.”
    • The House Foreign Affairs Subcommittee on Trade is scheduled to hold a hearing titled, “Trade with Cuba: Growth and Opportunities.”
    • The House Foreign Affairs Subcommittee on Asia and the Pacific is scheduled to hold a hearing titled, “U.S.-India Relations: Democratic Partners of Economic Opportunity.”
    • The Senate Armed Services Committee is scheduled to hold a hearing titled, “Posture of the Department of the Navy.”
    • The House Foreign Affairs Subcommittee on Europe, Eurasia, and Emerging Threats is scheduled to hold a hearing titled, “U.S. Policy Toward National Self-Determination Movements.”
    • The Senate Appropriations State-Foreign Operations Subcommittee is scheduled to hold a hearing to review the FY 2017 budget request and funding justification for the U.S. Agency for International Development (USAID).
  • On Wednesday, 16 March:
    • The Tom Lantos Human Rights Commission is scheduled to hold a hearing titled, “Five Years of War: The Plight of Civilians in Syria and the Refugee Crisis of a Generation.”
    • The House Armed Services Committee is scheduled to hold a hearing titled, “The FY 2017 National Defense Authorization Budget Request from the Military Departments.”
    • The Senate Appropriations Subcommittee on Defense is scheduled to hold a hearing titled, “The FY 2017 funding request and budget justification for the National Guard and Reserve.”
    • The House Appropriations State-Foreign Operations Subcommittee is scheduled to hold a budget hearing to examine the funding for USAID.”
    • The House Armed Services Committee is scheduled to hold a hearing titled, “FY 2017 Budget Request for U.S. Cyber Command: Preparing for Operations in the Cyber Domain.”
    • The Senate Armed Services Subcommittee on Airland is scheduled to hold a hearing titled, “Army Unmanned Aircraft Vehicle and Air Force Remotely Piloted Aircraft Enterprises.”
    • The House Armed Services Subcommittee on Tactical Air and Land Forces is scheduled to hold a hearing titled, “FY 2017 Army and Air Force Rotorcraft Modernization Programs.”
    • The House Armed Services Subcommittee on Oversight and Investigations is scheduled to hold a hearing titled, “Evaluating DOD Investments: Case Studies in Afghanistan Initiatives and U.S. Weapons Sustainment.”
  • On Thursday, 17 March:
    • The Senate Armed Services Committee is scheduled to hold a hearing titled, “Department of Defense Budget Posture.”
    • The House Armed Services Committee is scheduled to hold a hearing titled, “The Department of the Navy 2017 Operation and Maintenance Budget Request and Readiness Posture.”
    • The Senate Foreign Relations Committee is scheduled to hold a hearing titled, “Reviewing the Administration’s Nuclear Agenda.”

Looking Ahead

Washington is expected to focus on the following upcoming events:

  • 18-20 March:  German Marshall Fund’s 2016 Brussels Forum
  • 20-22 March:  President Obama travels to Cuba
  • 23-24 March:  President Obama travels to Argentina
  • 31 March – 1 April:   Nuclear Security Summit in Washington
  • April 25-29:  President Obama attends the Hannover Messe in Germany
  • [TBA] May:  President Obama travels to Vietnam and Laos
  • 8-9 July:  NATO Summit in Warsaw, Poland

Tax-Writers Continue Debate on International Tax Reform, Inversions; Global Efforts on CbyCR Implementation Move Forward

By Squire Patton Boggs on Posted in Tax

Legislative Activity

International Tax Reform v. Inversions

Following up on Senate Finance Committee Chairman Orrin Hatch’s (R-UT) recent acknowledgment that his “corporate integration” proposal has been delayed, at least by “a few weeks,” it now appears that the House Ways and Means Committee may miss its self-imposed goal of March 31 by which to release a draft of its international tax reform proposal. Nevertheless, while the exact timeline for finalizing the proposal appears to be in flux, the basic framework – which Representative Charles Boustany (R-LA) has acknowledged is “probably unlikely” to become law this year – consists of three main aspects: (1) moving from a worldwide system of taxation to a territorial system of taxation with a dividend exemption regime; (2) lowering corporate tax rates; and (3) implementing an “Innovation Box.”

Moreover, as Republicans and Democrats work out their disagreements over how to approach certain aspects of tax reform (i.e., rates, whether to have an Innovation Box, etc.), Democrats have again set their immediate focus on combatting corporate tax inversions. In fact, just last week, following House Ways and Means Committee Ranking Member Sandy Levin’s (D-MI) bill seeking to restrict earnings stripping practices, Senators Chuck Schumer (D-NY) and Sherrod Brown (D-OH) have also introduced a new set of bills targeting inversions. Senator Brown’s bill, S. 2662, Pay What You Owe Before You Go Act, would require inverting corporations to pay U.S. tax on all deferred overseas profits before reincorporating in a new country, while Senator Schumer’s bill, S. 2666, Corporate Inverters Earnings Stripping Reform Act, is similar to Ranking Member Levin’s legislation and also seeks to limit inverted companies earnings stripping abilities. Still, and despite this new round of bills, it is unlikely that Republicans will address inversions through standalone legislation and will instead continue to focus on tax reform as the solution.

This Week’s Hearings:

  • Wednesday, March 16: The House Appropriations Subcommittee on Financial Services and General Government will hold a hearing to examine the Treasury Department’s FY 2017 Budget Request.

Regulatory Activity

Treasury Continuing to Work Through CbyCR Complications; IRS Will Not Accept Voluntary Submissions

With final country-by-country reporting (CbyCR) rules due out by June 30, there remain certain difficulties with domestic implementation of CbyCR regulations. Namely, given the different effective dates between expected U.S. regulations and the Organisation for Economic Co-operation and Development’s (OECD) proposal, which calls for compliance with CbyCR requirements starting for fiscal years beginning on or after January 1, 2016, it is possible that certain multinationals would not yet be required to comply with the requirements domestically, but could face compliance requests from other countries.

Recognizing the potential complications, Treasury is working with the OECD and individual countries to come up with an appropriate solution. One potential option: surrogate reporting. In other words, should the country in which a multinational corporation is headquartered not be prepared to collect data at a time during which the company has a need to collect and report such data, that company can appoint a surrogate country to collect its data instead. However, as confirmed recently by Jeffrey Mitchell, Chief, Branch 2, Office of Associate Chief Counsel (International), the Internal Revenue Service (IRS) will not accept voluntary early filings. Instead, companies “will need to look at the facts in all of the jurisdictions in which they do business and where they have constituent entities, and determine if they have to file, or whether or not they can use a surrogate entity from one of the jurisdictions from which they do business.”

Outside of U.S. CbyCR implementation, last week, European finance ministers reached an agreement that would require EU-wide reporting by covered multinational corporations. It is also expected that, despite objections by several countries, the Commission will publish an additional proposal in April that would make at least certain aspects of the CbyCR Report public. Note, however, that before such regulations are considered binding, individual member countries must first incorporate the regulations into their respective bodies of law via legislation.

FCC Chairman Circulates Draft Broadband Privacy Rules

By Squire Patton Boggs on Posted in Technology and Communications

Legislative Activity

Sen. Thune Introduces FCC Reauthorization Act

On March 7, Sen. John Thune (R-SD), Chairman of the Senate Commerce, Science & Transportation Committee (Senate Commerce Committee) introduced S.2644, the FCC Reauthorization Act of 2016. The bill would reauthorize the Federal Communications Commission (FCC), which has not been reauthorized since 1990, and would authorize appropriations for Fiscal Year (FY) 2017 and FY 2018 in the amounts of $361.1 million for FY17 and $348.7 million for FY18. For FY17, no more than $16.867 million “shall remain available until expended for necessary expenses of the Commission associated with moving to a new facility or reconfiguring the existing facility to significantly reduce space consumption.” The bill also makes significant appropriations for salaries and expenses for the Office of Inspector General (OIG) of the FCC.

The bill also does the following:

  • Clarifies that all FCC commissioners, whether appointed to a full five-year term or to fill a vacancy that occurs during a term, may remain at the FCC beyond a term’s expiration until a  successor is appointed and has been confirmed;
  • Requires the FCC to submit various documents such as budget estimates and legislative recommendations to Congress as a means of enhancing transparency;
  • Requires a Government Accountability Office (GAO) report that will include an analysis of whether the FCC’s current regulatory fee structure correlates to the actual workload of the FCC;
  • Requires that deposits that the FCC requires as a precondition of bidding in any spectrum auction to be deposited directly with the United States of any entity to bid in a spectrum auction to be deposited with the U.S. Department of the Treasury (a version of this provision was introduced in the Senate in December 2015 as S.2319);
  • Avoids disrupting funding for various Universal Service Fund (USF) mechanisms; and
  • Indefinitely extends a prohibition that blocks the FCC from implementing a 2004 recommendation of the USF Joint Board proposing to limit USF funds to a single line per household.

The Senate Commerce Committee has scheduled a markup of the bill for Wednesday, March 16.

Senate Commerce Committee Approves MOBILE NOW Act

On March3, the Senate Commerce Committee approved S.2555, the Making Opportunities for Broadband Investment and Limiting Excessive and Needless Obstacles to Wireless (MOBILE NOW) Act by voice vote. The legislation, the substance of which was previously discussed in detail here, specifically targets the buildout of next-generation 5G wireless broadband by ensuring that more spectrum is made available for commercial use. The bill passed the Senate Commerce Committee amendments, including one that would ensure that least 100 MHz of newly freed spectrum would be available for unlicensed uses and that another 100 MHz would be specifically available for commercial mobile services. The bill now goes to the full Senate for consideration.

