Appropriations Process All But Over, CR Likely; Budget Negotiations Possible, But Who and When is Unclear

By Capital Thinking on July 27, 2015 Posted in Budget and Appropriations

Legislative Activity

Appropriations Process All But Over, CR Likely

The appropriations process is almost certainly over and when Congress returns from the August recess there will be just ten legislative days before federal funding runs out, hardly enough time to negotiate a budget deal or an omnibus spending bill. As anticipated, Congress will likely pass a Continuing Resolution (CR) before funding runs out. On Thursday, House Speaker John Boehner (R-OH) admitted as much to reporters, but said no decisions have been made as to what it will look like.

This year, the House passed six appropriations bills, half of the total, before a controversial confederate flag amendment stalled the process. The Senate Appropriations Committee passed all twelve appropriations bills out of the Committee this year, for the first time since 2009. Despite that milestone, Senate Democrats have held to their strategy to block any appropriations bills from coming to the floor, effectively dooming the appropriations process from the start. It is unclear if the Senate Democrats’ strategy will ultimately culminate in a spot at the budget negotiations table, as they had hoped.

Budget Negotiations Possible, But Who and When is Unclear

President Obama and Congressional Democrats have been pushing Republicans to negotiate a budget deal for months, and it seems Congress may be headed in that direction, but it is unclear what a budget deal would look like, or who would lead the negotiations.

The Murray-Ryan 2013 budget deal, which relaxed the sequester’s spending limits for two years, could be a blueprint for a 2015 budget deal. However, Congressman Paul Ryan (R-WI) and Senator Patty Murray (D-WA) are unlikely to lead current negotiations, as neither Chair their respective House and Senate Budget Committees as they did in 2013 and Rep. Ryan, as Chairman of the House Ways and Means Committee, is currently focused on the heavy lift of international tax reform.

While it is unclear how a budget deal will come together, it is likely that Democrats will fight for equal spending increases for both defense and non-defense discretionary spending. Republicans will push for fully offsetting any increase in spending, and probably resist Democratic efforts to include closing tax loopholes alongside reduced spending to pay for the increases. While the details are yet to be determined, the pressure to enter budget deal negotiations will certainly increase in the coming weeks and months.

This Week’s Hearings:

Tuesday, July 28: The House Budget Committee will hold a hearing titled “First Principles of Congressional Budgeting.”

Senate is Likely to Consider Cybersecurity Legislation Before August Recess

By Capital Thinking on July 27, 2015 Posted in Data Privacy & Cybersecurity

Legislative Activity

Senate is Likely to Consider Cybersecurity Legislation Before August Recess

Once it completes its work on surface transportation reauthorization legislation, the Senate has indicated that it plans to consider the Cybersecurity Information Sharing Act (CISA/S. 754) on the Senate floor before it leaves for recess, which is scheduled to begin on August 7. It is likely that Senators will introduce a number of amendments to the legislation when it hits the floor, including amendments that would seek to create data breach notification standards, to expand the privacy protections in the bill, and to update federal cybersecurity efforts, particularly in light of the Office of Personnel Management data breach.

Last week, Senate Homeland Security and Governmental Affairs Chairman Ron Johnson (R-WI) and Ranking Member Tom Carper (D-DE) announced that they would mark up a bill on Wednesday that would accelerate the deployment of the Department of Homeland Security’s cybersecurity program, EINSTIEN 3, to all federal agencies. Additionally, Senator Susan Collins (R-ME), along with a bipartisan group of Senators, also announced last week that they were introducing a separate bill – the FISMA Reform Act of 2015 – to strengthen the cyber defense posture of federal networks by updating the Federal Information Security Modernization Act that was signed into law last year. Both of these bills are likely to be offered as amendments to the Cybersecurity Information Sharing Act.

While the timing for consideration of CISA has not been made official to date, Senate Majority Leader Mitch McConnell (R-KY) is currently assessing how much time will be needed to consider the bill on the floor, as well as the potential for a number of controversial amendments that could take up significant floor time. A number of stakeholders, including the U.S. Chamber of Commerce and the Information Technology Industry Council, have indicated that they will include the vote on CISA as a key vote on their scorecards.

The House previously passed two information sharing bills: the Protecting Cyber Networks Act (H.R. 1560) and the National Cybersecurity Protection Advancement Act (H.R. 1731) in April. These bills were combined after passage and will have to be conferenced with CISA once it is passed by the Senate.

This Week’s Hearings:

Tuesday, July 28: The House Homeland Security Subcommittee on Cybersecurity, Infrastructure Protection, and Security Technologies will hold a hearing titled “Promoting and Incentivizing Cybersecurity Best Practices.”
Wednesday, July 29: The Senate Homeland Security and Governmental Affairs Committee will mark up a number of homeland security bills including the Critical Infrastructure Protection Act of 2015 and the EINSTEIN Act of 2015.
Thursday, July 30: The House Permanent Select Committee on Intelligence will hold a hearing titled “World Wide Cyber Threats.”

House Members introduce Bipartisan Education Measures; ED Seeks Feedback on Recognizing Innovative Programs

By Capital Thinking on July 27, 2015 Posted in Education

Legislative Activity

Higher Education Act Reauthorization

Last Thursday, several Members of Congress joined together in a bipartisan manner to introduce legislation that aims to improve the country’s higher education system by simplifying the financial aid process, improving consumer information, providing financial aid counseling, and creating a more flexible Pell Grant program. The House Education and the Workforce Committee published fact sheets for each of the four bills, described below:

The Simplifying the Application for Student Aid Act (H.R. 3177), introduced by Reps. Joe Heck (R-NV), Phil Roe (R-TN), Jared Polis (D-CO), and Mark Pocan (D-WI), would “allow students to use family income data from two years prior to the date of the FAFSA application.” It would also “improve the ability to link between the online FAFSA form and income tax data stored by the Internal Revenue Service to automatically input income data into the FAFSA form, reducing the need to manually input information that often prevents low-income students from applying for aid.”
The Strengthening Transparency in Higher Education Act (H.R. 3178), introduced by Reps. Virginia Foxx (R-NC), Luke Messer (R-IN) and Gregorio Sablan (D-MP), would “create a consumer-tested College Dashboard that would display only key information students need when deciding which school to attend.” Among other statistics, the College Dashboard would include information on the student completion rates, including Pell Grant recipients.
The Empowering Students through Enhanced Financial Counseling Act (H.R. 3179), introduced by Reps. Brett Guthrie (R-KY), Rick Allen (R-GA), and Suzanne Bonamici (D-OR), would direct “the secretary of education to maintain and disseminate a consumer-tested, online counseling tool institutions can use to provide annual loan counseling, exit counseling, and annual Pell Grant counseling.”
The Flexible Pell Grant for 21st Century Students Act (H.R. 3180), introduced by Reps. Elise Stefanik (R-NY), Carlos Curbelo (R-FL) and Rubén Hinojosa (D-TX), “would provide students the flexibility to draw Pell Grant funds at an accelerated pace in order to pay for additional courses within an award year.”

The move, at least for now, indicates Committee members will try to work in a bipartisan fashion on HEA reauthorization, or at least look for common ground in select areas.