Bill on Unwanted Robocalls and Texts Introduced in House

On March 4, Ranking Member of the Communications and Technology Subcommittee of the House Energy and Commerce Committee (House Commerce Committee) Anna Eshoo (D-CA) introduced H.R.4682, the Help Americans Never Get Unwanted Phone Calls Act of 2016 (HANGUP Act). The bill rescinds a provision of the Bipartisan Budget Act of 2015 that exempted debt collectors from laws prohibiting them from robocalling mobile phones of consumers who have a debt owed or guaranteed by the federal government without consent. Specifically, the bill would protect anyone with federal loans, including student loans, mortgages, veterans loans, and farming loans from unwanted robocalls and texts to their mobile phones. The bill has been referred to the House Commerce Committee for consideration.

Legislation Amending the CAN-SPAM Act Introduced in House

On March 3, Rep. Kathleen Rice (D-NY) introduced H.R.4709, the Unsubscribe from All Act of 2016. The bill makes amendments to a 2003 law known as the Controlling the Assault of Non-Solicited Pornography and Marketing Act or CAN-SPAM Act, which was the legislative response to a large number of complaints over spam e-mails at the time of its passage, requires, among other things, that all commercial emails contain a visible and operable unsubscribe mechanism. Rep. Rice’s bill amends the CAN-SPAM Act to require that the process of unsubscribing from all of a company’s commercial emails would involve no more than two clicks on the part of the recipient. Importantly, the bill also requires that all commercial e-mails contain an option that allows recipients to unsubscribe from all future communications from that sender. The bill has been referred to the House Commerce Committee.

This Week’s Hearings:

  • Tuesday, March 15: The Senate Commerce Committee will hold a hearing entitled “Hands Off: The Future of Self-Driving Cars.”
  • Thursday, March 17: The Communications & Technology Subcommittee of the House Commerce Committee will hold a hearing entitled “Privatizing the Internet Assigned Number Authority.”

Regulatory Activity

FCC Announces Tentative Agenda for March 31 Open Meeting

The FCC on March 10 released a Public Notice announcing that the following items are tentatively on the agenda for the FCC’s March 31 Open Meeting:

  • Protecting the Privacy of Customers of Broadband Services: As discussed further below, the FCC will consider a Notice of Proposed Rulemaking “seeking comment on a framework for ensuring that consumers have the tools they need to make informed choices about how their data is used and when it is shared by broadband providers.”
  • Providing Affordable Broadband for Low-Income Americans: As discussed further below, the FCC will consider an item to “comprehensively restructure and modernize the Lifeline Program to efficiently and effectively connect low-income Americans to broadband” and “strengthen program oversight and administration.”
  • Expanding Access to Video Programming for Blind or Visually Impaired Americans: The FCC will consider a Notice of Proposed Rulemaking that “seeks comment on proposals to expand the amount of and access to video programming, for the benefit of consumers who are blind or visually impaired.”

The FCC’s March 31 Open Meeting is scheduled to commence at 10:30 a.m. in Room TW-C305 of the FCC’s headquarters at 445 12th Street S.W., Washington, D.C. The meeting is open to the public and will be streamed live at fcc.gov/live.

FCC Chairman Wheeler Circulates Proposed Broadband Privacy Rules

On March 10, the FCC released a Fact Sheet stating that “FCC Chairman Tom Wheeler has circulated for consideration by the full Commission a Notice of Proposed Rulemaking (NPRM) to ensure consumers have the tools they need to make informed choices about how and whether their data is used and shared by their broadband providers.” The Fact Sheet states that “[e]very day, consumers hand over very personal information simply by using residential or mobile broadband services” because “ISPs can collect customers’ personal and private information to create detailed profiles about their lives.” It states further that “[c]onsumers should have effective control over how their personal information is used and shared by their broadband service providers.”

Specifically, the draft rules would create “three categories” of “use and sharing of information” by broadband providers. First, any “customer data necessary to provider broadband services and for marketing the type of broadband service purchased by a customer would require no additional customer consent beyond the creation of the customer-broadband provider relationship.” Second, broadband providers would be allowed to use and share with affiliates customer data for “marketing other communications-related services . . . unless the customer affirmatively opts out.” Third, all “other uses and sharing of consumer data would require express, affirmative ‘opt-in consent from customers.’” The draft rules would also implement “robust and flexible data security requirements for broadband providers, including an overarching data security standard,” and establish “common-sense data breach notification requirements” including requiring that broadband providers notify affected customers of breaches of their data “no later than 10 days after discovery.”   Moreover, the FCC would be notified no later than 7 days after discovery, and certain law enforcement officials no later than 7 days after discovery in the case of a breach affecting more than 5,000 consumers.

The proposal will be voted on by the FCC at its March 31 Open Meeting and, if adopted, would request public comment on the proposed rules.

FCC, Verizon Settle “Supercookie” Probe

The FCC announced on March 7 that the Enforcement Bureau (EB) had reached a settlement with Verizon Wireless (VZW) to resolve an investigation into the company’s “practice of inserting unique identifier headers [(UIDH)] or so-called ‘supercookies’ into its customers’ mobile Internet traffic without their knowledge or consent” for the purpose of “creat[ing] profiles in order to serve advertisements,” according to a News Release and an Order and Consent Decree (Consent Decree). This is the second Open Internet enforcement action from the communications regulator, and demonstrates that the FCC’s new focus on data security and privacy continues to intensify, even as other regulators – such as the Consumer Financial Protection Bureau – join the race to protect consumer information online.

EB’s investigation “sought to determine Verizon Wireless’s compliance with Section 222 of the Communications Act” and the “Open Internet Transparency Rule.”  According to the Commission’s action, Section 222 “imposes a duty on carriers to protect their customers’ proprietary information.”. As noted in the Consent Decree, the Open Internet Transparency Rule requires “every fixed and mobile broadband Internet access service provider to ‘publicly disclose accurate information regarding the network management practices, performance, and commercial terms of its broadband Internet access services sufficient for consumers to make informed choices.”

EB’s investigation found that “although [VZW] began inserting UIDH into consumers’ Internet traffic as early December 2012, [VZW] did not disclose this practice until October 2014,” that “at least one of [VZW’s] advertising partners used UIDH for unauthorized purposes,” and that VZW had “inserted UIDH into the Internet traffic [on lines] ineligible to participate in Verizon Wireless’s targeted advertising programs.” To settle the investigation, VZW will pay $1,350,000 and “implement a compliance plan that requires it to obtain customer opt-in consent prior to sharing a customer’s UIDH with a third party to deliver targeted advertising.” The Consent Decree notes that VZW “cooperated with the [EB’s] investigation.”

FCC Chairman Wheeler Circulates Order to “Modernize Lifeline Program to Provide Affordable Broadband for Low-Income Americans”

On March 8, the FCC released a Fact Sheet discussing “an Order to modernize the FCC’s Lifeline program [by] making broadband more affordable for low-income consumers,” which Chairman Wheeler has circulated to the other Commissioners for a vote by the full FCC’s Open Meeting on March 31. The Lifeline program is a government subsidy program that provides discounted phone service to qualifying low-income consumers. The Fact Sheet states that “affordability [is] still the largest single barrier to broadband adoption in low-income households,” and that Lifeline “must evolve to meet today’s most pressing communications need: access to broadband.”

Principally, the draft Order proposes that “low income consumers could apply the $9.25 per month support to stand-alone broadband service as well as bundled voice and data service packages,” according to the Fact Sheet. The Fact Sheet further states that the Order would “encourage wide participation in the program by broadband providers, giving consumers competitive service options,” and would require minimum service standards to “ensure that supported service meet modern needs.” Additionally, the Order would establish a “National Eligibility Verifier to further deter waste, fraud and abuse” and implement a “budget mechanism [to] limit Lifeline’s cost to ratepayers.”

Chairman Wheeler and Commissioner Clyburn, who worked closely together in developing the draft Order, also posted to the FCC Blog discussing the item.

Senate Commerce Committee to Markup FAA Reauthorization

By Capital Thinking on Posted in Uncategorized

Legislative Activity

Senate Commerce Committee to Markup FAA Reauthorization

The Senate Commerce, Science, and Transportation Committee will mark up the Federal Aviation Administration Reauthorization Act of 2016 (S. 2658) this Wednesday, March 16. The bipartisan bill would reauthorize Federal Aviation Administration (FAA) programs through September 30, 2017. The text of the bill is available here.

Notably, the Senate’s FAA reauthorization bill does not include the controversial air traffic control (ATC) reform provisions from the House Transportation and Infrastructure Committee’s FAA reauthorization, the Aviation Innovation, Reform, and Reauthorization (AIRR) Act (H.R. 4441). The AIRR Act would remove ATC from FAA and transfer operation of air traffic services to a federally-chartered, not-for-profit corporation.

Despite discussion of increasing allowable PFCs by $2.00, from the current maximum of $4.50 to $6.50, during negotiations over the Senate’s FAA reauthorization bill, the provision was ultimately left out of the introduced bill. However, the bill does provide an increase of $400 million in Airport Improvement Program (AIP) funding for FY 2017.

Additionally, the bill includes significant provisions intended to hasten the integration of unmanned aircraft systems (UAS) into the National Airspace System, streamline the current permitting process for commercial UAS operations, and ultimately expand allowable UAS operations. The bill also includes several UAS provisions related to privacy.

The bill also includes provisions related to aviation safety, streamlining the implementation of the Next Generation Air Transportation System (NextGen), and aircraft certification reform.

The current FAA authorization expires on March 31. Last week, House Transportation and Infrastructure Committee Chairman Bill Shuster (R-PA) and House Ways and Means Committee Chairman Kevin Brady (R-TX) introduced a short-term extension (H.R. 4721) that would authorize FAA programs through July 15, 2016, and extend the authority to collect aviation taxes through March 31, 2017, to provide time to pass a longer term reauthorization bill.