Student Data Privacy Legislation

Last week, House Education and the Workforce Subcommittee on Early Childhood, Elementary, and Secondary Education Chairman Todd Rokita (R-IN) and Ranking Member Marcia Fudge (D-OH) introduced the Student Privacy Protection Act (H.R. 3157) to update the Family Educational Rights and Privacy Act (FERPA). House Education and the Workforce Committee Chairman John Kline (R-MN) and Ranking Member Bobby Scott (D-VA) also signed on as original co-sponsors of the legislation. According to the Committee, the bill would do the following:

Update the definition of an education record to ensure student information connected to classroom technology is protected.
Prohibit schools or independent entities, such as technology companies, from using a student’s education record to market products or services to that student.
Reaffirm a parent’s right to access their child’s education record and opt out of sharing their student’s directory information such as name, address, and date of birth.
Strengthen security requirements for storing and gaining access to student education records.
Provide parents with greater transparency about what student information schools determine can be used, collected, and shared for educational purposes.
Reinforce privacy protections by providing schools better guidance, support, and oversight.
Ensure compliance with the law and communication between parents and school leaders by requiring schools to designate a privacy official to oversee the use of student information.

Although the Committee had originally planned to mark up the legislation this week, it appears that they have now decided to postpone the mark-up until after the August recess. This bill is one of many student data privacy bills that have been introduced in the 114^th Congress and likely has the best chance of seeing movement this year given that it was authored by the staff on the Committee with jurisdiction over the bill and is bipartisan in nature. It is unclear at this time whether there is an appetite within the rest of the House and in the Senate to complete work on a FERPA update this Congress.

This Week’s Hearings:

Wednesday, July 29: The Senate Health, Education, Labor and Pensions Committee will hold a hearing titled “Reauthorizing the Higher Education Act: Combating Campus Sexual Assault.”

Executive Branch Activity

Department of Education Seeks Feedback on Recognizing Innovative Programs

In a blog post published on July 17, Department of Education Under Secretary Ted Mitchell announced the Department is seeking feedback over the next weeks and months to expand its understanding of how to assess the quality of non-traditional higher education programs. These innovative programs help to create a more accessible and cost-effective system of higher education, according to the Department. However, the quality of these programs varies and the Department says it lacks the tools to distinguish between the high-quality and poor-quality programs—from Massive Open Online Courses (MOOCS) and online skills courses to boot-camps and competency-based degrees. Additionally, the Department stated that current regulation prevents the certification of these high-quality programs to receive federal financial aid because the programs are not “institutions.”

The Department now seeks to develop “a new set of quality assurance questions” for innovative higher education programs, with a focus on “outputs and evidence.” In framing the discussion, it has identified three general categories for feedback: providers’ claims about student learning, effectiveness of student assessments, and student outcomes. The Department invites stakeholders to send their thoughts, questions, and ideas for engagement on these quality assurance questions to collegefeedback@ed.gov.

House and Senate Moving on Energy Bills; Spill Prevention and Coastal Management Also To Be Considered

By Squire Patton Boggs on July 27, 2015 Posted in Energy, Environment and Natural Resources

Legislative Activity

House and Senate “Comprehensive” Energy Bills

Last week, the House Energy and Commerce Committee, Subcommittee on Energy and Power held a markup of its comprehensive energy legislation that will be considered by the full House in the weeks ahead. In the Senate, Chairman Lisa Murkowski (R-AK) and Ranking Member Maria Cantwell (D-WA) introduced their bi-partisan “Energy Policy Modernization Act of 2015” which the Senate Energy and Natural Resources Committee will markup over two days this week on July 28 and July 30.

This Week’s Hearings:

Spill Prevention

On Tuesday, July 28, the House Committee on Transportation and Infrastructure, Subcommittee on Coast Guard and Maritime Transportation, will hold a hearing to consider the Foreign Spill Protection Act.

Natural Resources

The House Committee on Natural Resources will hold three hearings this week:

On Wednesday, July 29, there will be full committee oversight hearing titled, “Federal Agencies’ Selective Enforcement of Endangered Species Act (ESA) Consultation”
On Tuesday, July 28, the Subcommittee on Oversight and Investigations will hold a hearing titled “Accountability, Policies, and Tactics of Law Enforcement within the Department of Interior and Forest Service”
Also on Tuesday, July 28, the Subcommittee on Energy and Mineral Resources will hold a hearing to explore “Federal Implementation of the Coastal Zone Management Act”

Nuclear Energy

On Wednesday, July 29, the House Committee on Science Space and Technology, Subcommittee on Energy, will hold a hearing to review the Nuclear Regulatory Commission’s licensing process.

Continued Focus on Dodd-Frank, Challenge to CFPB Moves Forward

By Squire Patton Boggs on July 27, 2015 Posted in Financial Services

Legislative Activity

Financial Services Lawmakers Hone in on Dodd-Frank Reform as Fifth-Year Anniversary Approaches

Last week, the Senate Appropriations Committee passed along party lines in a 16-14 vote a $20.6 billion financial services appropriations package into which Republican appropriators inserted Senate Banking Committee Chairman Richard Shelby’s (R-AL) financial services regulatory reform bill. While the bill will now be sent to the full Senate for consideration, Senate Democrats are expected to continue blocking appropriations bills from coming to the floor. As such, Republican tactics will have no direct impact on financial services regulations. The move may, however, result in an environment in which it is even harder for lawmakers to come together on reforms.

In the House, with the fifth anniversary since the enactment of the Dodd-Frank Act now behind them (and the Volcker Rule compliance date having officially passed last week), financial services lawmakers are continuing to focus on ways to reform the law and will hold a series of hearings to examine the state of financial services regulation. The first of such hearings is scheduled for this coming week, with lawmakers set to discuss whether Dodd-Frank has made the nation more prosperous.

This Week’s Hearings:

Tuesday, July 28: The House Financial Services Committee will hold a markup of various pieces of legislation.
Tuesday, July 28: The House Financial Services Committee will hold a hearing titled “The Dodd-Frank Act Five Years Later: Are We More Prosperous?”
Tuesday, July 28: The Senate Banking Committee will hold a hearing titled “Lifting the Crude Oil Export Ban.”
Wednesday, July 29: The House Agriculture Committee will hold a hearing titled “Dodd-Frank Turns Five: Assessing the Progress of Global Derivatives Reform.”
Wednesday, July 29: The Senate Banking Subcommittee on Financial Institutions and Consumer Protection will hold a hearing titled “Financial Institutions and Consumer Protection.”

Regulatory Activity

Constitutional Challenge to the CFPB to Move Forward

Last week, the DC Court of Appeals reversed the ruling of a lower court and found that Texas-based State National Bank of Big Spring has standing to challenge both the constitutionality of the Consumer Financial Protection Bureau (CFPB) and the recess appointment of Director Richard Cordray. The Court did not address the merits of the case, the central argument of which goes to the single director structure and insulation against oversight. This comes on the heels of newly introduced legislation by Senator Ted Cruz (R-TX) and Representative John Ratcliffe (R-TX) to eliminate the agency.

CFTC to Hold Meeting of Energy and Environmental Markets Advisory Committee

On Wednesday, July 29, the Commodity Futures Trading Commission (CFTC) will hold a meeting of its Energy and Environmental Markets Advisory Committee (EEMAC), which is sponsored by Commissioner J. Christopher Giancarlo. The meeting will focus on the Commission’s proposed rules with respect to position limits, trade options, and its recent final interpretation concerning forward contracts with embedded volumetric optionality and how these initiatives will impact energy and environmental markets.

House Committee on Energy and Commerce to Mark Up Health Legislation; Potential Senate Vote on Obamacare Repeal This Week; House Committee on the Judiciary Announces Hearings on Competition in the Health Care Marketplace; Medicare Trustees Release Annual Report

By Squire Patton Boggs on July 27, 2015 Posted in Healthcare

Legislative Activity

House Committee on Energy and Commerce to Mark Up Health Legislation

The House Committee on Energy and Commerce has announced that it will hold a markup on Tuesday, July 28. Several health bills are on the agenda: H.R. 1344, the Early Hearing Detection and Intervention Act of 2015, which reauthorizes a program for early detection, diagnosis, and treatment regarding deaf and hard-of-hearing newborns, infants, and young children; H.R. 1462, the Protecting Our Infants Act of 2015, which seeks to reduce the rise of prenatal opioid abuse and neonatal abstinence syndrome through improving data and developing recommendations for prevention and treatment; H.R. 1725, the National All Schedules Prescription Electronic Reporting Reauthorization Act of 2015, which amends and reauthorizes the controlled substance monitoring program under the Public Health Service Act; and H.R. 2820, the Stem Cell Therapeutic and Research Reauthorization Act of 2015, which reauthorizes the National Cord Blood Inventory program and the C.W. Bill Young Cell Transplantation Program.

Potential Senate Vote on Obamacare Repeal This Week

On Sunday, July 26, the Senate Republicans failed to attach an Affordable Care Act (ACA) repeal provision to the highway funding bill. The amendment fell on a partisan 49-43 vote, but eight senators were absent from the weekend proceedings. Sen. Mike Lee (R-UT) is expected to propose a procedural motion early this week that would allow approval of the Obamacare repeal provision with a simple majority vote.

House Committee on the Judiciary Announces Fall Hearings on Health Care Competition

On Thursday, July 23, House Committee on the Judiciary Chairman Bob Goodlatte (R-VA), Ranking Member John Conyers Jr. (D-MI), Subcommittee on Regulatory Reform, Commercial and Antitrust Law Chairman Tom Marino (R-PA), and Subcommittee on Regulatory Reform, Commercial and Antitrust Law Ranking Member Hank Johnson (D-GA) announced that the Committee plans to hold a series of hearings to explore competition in the U.S. health care marketplace. According to the Committee, the first hearing in September will consider the role the ACA has played in the consolidation of the industry. It will also examine any impacts on care accessibility and affordability for consumers. The second hearing will focus on consolidation within the industry, including the proposed mergers between Aetna and Humana and Anthem and Cigna.

Last week, Anthem Inc. agreed to purchase Cigna Corp. for $48.4 billion, which would create the largest health insurer in the country if the deal passes regulatory muster. Several weeks ago, Aetna Inc. agreed to buy Humana Inc. for $34 billion.

This Week’s Hearings:

Tuesday, July 28: The House Committee on Ways and Means Subcommittee on Health will hold a hearing to discuss rural health care disparities created by Medicare regulations.
Tuesday, July 28: The House Committee on Education and the Workforce will hold a hearing titled “Reviewing the Policies and Priorities of the U.S. Department of Health and Human Services.” The Honorable Sylvia Mathews Burwell is slated to testify.
Tuesday, July 28: The House Committee on Energy and Commerce Subcommittee on Oversight and Investigations will hold a hearing titled “Continuing Concerns with the Federal Select Agent Program: Department of Defense Shipments of Live Anthrax.”
Tuesday, July 28: The House Committee on the Judiciary Subcommittee on Crime, Terrorism, Homeland Security, and Investigations will hold a hearing titled “America’s Growing Heroin Epidemic.”
Tuesday, July 28: The House Committee on Energy and Commerce will hold a markup to consider H.R. 985, Concrete Masonry Products Research, Education, and Promotion Act of 2015; H.R. 1344, Early Hearing Detection and Intervention Act of 2015; H.R. 1462, Protecting Our Infants Act of 2015; H.R. 1725, National All Schedules Prescription Electronic Reporting Authorization Act of 2015; H.R. 2820, Stem Cell Therapeutic and Research Reauthorization Act of 2015; and H.R. 3154, E-Warranty Act of 2015.
Wednesday, July 29: The Senate Committee on Indian Affairs will hold a hearing titled “Examining the True Costs of Alcohol and Drug Abuse in Native Communities.”
Thursday, July 30: The House Committee on Agriculture Subcommittee on Livestock and Foreign Agriculture will hold a hearing titled “Examination of Federal and State Response to Avian Influenza.”
Friday, July 31: The Senate Special Committee on Aging will hold a field hearing in St. Louis, Missouri titled “Celebrating Medicare: Strengthening The Program For The Next 50 Years.”

Regulatory Activity

CMS Names Participants in Hospice Demonstration

On Monday, July 20, the Centers for Medicare and Medicaid Services (CMS) named the hospice providers that will be participating in the Medicare Care Choice Model, a demonstration which will allow Medicare and dually eligible beneficiaries to receive palliative care services from certain hospice providers while concurrently receiving curative care services. Current payment rules require Medicare and dually eligible beneficiaries to forego curative care in order to receive palliative care services offered by a hospice.

CMS has selected 140 Medicare-certified hospice centers to participate in this five year demonstration. Participating hospices will provide services that are currently available under the Medicare hospice benefit for routine home care and respite levels of care, but which cannot be separately billed under Medicare Parts A, B, and D. CMS will pay the hospices a per beneficiary monthly fee ranging from $200 to $400.

Medicare Trustees Release Annual Report

On Wednesday, July 22, the Boards of Trustees for Medicare released its annual report to Congress titled “2015 Annual Report of the Boards of Trustees of the Federal Hospital Insurance and the Federal Supplementary Medical Insurance Trust Funds.” This mandated report addresses the financial operations and actuarial status of the Medicare trust funds.

Of note, the Board projects that, in the future, expenditures will increase at a somewhat faster pace than the overall economy. As a percentage of gross domestic product (GDP), expenditures are projected to increase from 3.5 percent in 2014 to 6.0 percent in 2089. The Trustees estimate that the Medicare Part A trust fund will be depleted in 2030, the same year stated in last year’s report. The Trustees recommend that Congress and the Executive Branch work together “with a sense of urgency” to address the depletion of the Medicare Part A trust fund, as well as the projected growth rate in Medicare Parts A, B, and D.

CMS Provides Guidance on State Innovation Waivers

On Wednesday, July 22, CMS released guidance on the section 1332 State Innovation Waiver. This waiver is designed to encourage states to pursue innovative strategies in ACA implementation, while ensuring that the basic protections of the ACA are retained. This guidance provides an overview and a list of frequently asked questions on the State Innovation Waiver application process. This guidance also provides the key elements to be included in an application and a description of the application review process.

State Innovation Waivers are slated to be available beginning on January 1, 2017. CMS will approve the waivers for five-year periods, and they may be renewed.

CMS Announces Expedited Review of Section 1115 Demonstrations

On Friday, July 24, CMS released an informational bulletin, which announced that the agency is establishing a “fast-track” process for federal review of proposed extensions to section 1115 Medicaid and Children’s Health Insurance Program (CHIP) demonstrations. Section 1115 demonstrations give states flexibility in designing and improving their CHIP and Medicaid programs.

This expedited review process will be available for states with existing section 1115 demonstrations that have “proven program outcomes,” have not made substantial program changes since the last extension cycle, and are not proposing “major or complex changes.” The informational bulletin provides a streamlined approach for section 1115(a) extensions and simplifications to section 1115(e) and section 1115(f) extensions.

CMS will provide states with further information roughly 18 months prior to the expiration of their current demonstration in order to assist the state in considering whether to use the new fast-track process.

Congress Continues Oversight of Aviation Security Agency

By Clark Ervin and Ludmilla Kasulke on July 27, 2015 Posted in Uncategorized

Legislative Activity

Congress Continues Oversight of Aviation Security Agency

On Thursday, July 23, the House Homeland Security Subcommittee on Transportation Security advanced three measures aimed at strengthening the Transportation Security Administration (TSA), after covert TSA testing earlier this year found airport screeners failed to detect prohibited items in 67 out of 70 test cases.