This Week’s Hearings:      

  • Tuesday, March 15: The House Appropriations Committee Transportation, Housing and Urban Development, and Related Agencies Subcommittee will hold a hearing on the FY 2017 budget for the Transportation Department and Housing and Urban Development’s Office of Inspector General.
  • Tuesday, March 15: The House Armed Services Committee Readiness Subcommittee will hold a hearing on “The U.S. Transportation Command FY 2017 Readiness Posture.”
  • Tuesday, March 15: The House Science, Space, and Technology Committee Oversight Subcommittee will hold a hearing titled “Racing to Regulate: EPA’s Latest Overreach on Amateur Drivers.”
  • Tuesday, March 15: The House Transportation and Infrastructure Committee Coast Guard and Maritime Transportation Subcommittee will hold a hearing on “The President’s FY 2017 Budget Request for Coast Guard and Maritime Transportation Programs.”
  • Tuesday, March 15: The Senate Commerce, Science, and Transportation Committee will hold a hearing titled “Hands Off: The Future of Self-Driving Cars.”
  • Wednesday, March 16: The Senate Commerce, Science, and Transportation Committee will hold a markup of S.2658, the “Federal Aviation Administration Reauthorization Act of 2016”; and S.2644, the “FCC Reauthorization Act of 2016”; and votes on nomination for promotion in the United States Coast Guard.

Senate to Vote on Addiction and Recovery Act; House Not in Session

By Squire Patton Boggs on Posted in Uncategorized

Senate Legislative Activity

The Senate will convene on Monday, March 7, at 3:00pm. Following any Leader remarks, the Senate will be in a period of morning business until 4:00pm, with Senators permitted to speak up to 10 minutes each.

At 4:00pm, the Senate will resume consideration of S.524, Comprehensive Addiction and Recovery Act of 2015. At 5:30pm, the Senate will hold a roll call vote on the motion to invoke cloture on amendment #3378 (substitute) to S.524 by Senators Chuck Grassley (R-IA) and Pat Leahy (D-VT). Note that Senator Mitch McConnell (R-KY) last week filed cloture on both the Grassley-Leahy substitute amendment and on the underlying bill. The filing deadline for first degree amendments to the substitute amendment and the bill is 3:30pm on Monday; amendments must be germane and timely filed to be considered in order if cloture is invoked. In addition to the Grassley-Leahy amendment, amendment #3374 by Senator Joe Donnelly (D-IN), as modified (follow-up services) is also pending.

House Legislative Activity

The House is not in session this week. Lawmakers are set to return to Washington on Monday, March 14 to resume legislative business.

Hatch’s “Corporate Integration” Plan Delayed; Treasury Expected to Release Final CbyCR Regulations by July

By Squire Patton Boggs on Posted in Tax

Legislative Activity

“Corporate Integration” Proposal Delayed

As the House Ways and Means Committee continues moving forward with its international tax reform proposal, last week the Senate Finance Committee indicated that its “corporate integration” proposal has been delayed. The proposal, which would lower the effective rate for corporations by eliminating a double layer of taxation, is now potentially “a few months” away from being released, with Senate Finance Committee Orrin Hatch (R-UT) suggesting that his goal is to move forward with his plan on corporate integration by May. While Chairman Hatch noted that the Committee is still awaiting additional feedback from the Joint Committee on Taxation, senior staff last week suggested that the Committee is also continuing to examine design questions. Additionally, according to staff, the Committee may actually release a discussion draft of the proposal within “a few weeks,” not a few months as the Chairman suggested earlier in the week.

This Week’s Hearings:

  • Tuesday, March 8: The Senate Appropriations Subcommittee on Financial Services and General Government will hold a hearing to examine the Treasury Department’s FY 2017 Budget Request.

Regulatory Activity

Treasury Expected to Release Final CbyCR Rules by July

Following up to the proposed country-by-country reporting (CbyCR) rules published last year, Deputy Assistant Secretary for International Tax Affairs Robert Stack last week indicated that the Treasury Department “fully expect[s]” to finalize the rules by June 30. According to Mr. Stack, if Treasury moves forward as expected, companies meeting the threshold level of sales would be required to file a report “for all tax years that begin after that date, including years beginning on July 1, 2016, and September 1, 2016.” Part of the reason for the expedited nature of the rules (with July 1 being six months earlier that the date in the proposed rules) is a result of pressure from other countries that the U.S. might delay the CbyCR requirements indefinitely if not finalized before the next Administration takes office in January 2017.  Relatedly, Mr. Stack also expressed that he is hopeful other countries will be flexible about the effective date of their respective rules.

Senate to Resume Consideration of Bill on Addiction and Recovery; House Debates Legislation on Medicaid and Emission Standards

By Squire Patton Boggs on Posted in Uncategorized

Senate Legislative Activity

The Senate will convene on Monday, February 29, at 3:00pm. Following any Leader remarks, the Senate will be in a period of morning business until 5:00pm, with Senators permitted to speak up to 10 minutes each.

At 5:00pm, the Senate will resume consideration of the motion to proceed to S.524, Comprehensive Addiction and Recovery Act of 2015, with the time equally divided between the two managers or their designees until 5:30pm. At 5:30pm, there will be a roll call vote on the motion to invoke cloture on the motion to proceed to S.524.

House Legislative Activity

On Monday, February 29, the House will meet at 12:00pm for morning hour and at 2:00pm for legislative business, with votes postponed until 6:30pm. The following legislation will be considered under suspension of the rules:

  1. H.R. 4238 – To amend the Department of Energy Organization Act and the Local Public Works Capital Development and Investment Act of 1976 to modernize terms relating to minorities;
  2. H.R. 4444 – EPS Improvement Act of 2016;
  3. H.R. 4583 – To promote a 21st century energy and manufacturing workforce, as amended;
  4. H.R. 4401 – Amplifying Local Efforts to Root out Terror Act of 2016, as amended;
  5. H. Res. 148 – Calling on the government of Iran to fulfill their promises of assistance in this case of Robert Levinson, the longest held United States civilian in our Nation’s history, as amended;
  6. H.R. 1471 – FEMA Disaster Assistance Reform Act of 2015, as amended;
  7. H.R. 4084 – Nuclear Energy Innovation Capabilities Act, as amended;
  8. S. 1172 – Edward “Ted” Kaufman and Michael Leavitt Presidential Transitions Improvements Act of 2015, as amended; and
  9. S. 1580 – Competitive Service Act of 2015, as amended

On Tuesday, March 1, the House will meet at 10:00am for morning hour and at 12:00 pm for legislative business. The following legislation will be considered under suspension of the rules:

  1. H.R. 2814 – To name the Department of Veterans Affairs community-based outpatient clinic in Sevierville, Tennessee, the Dannie A. Carr Veterans Outpatient Clinic;
  2. H.R. 2347 – Federal Advisory Committee Act Amendments of 2016, as amended;
  3. H.R. 3735 – To designate the facility of the United States Postal Service located at 200 Town Run Lane in Winston Salem, North Carolina, as the “Maya Angelou Memorial Post Office”;
  4. H.R. 136 – To designate the facility of the United States Postal Service located at 1103 USPS Building 1103 in Camp Pendleton, California, as the “Camp Pendleton Medal of Honor Post Office”;
  5. H.R. 1132 – To designate the facility of the United States Postal Service located at 1048 West Robinhood Drive in Stockton, California, as the “W. Ronald Coale Memorial Post Office Building”;
  6. H.R. 2458 – To designate the facility of the United States Postal Service located at 5351 Lapalco Boulevard in Marrero, Louisiana, as the “Lionel R. Collins, Sr. Post Office Building”;
  7. H.R. 3082 – To designate the facility of the United States Postal Service located at 5919 Chef Menteur Highway in New Orleans, Louisiana, as the “Daryle Holloway Post Office Building”;
  8. H.R. 3274 – To designate the facility of the United States Postal Service located at 4567 Rockbridge Road in Pine Lake, Georgia, as the “Francis Manuel Ortega Post Office”;
  9. H.R. 3601 – To designate the facility of the United States Postal Service located at 7715 Post Road, North Kingstown, Rhode Island, as the “Melvoid J. Benson Post Office Building”;
  10. H.R. 4046 – To designate the facility of the United States Postal Service located at 220 East Oak Street, Glenwood City, Wisconsin, as the Second Lt. Ellen Ainsworth Memorial Post Office;
  11. S. 1596 – To designate the facility of the United States Postal Service located at 2082 Stringtown Road in Grove City, Ohio, as the “Specialist Joseph W. Riley Post Office Building”;
  12. S. 1826 – To designate the facility of the United States Postal Service located at 99 West 2nd Street in Fond du Lac, Wisconsin, as the Lieutenant Colonel James “Maggie” Megellas Post Office

On Wednesday, March 2, the House will meet at 10:00am for morning hour and at 12:00 pm for legislative business. The House will consider H.R. 3716 – Ensuring Access to Quality Medicaid Providers Act (Subject to a Rule).

On Thursday, March 3, the House will meet at 9:00am for legislative business, with last votes expected by 3:00 pm. The House will consider H.R. 4557 – Blocking Regulatory Interference from Closing Kilns Act of 2016 (Subject to a Rule).

On Friday, March 4, no votes are expected in the House.

House Republicans Look for Mandatory Cuts to Make Passage of a Budget Resolution Possible

By Capital Thinking on Posted in Budget and Appropriations

Legislative Activity

House Republicans Look for Mandatory Cuts to Make Passage of a Budget Resolution Possible

House Budget Committee Chairman Tom Price (R-GA) and House Republican Leadership continue to look for cuts to mandatory spending to offset the $30 billion increase in discretionary spending for FY 2017 called for in last year’s bipartisan budget deal. However, the likelihood that House Republicans will pass a budget resolution is reduced each day it is delayed. While House Speaker Paul Ryan (R-WI) has argued that following the higher spending limits would provide Republicans the best opportunity to push conservative policy priorities during the appropriations process, the higher spending levels face significant opposition among House Republicans.

The Republican Study Committee (RSC), which includes around 170 House Republicans, followed the House Freedom Caucus’ lead and is pushing for a discretionary spending limit of $1.04 trillion, the level set in the Budget Control Act (sequestration) and $30 billion less than the levels set in last year’s budget deal. However, Republican Leadership is developing a workaround that they hope will appease the Freedom Caucus and the RSC while maintaining the higher discretionary spending levels called for in the budget deal.