The Transportation Security Administration Reform and Improvement Act of 2015 would amend the Homeland Security Act of 2002 to improve the efficiency of TSA’s PreCheck program, review TSA’s secure flight program comparing airline passenger lists to government watch lists, and require a report on the efficiency and effectiveness of the Surface Transportation Security Inspection Program, which surveys and conducts inspections of freight rail operations across the United States.

The Airport Access Control Security Improvement Act of 2015 (H.R. 3102) would create a risk-based program for airport employee screening based on their need for access to secure areas. A manager’s amendment introduced by Subcommittee Chairman John Katko (R-NY) and adopted during the mark-up would establish redress procedures for airport employees denied access based on past criminal offenses.

Finally, the Partners for Aviation Security Act (H.R. 3144) would require consultations with the Aviation Security Advisory Commission, a panel of industry groups and other interested stakeholders, when considering the list of items prohibited from being taken onto commercial aircraft.

Separately, newly-confirmed TSA Administrator will appear before the House Homeland Security Committee on Wednesday, July 29, to discuss his plans for leading the agency and how he intends to address concerns regarding TSA management.

This Week’s Hearings:

Tuesday, July 28: The Senate Homeland Security and Governmental Affairs Committee will hold a hearing titled “Avoiding Duplication: An Examination of the State Department’s Proposal to Construct a New Diplomatic Security Training Facility.”
Wednesday, July 29: The Senate Homeland Security and Governmental Affairs Committee will hold a Business Meeting.
Wednesday, July 29: The House Homeland Security Committee will hold a hearing titled “Aviation Security Challenges: Is TSA Ready for the Threats of Today?”

President Obama Travels to Africa; Congress Continues to Scrutinize the Iran Deal, While the Senate Looks to Possibly Reauthorize the Ex-Im Bank

By Squire Patton Boggs on July 27, 2015 Posted in Defense & Homeland Security, US Executive Branch

President Obama’s Africa Trip

President Barack Obama travelled to Kenya this past weekend, where he met with Kenyan President Uhuru Kenyatta. The Governments of the United States and Kenya issued a joint commitment to promote good governance and anti-corruption efforts in Kenya. The White House also released fact sheets on: (1) Advancing Democracy, Human Rights, Gender Equality, Wildlife Conservation, and Governance in Africa; (2) deepening the U.S.-Africa trade relationship; (3) Power Africa; and (4) U.S. Investment in Entrepreneurship. On Sunday afternoon, President Obama travelled to Ethiopia, where he is expected to meet with Ethiopian officials and officials from the African Union.

Iran

A largely skeptical panel of Senators questioned Secretary of State John Kerry over the Iran nuclear deal last Thursday, with both sides previewing criticisms likely to be repeated throughout the agreement’s 60-day congressional review period. Secretary Kerry told the Senate Foreign Relations Committee (SFRC) that there is no alternative if the United States rejects the deal. SFRC Chairman Bob Corker (R-Tennessee) alleged that Secretary Kerry had turned Iran from being a pariah, to putting Congress in that role during the course of making the agreement.

During the hearing, Senator Marco Rubio (R-Florida), a 2016 Republican presidential contender, warned that the next U.S. President could overturn the deal, observing it is not a binding treaty. Should Congress ultimately vote against the deal and should President Obama veto such an act, he will need to secure significant support from Democrats to sustain his veto. Senator Bob Menendez (D-New Jersey) appeared to voice wider frustration in Congress that Members had not been more closely consulted during the negotiating process.

Russia/Ukraine Crisis

Ukrainian Prime Minister Arseniy Yatsenyuk and General Philip Breedlove, Commander of Supreme Allied Command and of U.S. European Command, met in Kyiv last week, where they discussed the progress of joint Ukrainian-U.S. military exercises. General Breedlove is also expected to visit the training exercises in Lyiv Oblast.

Separately, Ukrainian Prosecutor General Viktor Shokin and U.S. Assistant Secretary of State for International Narcotics and Law Enforcement Affairs William Brownfield discussed reforms and personnel changes in prosecution agencies. Assistant Secretary Brownfield also signed a Memorandum of Understanding (MOU) with Mikheil Saakashvili, Governor of Ukraine’s Odessa Oblast, assuring American support. The MOU marks the first agreement between the regional Ukrainian government and the United States. The signing ceremony also formally recognized the official deployment of a new patrol police force in Odessa trained by the California Highway State Patrol.

Syria/Iraq

U.S. Secretary of Defense Ash Carter met Kurdish leaders during an unannounced visit to the capital of Iraq’s Kurdistan Region. Secretary Carter landed early last Friday in Irbil. This visit comes a day after his stop in Baghdad, where Secretary Carter took a firsthand look at joint U.S.-Iraqi army efforts to thwart the advances of ISIL. He also visited Israel, Jordan, and Saudi Arabia last week.

Turkey

After the 20 July terrorist attack, reportedly by the PKK, in Suruç, Turkey, National Security Council Spokesperson Ned Price expressed U.S. solidarity with the Turkish Government and its people, reaffirming U.S. resolve to work with Turkey and other allies to combat terrorism.

On 22 July, President Obama spoke with Turkish President Recep Tayyip Erdogan about deepening bilateral cooperation in the fight against ISIL and common efforts to bring security and stability to Iraq and a political settlement to the conflict in Syria. After months of negotiations, Turkish leaders agreed to U.S. requests to use the Incirlik Air Base in southern Turkey to send fighter jets and armed drones to attack fighters based in Syria and Iraq.

Trade

Despite U.S. efforts to conclude a final deal with the Trans-Pacific Partnership (TPP) countries, there are a number of outstanding issues reported to yet be resolved during the 28-31 July Ministerial Meeting in Maui, Hawaii. These issues include: (1) intellectual property (pharmaceuticals); (2) goods market access (dairy, rice, sugar, and apparel and footwear); (3) automotive issues with Japan; (4) rules of origin (textiles and apparel); (5) state-owned enterprises and which entities should be exempt; (6) investment (the investor-state dispute settlement mechanism); (7) labor; (8) non-conforming measures on services and investment; and (9) tobacco.

Last week, U.S. and EU trade officials, along with several members of their respective legislatures, held off-the-record panels and receptions with business leaders to discuss a wide range of topics, including ongoing Transatlantic Trade and Investment Partnership (TTIP) talks.

While some Republican lawmakers acknowledged that plans have been delayed for holding formal discussions to reconcile differences between the House and Senate versions of the pending customs and enforcement bill (H.R. 644) due to issues in the informal negotiations, they reiterated their aim wrap up talks before the August recess. Senator John Thune (R-South Dakota), Republican conference chair and one of the seven Senate conferees on the bill, expressed doubts that the House would vote on the motion to go to conference before the recess, delaying action on the customs bill until the fall.

In a 17 July letter, 12 Democratic lawmakers argued for the conferees to remove the climate change language in the House-passed customs bill, calling it misplaced, ambiguous, and serving only to send the wrong message to the world on U.S. climate policy.

Ex-Im Bank

Senator Maria Cantwell (D-Washington) alleged to reporters that Congress is treating reauthorization of the lapsed U.S. Export-Import (Ex-Im) Bank charter like a pawn. Some in the House are saying they would allow movement to renew Ex-Im if the Senate takes up the short-term highway and transit bill. On Thursday, White House Press Secretary Josh Earnest affirmed that the Administration insists the provisions reauthorizing the Export-Import Bank be added to any transportation bill that passes Congress before the end of July.

Senator Pat Roberts (R-Kansas), Chairman of the Senate Committee on Agriculture, filed an amendment last week to the Senate highway bill to repeal mandatory country of origin labeling (COOL) requirements for beef, pork and chicken – to prevent billions of dollars in retaliatory tariffs by Canada and Mexico on the U.S. economy. Last Friday, Senate Majority Leader Mitch McConnell (R-Kentucky) moved to block any amendments to the transportation bill in a procedure called “filling the amendment tree.”

Majority Leader McConnell has said he will allow two amendment votes — (1) one related to repealing Obamacare, and (2) another related to the Ex-Im Bank. The Majority Leader said on the floor that he is still open to having debate on germane amendments. An aide to Senator McConnell reported that the Senate will likely vote on the Obamacare amendment on Sunday, with a vote on Ex-Im later next week. The Senate Republican Leadership is anticipating a final passage vote on the bill possibly on Thursday.

Trafficking in Persons Report

The State Department is due to release its overdue Trafficking in Persons (TIP) Report on Monday, 27 July. On 15 July, President Obama announced his intention to nominate Susan Coppedge to be the next Director of the Office to Monitor and Combat Trafficking, with rank of Ambassador at Large. The Senate has yet to schedule a confirmation hearing for Ms. Coppedge.

FIFA

U.S. authorities investigating the widespread Fédération Internationale de Football Association (FIFA) corruption scandal are now reportedly looking into the role that major financial institutions played in the alleged scheme. The United States has also asked Paraguay to extradite Nicolás Leoz, the former president of South America’s soccer confederation, Conmebol, a suspect in the scandal.

Looking Ahead

Washington will likely focus on the following upcoming matters:

23-28 July: President Obama to travel to Kenya attend the Global Entrepreneurship Summit
TBD August: AGOA Forum in Libreville, Gabon
15 September: 70th Session of the UN General Assembly (UNGA) opens in New York City
24 September: Pope Francis to address Congress and meet with President Obama
28 September: General debate of the UNGA begins
30 Nov.-11 Dec.: UN Global Climate Conference in Paris

Lawmakers Hoping to Move Forward on Highway Bill, IRS Proposes Regulations on “Disguised Payments”

By Squire Patton Boggs on July 27, 2015 Posted in Tax

Legislative Activity

Tax-Writers Running Out of Time on Highway Bill

Following the passage last week of the House’s $8 billion five-month highway patch, the Senate continues to remain focused on moving forward with its own bill, which provides for a six year highway reauthorization and three years’ worth of funding (more than $47 billion), with offsets derived from: (1) shifting the deposit of civil motor vehicle safety penalties to the Highway Trust Fund; (2) tax compliance, such as mortgage information reporting; (3) fees and receipts, such as index user fees; and (4) outlays, such as rescinding certain unused TARP funds.

After weekend work on the legislation, the Senate hopes to wrap up the process before the House leaves town on Friday. Still, concerns over the underlying safety title, various pay-fors, and unrelated amendments (i.e., votes on Affordable Care Act repeal and Export-Import reauthorization) have put the bill’s future in jeopardy. What’s more, recognizing that the longer-term bill faces a tough road, Majority Leader McConnell has suggested that his backup plan will be to put forward a two-month patch in its steed. With only five legislative days left in the session before the House closes up shop until September, it is unclear what approach will ultimately prevail.

Importantly, if the House’s five-month extension does win the day, House Ways and Means Committee Chairman Paul Ryan (R-WI) is likely to press forward with international tax reform when lawmakers return to Washington in September. If the Senate’s longer-term bill prevails, however, any outstanding hope for international tax reform this year is all but dead.

Lawmakers to Debate Tax Code’s Impact on Foreign Acquisitions of U.S. Businesses

This week, the Senate Permanent Subcommittee on Investigations will hold a hearing to explore the impact of the U.S. tax code on foreign acquisitions of U.S. businesses and the ability of U.S. businesses to expand by acquisition. Despite Democrats continued frustration over tax inversions – and desire to combat the issue with further regulations – we expect Senator Rob Portman (R-OH), Chair of the Subcommittee, to continue urging lawmakers to instead focus on reforming the tax Code as a way to make U.S. businesses more competitive and encourage them to stay in the United States.

This Week’s Hearings:

Tuesday, July 28: The House Ways and Means Subcommittee on Select Revenue Measures will hold a hearing titled “Reform of the Multiemployer Pension System.”
Tuesday, July 28: The Joint Economic Committee will hold a hearing titled “Dynamic Scoring: How Will It Affect Fiscal Policymaking?”
Wednesday, July 29: The Senate Judiciary Subcommittee on Oversight, Agency Action, Federal Rights and Federal Courts will hold a hearing titled “Revisiting IRS Targeting: Progress of Agency Reforms and Congressional Options.”
Thursday, July 30: The Senate Homeland Security and Governmental Affairs Permanent Subcommittee on Investigations will hold a hearing titled “Impact of the U.S. Tax Code on the Market for Corporate Control and Jobs.”

Regulatory Activity

IRS Issues Proposed Rule on “Disguised Payments”, Exempt Organizations

On Thursday, July 23, the Department of the Treasury and Internal Revenue Service (IRS) issued a long-awaited notice of proposed rulemaking (Notice) on “Disguised Payments for Services.” The Notice addresses, among other things, the tax treatment of management fee waivers, the tax treatment of carried interests received by a recipient for services to be provided by a person other than the recipient of the carried interest (such as a management company), and a variety of technical, but sometimes important issues, relating to whether payments or obligations to make payments are treated as: (1) distributive shares of partnership income; (2) payments to a partner in a capacity other than as a partner to which section 704(a) of the Internal Revenue Code applies; or (3) “guaranteed payments” to which section 704(c) applies. The technical provisions can be of importance because they may convert what a partner thought would be a share of partnership capital gain income to ordinary income.

The Notice states that proposed regulations included in the Notice will be effective with respect to arrangements entered into or modified after the regulations are issued in final form. It also states that pending final regulations, the determination of whether a payment is a disguised payment for services is made on the basis of the statute and the legislative history and “[p]ending the publication of final regulations, the position of the Treasury Department and the IRS is that the proposed regulations generally reflect Congressional intent as to which arrangements are appropriately treated as disguised sale payments for services.” Thus, for practical purposes the proposed regulations can be viewed as effective immediately with potential retroactive effect.

The Squire Patton Boggs tax team will provide a more detailed analysis of the Notice soon, including its impact on partners in existing partnerships.

Separately, IRS Commissioner John Koskinen last week indicated that final rules on political activity for exempt organizations will not be effective before the 2016 presidential election. According to Commissioner Koskinen he does not “want people thinking we are trying to get these regs done so we can influence the election.” However, the IRS may actually propose the rules in advance of the election, providing for a 90 day comment period, which will be followed by a hearing. Specifically, the rules are expected to address how much political activity exempt organizations can engage in without jeopardizing their tax-exempt status.

FCC Approves AT&T’s Acquisition of DIRECTV with Conditions

By Squire Patton Boggs on July 27, 2015 Posted in Technology and Communications

Legislative Activity

Senate Appropriations Committee Passes Bill That Would Decrease FCC’s Budget

On Thursday, July 23, the Senate Committee on Appropriations (Senate Appropriations Committee) approved the Fiscal Year 2016 (FY16) Financial Services and General Government Appropriations Bill (Appropriations Bill). The Federal Communications Commission (FCC) would receive $320 million, a cut of $20 million (roughly 6%) below the enacted level for Fiscal Year 2015. The bill provides funding for the FCC’s moving expenses as its leases expire. However, that funding may only be utilized if the FCC substantially reduces the size of its leased space. The legislation contains a number of riders. First, it prohibits the FCC from regulating prices or related terms in the FCC’s implementation of its 2015 Open Internet Order. Second, the bill restricts the use of money from the Universal Service Fund (USF) to expand access to broadband. An amendment from Sen. Jon Tester (D-MT) instructs the FCC to work with the Rural Utilities Service (RUS) to promote broadband deployment in rural parts of the country. The bill also exempts existing joint sales agreements (JSAs), the financial arrangements between local television broadcasters that govern the sale of advertising between stations, from recent FCC JSA rules that would require all such arrangements to be unwound by 2016. The approval of the Appropriations Bill by the Senate Appropriations Committee completes committee-level action on the bill.