Leadership’s current plan is to pursue separate legislation that would offset the $30 billion increase with an equivalent level of cuts to mandatory spending. House Majority Leader Kevin McCarthy (R-CA) has asked chairmen of authorizing committees to find new cuts to mandatory programs to include in the standalone legislation, and one Chairman said they have a week to come up with the cuts.

Chairman Price has said he wants to pass a budget resolution out of the Budget Committee next week, but that timeline is looking increasingly unlikely. If House Republicans do not pass an FY 2017 budget resolution they will forego the opportunity to use the Budget Reconciliation process, which would allow Senate Republicans to pass legislation without reaching the typical 60 vote threshold needed to overcome a filibuster.

This Week’s Hearings:

  • Tuesday, March 1: The Senate Appropriations Committee Agriculture, Rural Development, Food and Drug Administration, and Related Agencies Subcommittee will hold a hearing on the state of the farm economy.

Senate Appropriations Committee FY 2017 Budget Hearings

  • Tuesday, March 1: The Senate Appropriations Committee Legislative Branch Subcommittee will hold a hearing on the FY 2017 budget request and funding justification for the Senate Sergeant at Arms and the Capitol Police.
  • Tuesday, March 1: The Senate Appropriations Committee Homeland Security Subcommittee will hold a hearing on the FY 2017 budget request and funding justification for the Transportation Security Administration.
  • Wednesday, March 2: The Senate Appropriations Committee Energy and Water Development Subcommittee will hold a hearing on the FY 2017 budget request and funding justification for the Army Corps of Engineers and the Interior Department’s Bureau of Reclamation.
  • Wednesday, March 2: The Senate Appropriations Committee Interior, Environment, and Related Agencies Subcommittee will hold a hearing on the FY 2017 budget request and funding justification for the Interior Department.
  • Wednesday, March 2: The Senate Appropriations Committee Agriculture, Rural Development, Food and Drug Administration, and Related Agencies Subcommittee will hold a hearing on the FY 2017 budget request and funding justification for the Food and Drug Administration.
  • Wednesday, March 2: The Senate Appropriations Committee Defense Subcommittee will hold a hearing on the FY 2017 budget request and funding justification for the Navy and Marine Corps.
  • Thursday, March 3: The Senate Appropriations Committee Labor, Health and Human Services, Education, and Related Agencies Subcommittee will hold a hearing on the FY 2017 budget request and funding justification for the Health and Human Services Department.
  • Thursday, March 3: The Senate Appropriations Committee Military Construction, Veterans Affairs, and Related Agencies Subcommittee will hold a hearing on the FY 2017 budget request and funding justification for the Veterans Health Administration and Veterans Benefits Administration.
  • Thursday, March 3: The Senate Appropriations Committee Commerce, Justice, Science, and Related Agencies Subcommittee will hold a hearing on the FY 2017 budget request and funding justification for the Commerce Department.

House Appropriations Committee FY 2017 Budget Hearings

  • Monday, February 29: The House Appropriations Committee Financial Services and General Government Subcommittee will hold a hearing on the FY 2017 budget for the General Services Administration.
  • Tuesday, March 1: The House Appropriations Committee Energy and Water Development, and Related Agencies Subcommittee will hold a hearing on the FY 2017 budget for the Energy Department.
  • Tuesday, March 1: The House Appropriations Committee Defense Subcommittee will hold a hearing on the FY 2017 budget for the Navy and Marine Corps.
  • Tuesday, March 1: The House Appropriations Committee Homeland Security Subcommittee will hold a hearing on the FY 2017 budget for U.S. Customs and Border Protection.
  • Tuesday, March 1: The House Appropriations Committee Energy and Water Development, and Related Agencies Subcommittee will hold a hearing on the FY 2017 budget for the Energy Department, National Nuclear Security Administration, Weapons and Activities, and Nuclear Nonproliferation and Naval Reactors.
  • Tuesday, March 1: The House Appropriations Committee Legislative Branch Subcommittee will hold a hearing on the FY 2017 budget for the Architect of the Capitol.
  • Tuesday, March 1: The House Appropriations Committee Legislative Branch Subcommittee will hold a hearing on the FY 2017 budget for the U.S. Capitol Police.
  • Tuesday, March 1: The House Appropriations Committee Labor, Health and Human Services, Education, and Related Agencies Subcommittee will hold a hearing on the FY 2017 budget for the Corporation for National and Community Service.
  • Tuesday, March 1: The House Appropriations Committee Labor, Health and Human Services, Education, and Related Agencies Subcommittee will hold a hearing on the FY 2017 budget for the Housing and Urban Development Department.
  • Wednesday, March 2: The House Appropriations Committee Defense Subcommittee will hold a hearing on the FY 2017 budget for the Air Force.
  • Wednesday, March 2: The House Appropriations Committee Energy and Water Development, and Related Agencies Subcommittee will hold a hearing on the FY 2017 budget for Energy Department science programs.
  • Wednesday, March 2: The House Appropriations Committee Interior, Environment, and Related Agencies Subcommittee will hold a hearing on the FY 2017 budget for the Interior Department.
  • Wednesday, March 2: The House Appropriations Committee Labor, Health and Human Services, Education, and Related Agencies Subcommittee will hold a hearing on the FY 2017 budget for the Substance Abuse and Mental Health Services Administration.
  • Wednesday, March 2: The House Appropriations Committee Legislative Branch Subcommittee will hold a hearing on the FY 2017 budget for the House of Representatives.
  • Wednesday, March 2: The House Appropriations Committee Legislative Branch Subcommittee will hold a hearing on the FY 2017 budget for the Library of Congress and United States Copyright, Program Project, and Activity Review.
  • Wednesday, March 2: The House Appropriations Committee Transportation, Housing and Urban Development, and Related Agencies Subcommittee will hold a hearing on the FY 2017 budget for the Federal Railroad Administration and the Federal Aviation Administration.
  • Wednesday, March 2: The House Appropriations Committee Military Construction, Veterans Affairs, and Related Agencies Subcommittee will hold a hearing on the FY 2017 budget for the Veterans Affairs Department.
  • Wednesday, March 2: The House Appropriations Committee Energy and Water Development, and Related Agencies Subcommittee will hold a hearing on the FY 2017 budget for the Energy Department applied energy programs.
  • Wednesday, March 2: The House Appropriations Committee Homeland Security Subcommittee will hold a hearing on the FY 2017 budget for the Transportation Security Administration.
  • Thursday, March 3: The House Appropriations Committee Defense Subcommittee will hold a hearing on the FY 2017 budget for the U.S. Army.
  • Thursday, March 3: The House Appropriations Committee Interior, Environment, and Related Agencies Subcommittee will hold a hearing on the FY 2017 budget for the Bureau of Land Management.
  • Thursday, March 3: The House Appropriations Committee Homeland Security Subcommittee will hold a hearing on the FY 2017 budget for the U.S. Coast Guard.
  • Thursday, March 3: The House Appropriations Committee Agriculture, Rural Development, Food and Drug Administration, and Related Agencies Subcommittee will hold a hearing on the FY 2017 budget for the Agriculture Department marketing and regulatory programs.
  • Thursday, March 3: The House Appropriations Committee Interior, Environment, and Related Agencies Subcommittee will hold a hearing on the FY 2017 budget for the Office of Surface Mining Reclamation and Enforcement.
  • Thursday, March 3: The House Appropriations Committee Military Construction, Veterans Affairs, and Related Agencies Subcommittee will hold a hearing on the FY 2017 budget for Defense installations, environment, energy, and the Base Closure and Realignment Commission.

Senate Return To Energy Bill? House to Examine Energy and Environment FY’ 17 Budget Requests; BLM Proposes Rule for Oil and Gas Industry on Federal Lands

By Squire Patton Boggs on Posted in Energy, Environment and Natural Resources

Legislative Activity

This week, the Senate could return to floor consideration of S. 2012, the Energy Policy Modernization Act of 2016. Last week there was progress made toward hotlining a procedural proposal to separate consideration for a potential agreement on Flint, MI water funding and the Energy bill in order to vote on the two items separately – as opposed to the possibility of Flint funding being considered in the Energy bill. However the process has since been held up due to a hold placed by Senator Mike Lee (R-UT) who reportedly has concerns about both the energy bill and the Flint funding. If there is an agreement on Flint, the Senate Energy bill could be back on the floor rather quickly. Once the bill hits the floor, the Senators are expected to consider 30 amendments by voice vote and 8 amendments (including the SAVE Act) by roll-call vote – each of which would need 60 votes to pass. 

This Week’s Hearings:

  • On Tuesday, March 1, the House Natural Resources Committee will hold a hearing to examine the Department of the Interior’s (DOI) Fiscal Year 2017 Budget Request. DOI Secretary, Sally Jewell, will testify. Secretary Jewell will also testify on the Department’s budget request the following day on March 2 before the House Appropriations Committee, Subcommittee on Interior, Environment.
  • On Tuesday, March 1, the House Energy and Commerce Committee, Subcommittee on Energy and Power, will hold a concerning a discussion draft of the proposed reauthorization bill for the Pipeline and Hazardous Materials Safety Administration’s (PHMSA) pipeline safety program through 2019. The draft contains targeted mandates for PHMSA to increase transparency and accountability, complete overdue regulations and improve safety.
  • On Tuesday, March 1, the House Appropriations Committee, Subcommittee on Energy and Water Development, will hold a hearing on the Department of Energy’s FY 17 Budget Request.  DOE Secretary, Dr. Ernest Moniz, will testify. Secretary Moniz will also testify on the Department’s budget request the following day on March 2 before the he House Energy and Commerce Committee, Subcommittee on Energy and Power.  On Thursday, March 3, the Senate Energy and Natural Resources Committee will hold a hearing as well on DOE’s FY 17 Budget Request.
  • On Tuesday, March 1, the House Appropriations Committee, Subcommittee on Energy and Water Development, will hold a hearing titled “Department of Energy, National Nuclear Security Administration, Weapons and Activities and Nuclear Nonproliferation and Naval Reactors.” The Administrator for Nuclear Security at the Department of Energy, Frank Klotz, will testify, as well as others.
  • On Wednesday, March 2, the House Natural Resources Committee, Subcommittee on Energy and Mineral Resources, will hold a hearing titled “Impact of the President’s FY 2017 Budget on the Energy and Mineral Leasing and Production Missions of the Bureau of Ocean Energy Management (BOEM), the Bureau of Safety and Environmental Enforcement (BSEE), and the Bureau of Land Management (BLM)”.
  • On Wednesday, March 2, the Senate Environment and Public Works Committee will hold a hearing to examine three pieces of legislation: S. 2446, to amend subtitle D of the Solid Waste Disposal Act concerning coal combustion residuals and disposal, and S.1479, to amend the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) of 1980 to modify grant and a bill entitled, “Good Samaritan Cleanup of Orphan Mines Act of 2016.”
  • On Wednesday, March 2, the House Appropriations Committee, Subcommittee on Energy and Water Development, will hold an FY 17 Budget Request hearing concerning the Department of Energy, Applied Energy division. Several officials from the Department of Energy will testify including: the Under Secretary for Science and Energy; the Assistant Secretary for Energy Efficiency and Renewable Energy; the Acting Assistant Secretary for Nuclear Energy; Assistant Secretary for Fossil Energy; and the Assistant Secretary for Electricity Delivery and Energy Reliability.
  • On Wednesday, March 2, the House Appropriations Committee, Subcommittee on Energy and Water Development, will hold a hearing titled “Budget Hearing – Department of Energy, Science”.  The Under Secretary for Science and Energy and the Director of the Office of Science from the Department of Energy will testify.
  • On Thursday, March 3, the House Appropriations Committee, Subcommittee on Interior, Environment, and Related Agencies, will hold a hearing title “Budget Hearing – Office of Surface Mining Reclamation and Enforcement”.  The Director of the Office of Surface Mining Reclamation and Enforcement, Joseph Pizarchik, will testify.
  • On Thursday, March 3, the House Appropriations Committee, Subcommittee on Interior, Environment, and Related Agencies, will hold a hearing on the Bureau of Land Management (BLM’s) F 17 Budget Request. The Director of the Bureau of Land Management, Neil Kornze, will testify.
  • On Thursday, March 3, the House Committee on Science, Space, and Technology, Subcommittee on Energy and Subcommittee on Oversight, will hold a joint hearing titled “Department of Energy Oversight: The DOE Loan Guarantee Program”.

Regulatory Activity

BLM 

The Bureau of Land Management (BLM) has issued a proposed rule to amend regulations concerning land use plans pursuant to the Federal Land Policy and Management Act (FLPMA). According to the agency, the proposed rule is intended to “enable the BLM to more readily address landscape-scale resource issues, such as wildfire, habitat connectivity, or the demand for renewable and non-renewable energy sources and to respond more effectively to environmental and social changes.” The BLM has admitted that the proposed rule may have an impact on the oil and gas industry – possibly resulting in earlier and more involvement from the public in the agency’s planning process. Comment on the proposed rule is due April 25.

Marine and Hydrokinetic Advancement

On March 2, the Department of Energy (DOE), Wind and Water Power Technologies Office will hold a Summit on Marine and Hydrokinetic Research and Development in Washington, D.C. DOE states that it is targeting for attendance: “executive members from the Department of Energy, the national laboratories and industry to showcase DOE’s water power energy investments in the national laboratories and to identify activities ripe for technology transfer.” Registration details can be found here. 

House Divided on Fiduciary Rule, Puerto Rico; CFTC Likely to Proceed on Positions Limits Despite Industry Objections

By Squire Patton Boggs on Posted in Financial Services

Legislative Activity

Lawmakers Still Divided on Labor’s Fiduciary Rule

With the Department of Labor’s (DOL) Fiduciary Rule now with the Office of Management and Budget and being prepared for release in final form later this spring, last week Speaker of the House Paul Ryan (R-WI) emphasized his opposition to the proposal, noting that he is “determined to do everything possible” to derail the rule. Sharing the concerns of many other Republican lawmakers, Speaker Ryan underscored that the proposal would likely increase compliance burdens, raise the cost of investment advice, and potentially limit consumers’ access to such advice. Still, following a meeting last week with Secretary of Labor Thomas Perez, many Democrats who previously expressed reservations about the rule appear to have had their concerns resolved and are ready to support the proposal.

As previously reported, lawmakers in both the House and Senate have introduced legislation to block the Fiduciary Rule and replace it with a congressionally-drafted fiduciary standard by amending the Internal Revenue Code and the Employee Retirement Income Security Act (ERISA). The House Ways and Means Committee and the House Education and the Workforce Committee have both marked-up their respective Fiduciary Rule legislation, while the Senate versions of the bills have not yet been taken up by their respective committees.

Relatedly, last week, Securities and Exchange Commission (SEC) Chair Mary Jo White indicated that, despite the fact that the SEC only has three Commissioners, the Commission remains committed to moving forward with its efforts to promulgate a uniform Fiduciary Rule for investment advisors and broker dealers. The timing of such a proposal, however, remains unclear. Interestingly, the SEC’s renewed commitment to its own version of the rule comes as the Senate Homeland Security and Governmental Affairs Committee last Wednesday released a nearly 40-page report that suggests DOL rejected many of the SEC’s recommendations; DOL, however, responded that this was a mischaracterization and that its “engagement with the SEC was comprehensive.”

Puerto Rico Solution Remains Priority as March Deadline Approaches

As March approaches, pressure will remain on lawmakers to address the fiscal crisis in Puerto Rico. Last week, both the House Natural Resources Committee and House Financial Services Committee held hearings to discuss the appropriate path forward. While all agreed that Congress must take action to address the Commonwealth’s situation, there remained a clear divide between Republicans – who expressed skepticism over allowing Puerto Rico to access Chapter 9 bankruptcy protections – and Democrats – who generally, including the Obama Administration, appeared more amenable to allowing the island to restructure its debts. Though the exact approach and scope of the yet-to-be-released legislation are still being worked out, House Republicans are moving forward with a sense of urgency, as Speaker Ryan has asked that a solution be reached by the end of March.

Financial Services Policymakers Focus on International Insurance Regulation

Last week, the House Financial Services Subcommittee on House and Insurance held a hearing to discuss international insurance regulation and the impact on U.S. insurers. During the hearing, lawmakers discussed best practices for coordinating domestic and international insurance regulations on the insurance industry. There was also discussion of draft legislation addressing congressional oversight of international insurance regulation deliberations. Specifically, the draft legislation would establish various requirements before the Federal Insurance Office (FIO) or the Federal Reserve are permitted to agree to, accept, establish, enter into, or consent to the adoption of any final international insurance standards. This renewed oversight of international insurance standards comes after U.S. and EU regulators met from February 18-19 to discuss insurance regulation.

This Week’s Hearings:

  • Tuesday, March 1: The House Financial Services Committee Task Force to Investigate Terrorism Financing will hold a hearing titled “Helping the Developing World Fight Terror Finance.”
  • Tuesday, March 1: The House Appropriations Subcommittee on Transportation, Housing, and Urban Development will hold a hearing to discuss the budget of the Department of Housing and Urban Development.
  • Wednesday, March 2: The House Financial Services Committee will hold a markup of bills designed to promote access to capital and reduce regulatory burdens, as well as legislation on flood insurance options.
  • Thursday, March 3: The Senate Banking Committee will hold a hearing titled “Regulatory Reforms to Improve Equity Market Structure.”

Regulatory Activity

CFTC Likely to Move Forward on Position Limits, to Hold Roundtable on Residual Interest Deadline

Last week, the Commodity Futures Trading Commission’s (CFTC) Energy and Environmental Markets Advisory Committee held a meeting and released a report suggesting that there is “little to no evidence” that the Commission’s position limits rule is necessary. Nevertheless, CFTC Chairman Timothy Massad, as well as various Senators, including Elizabeth Warren (D-MA), Sherrod Brown (D-OH), and Bernie Sanders (I-VT) have come out in strong support of moving forward with the rule, despite the concerns of the CFTC’s Advisory Committee.

Additionally, on Thursday, March 3, the CFTC’s Division of Swap Dealer and Intermediary Oversight and the Office of the Chief Economist will host a public roundtable to discuss a report on the Residual Interest Deadline. The CFTC amended Regulation 1.22 regarding the requirement that a futures commission merchant maintain sufficient of its own capital in customer segregated accounts to cover the undermargined amount in futures customers’ trading accounts as of the close of trading on the previous business day. By May 16, 2016, staff must complete and publish for publish for public comment a report addressing the practicability of amending the Residual Interest Deadline from 6:00pm EST to the time of the settlement or some other time of day. This roundtable will, as required by Regulation 1.22, facilitate discussion of specific issues to be covered by the report.

FSOC to Discuss Annual Report, Federal Reserve to Meet on Single-Counterparty Credit Limits

On Wednesday, March 2, the Financial Stability Oversight Council (FSOC) will meet in Executive Session to discuss: (1) market developments; (2) the Council’s Annual Report; (3) the annual reevaluation of the designation of a nonbank financial company; and (4) an update on the Council’s ongoing work on asset management.

Additionally, on Friday, March 4, the Board of Governors of the Federal Reserve will hold a meeting to consider a proposal to establish single-counterparty credit limits for large U.S. bank holding companies and foreign bank organizations.