Senators Call For FCC to Extend Consumer Privacy Rules to Broadband

On July 22, a group of nine Senators wrote a letter to FCC Chairman Tom Wheeler urging the FCC to extend the FCC’s protection of customer proprietary network information (CPNI) to broadband consumers. In the letter, the Senators applauded the FCC’s 2015 Open Internet Order, in which it reclassified broadband as a telecommunications service regulated under Title II and chose to apply Section 222 of Title II, regarding the privacy of customer information, to broadband providers. The Senators urged the FCC to undertake a rulemaking in order to adapt and expand existing privacy protections to encompass broadband providers. Among a variety of suggestions to be considered in the rulemaking, the Senators highlighted that broadband consumer information should not be shared beyond the extent necessary for the Internet service provider (ISP) to deliver the requested service to the consumer. In addition, the Senators requested the FCC to consider implementation of robust data security and breach notification procedures in the event of a network or database breach. Chairman Wheeler has indicated that the FCC will likely commence work on broadband privacy issues this coming fall.

This Week’s Hearings:

Tuesday, July 28: The Subcommittee on Communications and Technology of the House Committee on Energy and Commerce will hold a hearing entitled “Continued Oversight of the Federal Communications Commission.” FCC Chairman Tom Wheeler and Commissioner Ajit Pai will testify at this hearing.
Wednesday, July 29: The Subcommittee on Courts, Intellectual Property, and the Internet of the House Judiciary Committee will hold a hearing entitled “Internet of Things.”

Regulatory Activity

FCC Approves AT&T’s Acquisition of DIRECTV with Conditions

On July 24, the FCC announced that it had approved AT&T’s proposed $48.5 billion acquisition of DirecTV, subject to certain conditions. Although the Order approving the transaction has not yet been released, an FCC news release stated that the conditions imposed by the FCC will “address potential harms” presented by the merger of “AT&T, one of the nation’s largest telephone and Internet service providers” with “DIRECTV, the nation’s largest satellite video provider.” Specifically, the FCC is requiring AT&T-DIRECTV to:

Expand fiber to the premises (FTTP) (e., fiber optic service) to 12.5 million customer locations.
Offer gigabit service to any E-rate eligible school or library where AT&T-DIRECTV deploys FTTP service.
Refrain from “imposing discriminatory usage-based allowances or other discriminatory retail terms and conditions on its broadband Internet access service.”
Submit its interconnection agreements to the FCC for review to determine whether “AT&T-DIRECTV is denying or impeding access to its networks in anticompetitive ways.” Interconnection agreements are contracts for the exchange of traffic between service providers.
Make available “an affordable, low-price standalone broadband service to low-income consumers in its broadband service area.”
Retain an “internal company compliance officer and an independent, external compliance officer” to monitor and report on the combined entity’s “compliance with all conditions of the merger.”

According to the news release, these conditions will “generally” remain in effect for four years following the close of the transaction.

Comment Dates Established for Lifeline Reform Proposals

On June 22, the FCC released a Second Further Notice of Proposed Rulemaking, Order on Reconsideration, Second Report and Order, and Memorandum Opinion and Order implementing various reforms to the Lifeline program intended to expand access to broadband services to low-income consumers, as well as seeking comment on other proposals to further access. The item is discussed in our blog post here. The proposals on which the FCC is seeking comment include whether to: (1) establish minimum service levels for voice and broadband Lifeline service; (2) set a permanent program support amount of $9.25; (3) establish a third-party “national verifier” for consumer eligibility; (4) establish a budget for the program; and (5) encourage participation by states and providers to increase competition in the program. Pursuant to the publication of the item in the Federal Register, comments on the FCC’s proposals are due August 17, and reply comments are due September 15.

FCC Seeks Comment on Updates to its Radiofrequency Authorization Rules

On July 21, the FCC released a Notice of Proposed Rulemaking seeking comment on proposals designed to “update” the agency’s rules governing evaluation and approval of radiofrequency (RF) devices. Specifically, the FCC is seeking comment on proposals to: (1) combine the Declaration of Conformity and verification programs into one product self-approval program; (2) “codify and clarify” the provisions for certification of modular transmitters; (3) “clarify responsibilities” for compliance when a final product may be composed of one or more modular transmitters; (4) codify “existing practices” for protecting the confidentiality of market-sensitive information; (5) “codify and expand” existing guidance for electronic labeling; (6) eliminate “unnecessary or duplicative rules[;]” and (7) discontinue the requirement that importers file FCC Form 740 with Customs and Border Protection for RF devices that are imported into the United States.

NTIA Commerce Spectrum Management Advisory Committee Meeting August 26

On August 26, the National Telecommunications and Information Administration (NTIA) will hold a meeting of its Commerce Spectrum Management Advisory Committee (CSMAC). According to its charter, CSMAC was created to advise the NTIA on “needed reforms to domestic spectrum policies” to “maximize” public benefits of spectrum and “keep wireless technologies . . . open to innovation” and “available to all Americans.” At the meeting, CSMAC will consider reports from its Subcommittees on General Occupancy Measurements and Quantification of Federal Spectrum Use, Spectrum Sharing Cost Recovery Alternatives, and Industry and Government Collaboration, according to the meeting notice here. The meeting, which is open to the public, will be held August 26 from 1:00 pm to 4:00 pm at the Boeing Regional Headquarters at 929 Long Bridge Drive, Arlington, VA 22202.

FCC to Host a Supplier Diversity Conference and Workshop for Small, Minority- and Women-Owned Business

On August 20, the FCC’s Office of Communications Business Opportunities (OCBO) will host a Supplier Diversity Conference and Workshop “focusing on private sector business opportunities for minority and women-owned businesses[,]” according to a Public Notice released July 22. The event will be held at the FCC”s headquarters on August 20 from 9:30 a.m. until 4:30 p.m. in the Commission Meeting Room. Representatives from “private industry, specifically telecommunications and technology firms . . . [will] discuss their organizations’ contracting procedures and [] provide insight on how small businesses should navigate the procurement process generally.” Panel discussions in the morning will address how “small businesses can distinguish themselves in the race for lucrative opportunities[,]” and FCC Chairman Tom Wheeler and the Commissioners are invited to offer remarks. In the afternoon, OCBO will coordinate confidential meetings with small business owners to provide “individualized advice on supplier strategies and information on current contracting opportunities.” Registrants for the afternoon meetings are asked to submit a “company profile” to the FCC by Friday, August 14 via email at ocboinfo@fcc.gov or by hardcopy to the FCC.