Two Health Bills Scheduled for House Floor; Senate to Consider Opioid Abuse Legislation; CMS Releases Proposed Rule on Provider Integrity; MedPAC Meets This Week

By Squire Patton Boggs on Posted in Healthcare

Legislative Activity

Two Health Bills Scheduled for House Floor

House Majority Leader Kevin McCarthy (R-CA) has stated that the chamber may consider two health bills this coming week. On Tuesday, March 1, the House is expected to consider H.R. 2814, to Name the Department of Veterans Affairs Community-Base Outpatient Clinic in Sevierville, Tennessee, the Dannie A. Carr Veterans Outpatient Clinic, under suspension of the rules. The next day, the House is expected to consider H.R. 3716, the Ensuring Terminated Providers are Removed from Medicaid and CHIP Act, which requires states to make available certain provider termination information to the Secretary of Health and Human Services.

Senate to Consider Opioid Abuse Legislation

On Monday, February 29, the Senate is expected to resume consideration of the motion to proceed to S. 524, the Comprehensive Addiction and Recovery Act of 2015, which authorizes the Attorney General to award grants to address the national epidemics of prescription opioid abuse and heroin use. A cloture vote is expected.

This Week’s Hearings:

  • Tuesday, March 1: The House Committee on Energy and Commerce Subcommittee on Health will hold a hearing titled “Examining the Financing and Delivery of Long-Term Care in the U.S.”
  • Tuesday, March 1: The House Committee on Rules will hold a meeting on H.R. 3716, the Ensuring Terminated Providers are Removed from Medicaid and CHIP Act.
  • Wednesday, March 2: The House Committee on Appropriations Subcommittee on Military Construction, Veterans Affairs, and Related Agencies will hold a hearing titled “Department of Veterans Affairs Budget.”
  • Wednesday, March 2: The House Committee on Science, Space, and Technology Subcommittee on Research and Technology will hold a hearing titled “Smart Health: Empowering the Future of Mobile Apps.”
  • Wednesday, March 2: The House Committee on Appropriations Subcommittee on Labor, Health and Human Services, Education, and Related Agencies will hold a hearing titled “Substance Abuse and Mental Health Services Administration Budget.”
  • Wednesday, March 2: The House Committee on Energy and Commerce Select Investigative Panel on Infant Lives will hold a hearing titled “Bioethics and Fetal Tissue.”
  • Wednesday, March 2: The House Committee on Energy and Commerce Subcommittee on Oversight and Investigations will hold a hearing titled “Examining the U.S. Public Health Response to the Zika Virus.”
  • Wednesday, March 2: The House Committee on Foreign Affairs Subcommittee on Africa, Global Health, Global Human Rights, and International Organizations will hold a hearing titled “The Growing Threat of Cholera and Other Diseases in the Middle East.”
  • Wednesday, March 2: The Senate Committee on Appropriations Subcommittee on Agriculture, Food and Drug Administration, and Related Agencies will hold a hearing titled “Hearing to Review the Fiscal Year 2017 Budget Request and Funding Justification for the Food and Drug Administration.”
  • Thursday, March 3: The House Committee on Energy and Commerce Subcommittee on Commerce, Manufacturing, and Trade will hold a hearing titled “Disrupter Series: Wearable Devices.”
  • Thursday, March 3: The Senate Committee on Appropriations Subcommittee on Departments of Labor, Health and Human Services, Education, and Related Agencies will hold a hearing titled “Hearing to Review the Fiscal Year 2017 Budget Request and Funding Justification for the U.S. Department of Health and Human Services.”
  • Thursday, March 3: The Senate Committee on Appropriations Subcommittee on Military Construction, Veterans Affairs, and Related Agencies will hold a hearing titled “Hearing to Review the Fiscal year 2017 and Fiscal year 2018 Funding Request and Budget Justification for the Veterans Health Administration and Veterans Benefits Administration.”
  • Friday, March 4: The House Committee on Veterans’ Affairs Subcommittee on Oversight and Investigations will hold a hearing titled “Addressing VA Opioid Prescription and Pain Management Practices.”

Regulatory Activity

CMS Releases Proposed Rule Focused on Provider Integrity

On Thursday, February 25, the Centers for Medicare & Medicaid Services (CMS) released a proposed rule titled “Medicare, Medicaid, and Children’s Health Insurance Programs; Program Integrity Enhancements to the Provider Enrollment Process.”

This proposed rule seeks to implement provisions from the Affordable Care Act (ACA) that require Medicare, Medicaid, and Children’s Health Insurance Program (CHIP) providers and suppliers to disclose certain current and previous affiliations with other providers and suppliers. CMS would be granted additional authority to deny or revoke a provider’s or supplier’s Medicare enrollment, and physicians or eligible professionals would be required to be enrolled in Medicare in an approved status (or have validly opted-out of the Medicare program) in order to order, certify, refer, or prescribe any Part A or B service, item, or drug.

The proposed rule is scheduled to be published in the Federal Register on March 1, and comments are due 60 days thereafter.

Other Activity

MedPAC Meeting This Week

On Thursday, March 3, and Friday, March 4, the Medicare Payment Advisory Commission (MedPAC) will hold a meeting to discuss Medicare policy issues and questions, as well as develop recommendations for Congress. The agenda includes the following topics:

  • Mandated report: Developing a unified payment system for post-acute care;
  • Telehealth services and the Medicare program;
  • Improving Medicare Part D;
  • Part B drug payment policy issues;
  • Improving the efficiency of oncology care in fee-for-service Medicare; and
  • Using competitive pricing to set beneficiary premiums in the fee-for-service and Medicare Advantage programs.

Senate Judiciary Committee to Hold Hearing on EB-5 Target Employment Areas

By Clark Ervin and Ludmilla Kasulke on Posted in Uncategorized

Legislative Activity

Senate Judiciary Committee to Hold Hearing on EB-5 Target Employment Areas

**NOTE: The Senate Judiciary Committee has since postponed this hearing.  We will update this post to reflect the new date/time once confirmed.**

This week, the Senate Judiciary Committee will hold its second hearing of the year examining the EB-5 Regional Center Program.  This program is designed to bolster the U.S. economy by incentivizing investment from foreign individuals in exchange for legal permanent residence.  The FY 2016 omnibus appropriations measure passed by Congress at the end of 2015 extended the EB-5 Regional Center Program for the remainder of the Fiscal Year.  However, lawmakers are currently debating whether to overhaul the program in light of what some argue is a need to better protect against potential abuse, refocus investment in areas that need it most, and increase the minimum levels of funds required to participate in the program.

Projects slated for Targeted Employment Areas require a lower investment amount, $500,000, as compared to $1 million elsewhere.  These rural or high unemployment areas must meet specific criteria to qualify, but, given the lower threshold, can serve as attractive candidates for foreign investment.  During a February 2 hearing, Senate Judiciary Committee Chairman Charles Grassley (R-IA) expressed his concern that the EB-5 Program lacks sufficient oversight and suffers from corruption and serious weaknesses, potentially implicating national security.  Chairman Grassley believes the program must be reformed before it can be reauthorized beyond September 30, an issue that will certainly be debated by lawmakers over the months to come.

This Week’s Hearings:

  • Tuesday, March 1: The House Homeland Security Subcommittee on Border and Maritime Security will hold a hearing titled “Transparency, Trust and Verification: Measuring Effectiveness and Situational Awareness Along the Border.”
  • Tuesday, March 1: The Senate Appropriations Subcommittee on Homeland Security will hold a hearing to consider the Transportation Security Administration’s FY 2017 budget request.
  • Tuesday, March 1: the House Appropriations Subcommittee on Homeland Security will hold a hearing to consider the U.S. Customs and Border Protection’s FY 2017 budget request.
  • Wednesday, March 2: The House Homeland Security Subcommittee on Transportation and Security will hold a hearing to consider the Transportation Security Administration’s FY 2017 budget request.
  • Wednesday, March 2: The Senate Homeland Security and Governmental Affairs Committee will hold a hearing to consider nominations.
  • Wednesday, March 2: The Senate Judiciary Committee will hold a hearing titled “The Distortion of EB-5 Targeted Employment Areas: Time to End the Abuse.”
  • Wednesday, March 2: The House Appropriations Subcommittee on Homeland Security will hold a hearing to consider the Transportation Security Administration’s FY 2017 budget request
  • Thursday, March 3: The Senate Homeland Security and Governmental Affairs Committee will hold a hearing titled “Dogs of DHS: How Canine Programs Contribute to Homeland Security.”
  • Thursday, March 3: The Senate Judiciary Committee will hold a hearing to consider nominations and legislation.
  • Thursday, March 3: The House Appropriations Subcommittee on Homeland Security will hold a hearing to consider the U.S. Coast Guard’s FY 2017 budget request.
  • Tuesday, March 8: The Senate Homeland Security and Governmental Affairs Committee will hold a hearing to consider the U.S. Department of Homeland Security’s FY 2017 budget request.

Senate Finance Committee to Examine Past Free Trade Agreements; Ceasefire Takes Effect in Syria

By Squire Patton Boggs on Posted in Defense & Homeland Security, US Executive Branch

President Barack Obama signed the customs bill and Judicial Redress Act into law last Wednesday.  In addressing U.S. state governors last week, the President expressed optimism that Congress may act this year on the Trans-Pacific Partnership (TPP) deal.  Congress will be in session this week, with a number of defense-related hearings scheduled, as well as a Senate Finance Committee hearing focused on previous free trade agreements (FTAs).

Customs Bill and Judicial Redress Act Signed into Law

On 24 February, President Obama signed H.R.644, Trade Facilitation and Trade Enforcement Act of 2015 (“customs bill”), into law.  President Obama said at the signing ceremony:

“We can’t have other countries engaged in practices that disadvantage American workers and American businesses.”

The President also thanked Senator Michael Bennet (D-Colorado) for the provision in the law that provides “new tools to deal with currency devaluations that are designed to undercut U.S. goods, U.S. exports, and [the U.S.] balance in trade.”  The signing statement for the customs bill is available here.

TPP – Developments in Washington

Addressing the National Governors Association early last week, President Obama said he is “cautiously optimistic” that Congress can approve the TPP deal this year.  In a teleconference call with the media later in the week, Jeff Zients, Director of the National Economic Council, signaled the White House is willing to wait on a congressional vote on the TPP to ensure the strongest possible support for the agreement.

Senate Finance Hearing on FTAs This Week

Last Thursday, Chairman Hatch announced the Committee will hold a hearing on 3 March to examine the implementation of past trade agreements. The Chairman did not specifically reference the TPP deal, when he said:

“This hearing will give Members the opportunity to examine the degree to which our trade agreement partners have met their existing obligations and look at ways to improve the implementation of future free trade agreements considered under this important trade tool.”

TTIP Developments

U.S. Chief Negotiator Dan Mullaney said at a press briefing on Friday that the United States had tabled a proposal at this week’s Transatlantic Trade and Investment Partnership (TTIP) negotiations in Brussels that would create a formal mechanism for a regulator-to-regulator dialogue.  The EU also submitted a revised proposal on regulatory cooperation.  There are nine sectors where regulatory cooperation is being discussed:  (1) information and communication technology, (2) engineering, (3) chemicals, (4) pesticides, (5) autos, (6) pharmaceuticals, (7) medical devices, (8) cosmetics, and (9) textiles.

Zika Virus – President Urges Congress to Act on Emergency Funds

In a letter to Speaker of the House Paul Ryan (R-Wisconsin) last week, President Obama requested that Congress consider a Fiscal Year (FY) 2016 emergency supplemental appropriations request of approximately $1.9 billion to respond to the Zika Virus both domestically and internationally.

Syria – Ceasefire Goes into Effect

Over the weekend, the U.S.-Russian brokered deal on a “cessation of hostilities” in Syria came into effect but does not apply to terrorist organizations, such as ISIL, al Nusra, etc.  On Friday, the United Nations Security Council unanimously adopted a resolution urging all parties involved in Syrian civil war to adhere to the terms of the ceasefire agreement.  The ceasefire will be monitored by a task force co-chaired by Moscow and Washington.

Russia/Ukraine – President Obama Speaks with President Putin

In a telephone call last week, President Obama reiterated to Russian President Vladimir Putin that the combined Russian-separatist forces in eastern Ukraine need to fulfill the Minsk agreements, and he emphasized the ceasefire must be maintained.  President Obama further underscored the importance of quickly reaching agreement on modalities for holding elections in eastern Ukraine that meet Organization for Security and Cooperation in Europe (OSCE) standards.  The two leaders also discussed the situation in Syria.

North Korea – New UNSCR Proposed

On Friday, Senate Foreign Relations Committee Chairman Bob Corker (R-Tennessee) issued a statement on the proposed U.N. Security Council Resolution (UNSCR) targeting North Korea’s nuclear program.  He said that “[i]f strictly enforced, this resolution can be a catalyst for the United States and the world to begin taking a much tougher stand against the growing nuclear threat from North Korea.”  Senator Corker also urged the Obama Administration to fully implement the North Korea Sanctions and Policy Enhancement Act of 2016, which he reminded would toughen enforcement of sanctions, put forward strategies to improve human rights, and stop cyberattacks from that country.

U.S. LNG Exports Head South

On 24 February, Cheniere Energy said it will ship the first major cargo of liquefied natural gas (LNG) to Brazil from the company’s Sabine Pass facility on the Texas-Louisiana border.  The Department of Energy approved the facility to ship 2.2 billion cubic feet per day for 20 years.  This is the first of several LNG export terminals expected to come online in the coming months.

U.S.-Mexico High-Level Summit

Vice President Joe Biden, accompanied by Secretary of Commerce Penny Pritzker, travelled to Mexico City for the third annual U.S.-Mexico High-Level Economic Dialogue on February 25 to discuss six priority areas: (1) modern borders, (2) energy, (3) workforce development, (4) regulatory cooperation, (5) regional and global leadership, and (6) stakeholder engagement.  The White House released a joint statement at the conclusion of the Dialogue, available here.

Northern Triangle Summit

On 24 February, Vice President Biden met in Washington with El Salvador President Salvador Sanchez Cerén, Guatemalan President Jimmy Morales, and Honduras President Juan Orlando Hernandez to discuss joint efforts to promote economic integration in the Northern Triangle of Central America, ultimately seeking to address the underlying conditions driving migration to the United States.  At the conclusion of the meeting, a joint statement was released, available here.

Congressional Hearings This Week

  • On Tuesday, 1 March, the Senate Armed Services Committee is scheduled to hold a hearing titled, “United States European Command.”
  • On Tuesday, 1 March, the House Appropriations Subcommittee on Defense is scheduled to hold a hearing titled, “Budget Hearing – United States Navy and Marine Corps.”
  • On Tuesday, 1 March, the House Armed Services Committee is scheduled to hold a hearing titled, “Member Day – National Defense Priorities from Members for the FY 2017 National Defense Authorization Act.”
  • On Tuesday, 1 March, the Tom Lantos Human Rights Commission is scheduled to hold a hearing titled, “The Demand Factor in the Global Sex Trade: Human Trafficking as a Human Rights Crisis.”
  • On Tuesday, 1 March, the House Armed Services Subcommittee on Seapower and Projection Forces is scheduled to hold a hearing titled, “Air Force Projection Forces Aviation Programs and Capabilities for Fiscal Year 2017.”
  • On Tuesday, 1 March, the House Financial Services Committee Taskforce to Investigate Terrorism Financing is scheduled to hold a hearing titled, “Helping the Developing World Fight Terror Finance.”
  • On Tuesday, 1 March, the Senate Foreign Relations Subcommittee on State Department and USAID Management is scheduled to hold a hearing titled, “A Review of the FY 2017 State and USAID Budget Request.”
  • On Tuesday, 1 March, the Senate Armed Services Subcommittee on Airland is scheduled to hold a closed hearing titled, “Air Force Long Range Strike-Bomber.”
  • On Tuesday, 1 March, the House Armed Services Subcommittee on Emerging Threats and Capabilities is scheduled to hold a hearing titled, “Special Operations Forces in an Evolving Threat Environment: A Review of the Fiscal Year 2017 Budget Request for U.S. Special Operations Command.”
  • On Wednesday, 2 March, the House Armed Services Committee is scheduled to hold a hearing titled, “World Wide Threats.”
  • On Wednesday, 2 March, the House Appropriations Subcommittee on Defense is scheduled to hold a hearing titled, “Budget Hearing – United States Air Force.”
  • On Wednesday, 2 March, the Senate Appropriations Subcommittee on Defense is scheduled to hold a hearing titled, “Hearing to review the Fiscal Year 2017 budget request and funding justification for the U.S. Navy and Marine Corps.”
  • On Wednesday, 2 March, the House Armed Services Subcommittee on Tactical Air and Land Forces is scheduled to hold a hearing titled, “Ground Force Modernization Budget Request.”
  • On Wednesday, 2 March, the House Armed Services Subcommittee on Strategic Forces is scheduled to hold a hearing titled, “Fiscal Year 2017 Budget Request for Department of Defense Nuclear Forces.”
  • On Wednesday, 2 March, the House Foreign Affairs Subcommittee on Global Health is scheduled to hold a hearing titled, “The Growing Threat of Cholera and Other Diseases in the Middle East.”
  • On Thursday, 3 March, the Senate Armed Services Committee is scheduled to hold a hearing titled, “Posture of the Department of the Air Force.”
  • On Thursday, 3 March, the House Appropriations Subcommittee on Military Construction and Veterans Affairs is scheduled to hold a hearing titled, “Budget Hearing – Installations, Environment, Energy and BRAC.”
  • On Thursday, 3 March, the House Appropriations Subcommittee on Defense is scheduled to hold a hearing titled, “Budget Hearing – United States Army.”
  • On Thursday, 3 March, the House Armed Services Subcommittee on Readiness is scheduled to hold a hearing titled, “The Marine Corps 2017 Budget Request and Readiness.”
  • On Thursday, 3 March, the Tom Lantos Human Rights Commission is scheduled to hold a hearing titled, “The Unidentified: Accountability for War Crimes in Kosovo.”

Looking Ahead

Washington is expected to focus on the following upcoming events:

  • 1 March:                                Super Tuesday – Primaries/Caucuses for both parties in several states
  • 10 March:                              President Obama hosts Canadian Prime Minister Justin Trudeau
  • 21-22 March:                        President Obama travels to Cuba
  • 23-24 March:                        President Obama travels to Argentina
  • 31 March – 1 April:              Nuclear Security Summit in Washington
  • April 25-29:                           President Obama attends the Hannover Messe in Germany
  • [TBA] May:                            President Obama travels to Vietnam and Laos
  • 8-9 July:                                 NATO Summit in Warsaw, Poland

Tax-Writers Debate International Tax Reform, Inversions; OECD Releases “Inclusive” BEPS Framework

By Squire Patton Boggs on Posted in Tax

Legislative Activity

Democratic Tax-Writers Remain Focused on Inversions, Despite Push for International Tax Reform

Last week, the House Ways and Means Committee held its first hearing on international tax reform this session. During the hearing, Members and witnesses discussed the need for tax reform, the benefits and challenges that come from doing international tax reform separately from comprehensive reform, and specific ideas that should be included as tax-writers move forward with reforming the U.S. tax Code. With Republicans focused on fixing the “broken tax Code” through international tax reform as their first step, and Democrats instead arguing for immediate action to combat corporate tax inversions, the divide between the parties is clear.

Looking ahead, House Ways and Means Committee Chairman Kevin Brady (R-TX) remains focused on moving forward with international tax reform this year. Though Chairman Brady and Representative Charles Boustany (R-LA), who is leading the Committee’s efforts on international tax reform, recognize that actually enacting such reforms this year is unlikely, following last week’s hearing, Representative Boustany announced his intention to release a bill before the end of March. It is unclear whether the Committee will hold another hearing on the issue before Representative Boustany releases his bill.