FCC Fines GPSPS $9.065 Million for Illegally Billing and Switching Customers’ Phone Companies

On July 23, the FCC announced that it had fined GPSPS, Inc., an Atlanta telephone company, $9,065,000 for switching customers’ long distance carriers without their authorization (slamming), billing customers for unauthorized charges (cramming), and submitting falsified evidence to government regulatory officials as “proof” that consumers had authorized the company to switch their providers, according to an FCC Forfeiture Order and accompanying news release. According to the news release, the FCC “reviewed more than 150 complaints against GPSPS” detailing that the company had “switched [customers’] long distance service provider[s] without their authorization even though they had never heard of or spoken to the company before discovering GPSPS’s charges on their telephone bills. In many cases, GPSPS refused to refund all of the unauthorized fees it charged consumers. Instead, the company misrepresented to consumers that they or someone in their household had authorized GPSPS’s service, and that GPSPS possessed an audio recording evidencing the authorization.” According to the FCC, GPSPS “fabricated” those audio recordings. FCC Commissioner Pai issued a statement calling on the FCC to initiate a proceeding to change the FCC’s slamming rules to make the “preferred carrier freeze . . . not an option, but the default.” The preferred carrier service is an elective service that enables customers to prevent their phone carriers from changing their long distance provider without express consent.

FCC Seeks Comment on AT&T Petitions on Text Telephony, Real-Time Text

On July 24, the FCC released a Public Notice seeking comment on two petitions filed June 12 by AT&T Services, Inc. (AT&T). In a Petition for Rulemaking, AT&T “requests that the [FCC] initiate a rulemaking proceeding to authorize the substitution of real-time text (RTT) for text telephony (TTY) in the IP-based environment[,]” according to the Public Notice. RTT is a text that is transmitted instantly as it is typed or created. TTY technology is typically used by individuals who are deaf or hard of hearing to communicate by typing messages on TTY devices that are transmitted over telephone lines. In a Petition for Waiver, AT&T asks the FCC to “waive, on a temporary basis, the [FCC’s] requirements to support TTY technology for devices and services ‘during the pendency of the rulemaking and until RTT is fully deployed to allow [AT&T] to offer [Voice over Internet Protocol] services that do not reliably support TTY[,]’” according to the Public Notice. The FCC states that AT&T’s petitions “request that the [FCC] recognize RTT as an alternative accessibility solution to TTY technology, and as a technology that will provide ‘superior functionality to TTY and deliver enhanced, interoperable disability access.’”

Senate to Move on Highway Bill, House Takes Up Legislation on Coal Combustion Residuals and Food Labeling

By Squire Patton Boggs on July 20, 2015 Posted in Uncategorized

Senate Legislative Activity

On Monday, July 20, the Senate is not in session. The Senate will meet on Tuesday, July 21, at 10:o0am. Following any Leader remarks, the Senate will be in a period of morning business, with Senators permitted to speak for up to 10 minutes each until 12:30pm. The Senate will be in recess from 12:30pm until 2:15pm, during which time Senators will participate in their weekly caucus meetings. At 2:15pm, the Senate will vote on the motion to invoke cloture on the motion to proceed to H.R. 22, the legislative vehicle for the highway funding bill.

House Legislative Activity

On Monday, July 20, the House will meet at 2:00pm in pro forma session, with no votes expected. On Tuesday, July 21, 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:

H.R. 2256 – Veterans Information Modernization Act, as amended;
H.R. 237 – FTO Passport Revocation Act of 2015, as amended;
H.R. 1557 – Federal Employee Antidiscrimination Act of 2015; and
H.R. 1473 – John F. Kennedy Center Reauthorization Act of 2015

On Wednesday, July 22, the House will meet at 10:00am for morning hour and at 12:00pm for legislative business. The House will consider H.R. 1734 – Improving Coal Combustion Residuals Regulation Act of 2015 (Subject to a Rule).

On Thursday, July 23, the House will meet at 10:00am for morning hour and at 12:00 pm for legislative business. On Friday, July 24, the House will meet at 9:00am for legislative business, with last votes expected by 3:00pm. The House will consider H.R. 1599 – Safe and Accurate Food Labeling Act of 2015, Rules Committee Print (Subject to a Rule). It is possible that additional legislative items will be added to the schedule.

Congress Shuffles Closer to a Budget Deal, as Appropriations Process Stops; Budget Reconciliation Will Wait Until After August Recess

By Capital Thinking on July 20, 2015 Posted in Budget and Appropriations

Legislative Activity

Congress Shuffles Closer to a Budget Deal, as Appropriations Process Stops

The appropriations process is all but over, after a Confederate flag flap during floor debate of the House Interior-Environment bill brought the process to a standstill. While the appropriations committees in both the House and Senate may mark-up their final appropriations bills over the coming weeks, the bills will likely never see the floor of the House or Senate.

Democrats will continue their push for a budget deal to relax the sequester’s spending caps for FY 2016, with Senate Democrats blocking any appropriation legislation from reaching the Senate floor. While there has been increased discussion of a possible budget deal in recent weeks, it is unclear who would negotiate it and what it would include. Republican leadership is expected to push for full offsets for any spending increases, while Democrats will call for equal increases in both defense and non-defense spending.

When Congress returns from August recess there will be only ten legislative days before federal funding runs out, and Congress will likely pass a Continuing Resolution to keep the government open beyond September and buy time to either negotiate a budget deal or an omnibus appropriations bill. Complicating the situation, Congress will also need to raise the debt ceiling sometime in November or December, which has been a difficult task over the last several years.

Budget Reconciliation Will Wait Until After August Recess

Congress will miss the July 24 budget reconciliation deadline, and will not consider reconciliation legislation until after the August recess at the earliest. House Budget Committee Chairman Tom Price (R-GA) noted the deadline was self-imposed, and would not preclude reconciliation later this year. It is unclear what Republicans will use the reconciliation process for, as some members of the conference would like to use it to repeal Obamacare while others want to make changes to mandatory programs such as Social Security, Medicare, and Medicaid.

The budget reconciliation process allows the Senate to bypass the typical 60-vote threshold, but cannot include extraneous provisions that do not affect revenue or spending. Additionally, reconciliation legislation cannot increase the budget deficit, which will be an important consideration if Republicans use reconciliation to repeal or partially-repeal Obamacare as the Congressional Budget Office recently said repeal would increase the budget deficit by $353 billion over ten years.

ESEA passes the Senate, with HEA next on the agenda for both education committees

By Capital Thinking on July 20, 2015 Posted in Education

Legislative Activity

Elementary and Secondary Education Act Reauthorization

Last Thursday, the Senate passed its version of the Elementary and Secondary Education Act (ESEA) – the Every Child Achieves Act (S. 1177) – by an 81-17 vote. The bill will now move to conference with the House’s ESEA bill – the Student Success Act (H.R. 5) – which passed out of that chamber on July 8. Senate Health, Education, Labor and Pensions (HELP) Committee Chairman Lamar Alexander (R-TN) stated that he plans to work with House Education and the Workforce Committee Chairman John Kline (R-MN) this week to create a schedule for the conference process, which is excepted to take several weeks with the goal of getting a final bill to the President to sign in the fall. Conferees will most likely be members of the two education committees.

While many advocates were quick to praise the Senate’s passage of the Every Child Achieves Act, there were a number of stakeholders, particularly civil rights groups, that expressed concerns that the Senate’s bill did not go far enough in its provisions on accountability and interventions for low-performing schools. Department of Education Secretary Arne Duncan also expressed similar concerns when he applauded the Senate’s passage of the bill by saying that it still falls short because it does not require interventions for low-performing schools or create policies that would ensure that resources are going to the schools that need them the most. Many of these groups are hoping to convince lawmakers to make changes on these issues as the House and Senate work out the differences between their two bills in conference.

Higher Education Act Reauthorization

Last week, Senate HELP Committee Chairman Alexander spoke at an event at the American Enterprise Institute and shared that the Committee will turn its attention to the reauthorization of the Higher Education Act (HEA) very shortly now that it has completed its work on ESEA. The Chairman noted that he will work with Senate HELP Committee Ranking Member Patty Murray (D-WA) to have a draft bill for the committee and education stakeholders to review in September. Chairman Alexander also indicated that he is pushing for a committee markup by October, but this timeline could easily be pushed back.