Democrats, however, oppose the Republicans’ decision to focus their efforts on international tax reform as a standalone first option and instead continue to emphasize that a “piecemeal” approach to tax reform, which focuses on international tax reform first, actually makes comprehensive reform more difficult. As such, recognizing that comprehensive reform is not an option until at least 2017, Democrats remain focused on the need to address corporate tax inversions – specifically through curbing earnings stripping, as proposed in Ranking Member Sandy Levin’s bill (H.R. 4581, The Stop Corporate Earnings Stripping Act of 2016), which he introduced last week. Note too, at the end of last week, following the introduction of this bill, nine House Democrats wrote a letter to Treasury Secretary Lew urging him to further restrict “hopscotch” loans.

In addition to the divide between House Ways and Means Republicans and Democrats, the Senate Finance Committee, led by Chairman Orrin Hatch (R-UT), is focused on corporate integration (i.e., offering companies a deduction for money paid to shareholders as dividends). Though he has not yet released much detail on his proposal (he is waiting for a score from the Joint Committee on Taxation), Chairman Hatch has emphasized that his proposal would not impede the Ways and Means Committee’s efforts on international tax reform, but instead might actually complement their work. Chairman Hatch noted that his approach “could significantly reduce effective corporate tax rates without all the difficult and highly politicized trade-offs that will accompany a reduction in the statutory corporate tax rate…and could help prevent future inversions and foreign takeovers and simply make the United States a better place to do business overall.” Still, Ranking Member Ron Wyden (D-OR) has indicated that he soon plans to release a bill that would make inversions more difficult by making various policy changes, including by addressing: (1) the ownership threshold for inverted companies; (2) hopscotch loans; and (3) “spinversions.”

This Week’s Hearings:

  • Tuesday, March 1: The Senate Finance Committee will hold a hearing titled “The Multiemployer Pension Plan System: Recent Reforms and Current Challenges.”

Regulatory Activity

OECD Releases “Inclusive” BEPS Framework

The Organisation for Economic Co-operation and Development (OECD) recently released an “inclusive framework” for implementation of its Base Erosion and Profit Shifting (BEPS) Project. Designed to address tax avoidance and improve the coherence of international tax rules, the BEPS Project is now being implemented domestically by various countries around the world. To aid in this process, “all countries and jurisdictions, whether developing or developed, are invited to participate in a new inclusive BEPS implementation forum.” Participants, “on an equal footing,” will take joint action to implement BEPS and set additional standards. Those countries opting to participate in this framework will meet in Kyoto, Japan on June 30 and July 1, 2016.

Democratic Senators Raise Concerns about Charter-Time Warner Merger

By Squire Patton Boggs on Posted in Technology and Communications

Legislative Activity

Democratic Senators Express Concern over Charter-Time Warner Merger

On February 25, five senators, including Sens. Edward Markey (D-MA), Al Franken (D-MN), Bernie Sanders (D-VT), Ron Wyden (D-OR), and Elizabeth Warren (D-MA), wrote a letter to Attorney General Loretta Lynch and Federal Communications Commission (FCC) Chairman Tom Wheeler expressing “significant concern” regarding the high-profile merger between Charter Communications, Time Warner Cable, and Bright House Networks, which is currently pending before the FCC. Their letter indicated that if Charter Communications’ planned acquisition of Time Warner Cable and Bright House Networks is approved, there would be negative effects on consumer choice, competition, and innovation in the broadband and online video markets. They stressed that allowing the merger would create a “broadband duopoly” that would leave the merged entity (New Charter) and Comcast in control of nearly two-thirds of the nation’s broadband-connected homes. They argued that rather than increased consolidation among existing broadband providers, the broadband markets need greater competition, stressing that broadband service is an economic and social necessity that should be competitively and affordably priced. The senators also argued that New Charter could use its power to block new online video distribution (“OVD”) providers from entering the market, causing further harm to consumers and to the online streaming service market.

The group requested that the Department of Justice (DoJ) and the FCC carefully evaluate how the merger could impact the telecommunications market. They stressed that New Charter must not only prove that the deal will not harm consumers, but must also show that it would actually benefit consumers and promote the public interest.

House Commerce Committee Advances Communications Bill to Protect Small Businesses

On February 25, the House Energy & Commerce Committee (House Commerce Committee) approved H.R.4596, the Small Business Broadband Deployment Act by voice vote. The bill, previously discussed here, exempts small businesses from the application of the enhanced transparency requirements of the FCC’s Open Internet Rules. The transparency requirements require broadband Internet service providers (“ISPs”) to publicly disclose accurate information concerning their network management practices, performance, and commercial terms of their Internet service. Recognizing that small ISPs would find the enhanced transparency requirements burdensome, the FCC established a temporary exemption for such providers through December 15, 2015. On December 15, 2015, the FCC extended the exemption until December 15, 2016. The bill passed by the House Commerce Committee aims to make the exemption permanent. Prior to advancing the bill, the Committee approved a bipartisan amendment that narrowed the bill’s definition of a small business from one with fewer than 500,000 subscribers to one with fewer than 250,000 subscribers, added a five-year sunset clause, and added a requirement that the FCC report back in 180 days on whether it recommends making the exemption permanent.   The bill now goes to the full House for consideration.

Anti-Spoofing Act Introduced in Senate

On February 22, Senators Deb Fischer (R-NE) and Bill Nelson (D-FL) introduced S.2558, the Spoofing Prevention Act of 2016. The bill takes aim at the practice of caller identification (caller ID) spoofing in which a caller deliberately falsifies the information transmitted to a caller ID display to disguise their identity. The practice has often been used to trick individuals into giving away valuable personal information so that it may be used for fraudulent activity or sold. Current law and FCC rules prohibit most types of spoofing. The Senate bill would strengthen the existing prohibitions. Specifically, the bill would change current law to prohibit caller ID spoofing on voice calls, including calls made by individuals outside the United States to callers in the United States and all calls made using Internet protocol (IP) enabled voice services. The legislation would also prohibit caller ID spoofing on text messages and directs the Government Accountability Office (GAO) to conduct a study of the actions that the FCC and the Federal Trade Commission (FTC) have undertaken to combat the practice. The bill further requires the FCC to publish a report identifying existing technology that consumers may use to protect themselves against the practice on its website. The bill has been referred to the Senate Committee on Science, Commerce, and Transportation (Senate Commerce Committee) for consideration.

This Week’s Hearings:

  • Tuesday, March 1: The House Judiciary Committee will hold a hearing titled “The Encryption Tightrope: Balancing Americans Security and Privacy.” Witnesses will include James Comey, director of the Federal Bureau of Investigation; Bruce Sewell, general counsel at Apple, Inc.; Susan Landau, a professor at Worcester Polytechnic Institute; and Cyrus Vance Jr., New York County District Attorney.
  • Wednesday, March 2: The Senate Commerce Committee will hold a hearing titled “Oversight of the Federal Communications Commission.” All five FCC commissioners will testify as witnesses.

Regulatory Activity

FCC Chairman Wheeler Heralds Formation of “NG911 Now Coalition”

On February 23, a “coalition of 911 public safety and industry leaders, in cooperation with the National 911 Program and the Next Generation 911 Institute . . . announced a nationwide effort to accelerate the implementation of Next Generation 911 (NG911) services by the end of 2020,” according to a Press Release from the coalition. The coalition is called the “NG911 Now Coalition.” NG911 refers to a 911 system that will use “Internet Protocol (IP)-based technology to deliver and process 911 traffic,” according to a 2013 FCC Report. Members of the NG911 Now Coalition include the National Association of State 911 Administrators (NASNA), the Industry Council for Emergency Responder Technologies (iCERT), and the National Emergency Number Association (NENA).

The FCC issued a Public Notice on February 23 in which Chairman Tom Wheeler heralded the formation of the NG911 Now Coalition. Chairman Wheeler wrote in his statement that the “transition to Next Generation 911 is stalled and we need an all-out effort to accelerate it,” and that the NG911 Now Coalition will work to “hasten the NG911 transition.” Chairman Wheeler’s statement noted that modernizing the nation’s 911 system “will take work from many stakeholders – including the FCC, state and local 911 authorities and legislatures, industry, and Congress[.]”

FCC Seeks Comment on Petition Asking for Modifications to Amateur Radio Service Rules

On February 22, the FCC released a Public Notice seeking comment on a Petition for Rulemaking (PFR) filed January 8 by the American Radio Relay League, Incorporated (ARRL), which asks the FCC to “modify various sections” of the FCC’s Amateur Radio Service rules to “appropriately facilitate Amateur Radio communications using High Frequency (HF) data transmission modes and protocols[.]” ARRL states in its PFR that the proposed rule changes are “components of a comprehensive band plan revision” that has been “transparently and repeatedly vetted within the Amateur radio community . . . [and] reflect the aggregate input of well over fifteen hundred radio Amateurs[.]” ARRL states that the proposals in its PFR will achieve a “fair, equitable, and efficient ‘band plan’ looking forward for the foreseeable future.”

FCC Announces Workshop on Making an Initial Commitment in the Broadcast Incentive Auction

On Friday, March 11, the FCC’s Incentive Auction Task Force and Media and Wireless Telecommunications Bureaus, will host a workshop discussing the procedures for making an initial commitment in the reverse auction phase of the Broadcast Incentive Auction, according to a February 26 Public Notice. An “initial commitment” is an “initial bid [and] irrevocable offer by the [broadcast licensee] to relinquish [] spectrum usage rights in exchange for the opening price offer for that bid option if that station is selected to be a winning station,” pursuant to the Incentive Auction Application Procedures Public Notice. The workshop will include “a demonstration of the initial commitment bidding system” and “a preview of the reverse auction bidding system for the clock phase” of the reverse auction.

The workshop will be held on Friday, March 11 from 10:00 am to 1:00 pm EST in the Commission Meeting Room at FCC Headquarters in Washington, D.C. The workshop is open to the public and will be available for remote viewing (details about remote viewing are pending).

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