In addition to laying out the timeline for HEA this fall, Chairman Alexander reiterated many of his previously stated goals for the reauthorization legislation at the AEI event. He noted the importance of (1) ending overregulation of institutions of higher education; (2) improving the accreditation process; (3) finding ways to ensure that institutions share the financial risk; and (4) collecting and disseminating important and non-duplicative data.

Need-Based Educational Aid Act

Last Tuesday, July 14, the Senate unanimously passed S.1482, the Need-Based Educational Aid Act of 2015, which would “improve and reauthorize provisions relating to the application of the antitrust laws to the award of need-based educational aid.” Specifically, the bill reauthorizes the antitrust tax exemption in Section 568 of the Improving America’s Schools Act of 1994 for colleges who practice need-blind admissions. The legislation would allow these colleges to collaborate on the financial aid formulas they use for determining how much students admitted on a need-blind basis can pay to attend. This will be the third reauthorization of this exemption, which is set to expire this September. Senators Chuck Grassley (R-IA) and Patrick Leahy (D-VT) were the original cosponsors of the bill.

The House is also moving forward with its version of the legislation, which was marked up on July 8 by the Judiciary Committee with no amendments.

This Week’s Hearings:

Tuesday, July 21: The Senate Finance Committee will mark up a bill that would extend certain expired tax provisions, including the teacher tax credit.
Wednesday, July 22: The Senate Health, Education, Labor and Pensions Committee will hold a hearing titled “Reauthorizing the Higher Education Act: Exploring Barriers and Opportunities within Innovation.”

House to Consider Carbon Costs; EPA and DOT Propose New Rules To Regulate Greenhouse Gas Emissions From Vehicles

By Squire Patton Boggs on July 20, 2015 Posted in Energy, Environment and Natural Resources

Regulatory Activity

Proposed Rules for Vehicles to Control GHG

The Environmental Protection Agency (EPA) and the Department of Transportation have announced proposed rules to create a “comprehensive Phase 2 Heavy-Duty National Program” intended to reduce greenhouse gas (GHG) emissions and fuel consumption for new on-road heavy-duty vehicles. The program focuses on phasing in new technology for model years 2018-2027. Comments are due September 11.

EPA’s SNAP Decision

In its Significant New Alternatives Policy (SNAP) program, EPA has announced that it has expanded the list of acceptable substitutes for ozone-impacting substances for use in refrigeration and air conditioning and well as for “foam blowing; solvent cleaning; aerosols; and adhesives, coatings, and inks sectors.”

Clean Air Awards

EPA has announced its competition for the 2016 Clean Air Excellence Awards Program to recognize innovative efforts to achieve clean air. Both public and private entities are eligible to apply for the five general award categories: (1) Clean Air Technology; (2) Community Action; (3) Education/Outreach; (4) Regulatory/Policy Innovations; and (5) Transportation Efficiency Innovations. Applications are due September 11.

Legislative Activity

Carbon Costs

On Wednesday, July 22, the House Committee on Natural Resources will hold an oversight hearing titled, “An Analysis of the Obama Administration’s Social Cost of Carbon.”

Brownfields

On Wednesday, July 22, the House Committee on Transportation and Infrastructure, Subcommittee on Water Resources and the Environment, will hold a hearing to discuss “Helping Revitalize American Communities Through the Brownfields Program.”

National Parks

On Thursday, July 23, the House Committee on Natural Resources, Subcommittee on Federal Lands, will hold a hearing to explore “New and Innovative Ideas for the Next Century of Our National Parks.”

Dodd-Frank Turns Five, Continued Focus on Fiduciary Rule

By Squire Patton Boggs on July 20, 2015 Posted in Financial Services

Legislative Activity

Financial Services Lawmakers Hone in on Dodd-Frank Reform as Fifth-Year Anniversary Approaches

As the fifth anniversary marking the enactment of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) arrives this Tuesday, July 21, financial services lawmakers are continuing to focus on ways to reform the law. On the House side, House Financial Services Committee Chairman Jeb Hensarling (R-TX) soon plans to organize a series of hearings to examine the Dodd-Frank Act and whether it has in fact resulted in greater financial stability. Moving forward, the Committee will focus on housing finance reform, institutions that are considered “Too-Big-to-Fail,” and oversight of the Department of Housing and Urban Development (HUD). According to Chairman Hensarling, the Committee is likely only to tackle small components of these and other issues this year, but has plans to move a larger bill in 2016.

On the other side of the Capitol, the Senate Banking Committee is now focused on reforms, such as raising the threshold for designation as a systemically important financial institution (SIFI), that may eventually be paired with relief for community and regional banks. While various Committee Democrats have pushed back against the $500 billion level proposed in Chairman Richard Shelby’s (R-AL) bill, the Committee this week will hold hearings on the SIFI designation process and systemic risk – a possible precursor to some sort of compromise on the issue.

DoL’s Fiduciary Rule Still in Spotlight

As the comment period for the Department of Labor’s (DoL) Fiduciary Rule proposal closes this Tuesday, July 21, DoL Secretary Thomas Perez is scheduled that same day to testify about the proposal before the Senate Health, Education, Labor, and Pensions (HELP) Subcommittee on Employment and Workplace Safety. DoL has scheduled its own hearing on the matter for August 10.

Separately, Senate Homeland Security and Governmental Affairs Committee Chairman Ron Johnson (R-WI) last week criticized Securities and Exchange Commission (SEC) Chair Mary Jo White for failing to turn over documents his Committee requested regarding the agency’s collaboration with the Department of Labor in drafting its fiduciary proposal. According to Chairman Johnson, “[i]f the Commission fails to immediately provide the requested documents, the Committee may consider use of the compulsory process.” The SEC has since indicated that it is “in the process of responding to the Committee as appropriate.”

This Week’s Hearings:

Wednesday, July 22: The House Financial Services Subcommittee on Monetary Policy and Trade will hold a hearing titled “Examining Federal Reserve Reform Proposals.”
Wednesday, July 22: The House Financial Services Task Force to Investigate Terrorism Financing will hold a hearing titled “The Iran Nuclear Deal and Its Impact on Terrorism Financing.”
Wednesday, July 22: The Senate Banking Subcommittee on Securities, Insurance, and Investment will hold a hearing titled “Oversight of the Financial Stability Oversight Council Designation Process.”
Thursday, July 23: The House Financial Services Committee will hold a hearing titled “Ending ‘Too Big to Fail’: What is the Proper Role of Capital and Liquidity?”
Thursday, July 23: The Senate Banking Committee will hold a hearing titled “Measuring the Systemic Importance of U.S. Bank Holding Companies.”
Friday, July 24: The House Financial Services Subcommittee on Financial Institutions and Consumer Credit will hold a hearing titled “National Credit Union Administration Operations and Budget.”

Regulatory Activity

Federal Reserve, OFR to Hold Meetings

Today, Monday, July 20, the Board of Governors of the Federal Reserve System will hold an open meeting to consider: (1) a Final Rule to Establish Risk-Based Capital Surcharges for Systemically Important Bank Holding Companies; and (2) a Final Order Applying Enhanced Prudential Standards to General Electric Capital Corporation under Section 165 of the Dodd-Frank Act.

Separately, on Thursday, July 23, the Office of Financial Research (OFR) will hold the sixth meeting of the Financial Research Advisory Committee to review committee recommendations and discuss stress testing, data collection, data sharing, and analyzing operational risks.