Republicans Postpone Reconciliation Actions Until After August Recess; CMS Proposes Sweeping Changes to LTC Facilities; MedPAC Releases 2015 Data Book

By Squire Patton Boggs on Posted in Healthcare

Legislative Activity

Republicans Postpone Reconciliation Actions Until After August Recess

With the August District Work Period only weeks away, House Committee on the Budget Chairman Tom Price (R-GA) announced this past week that the House Committee on the Budget would not act on reconciliation until after the lawmakers reconvene in September. The three House committees and two Senate committees with health care jurisdiction are not expected to report their proposals until after the August recess.

Some Republican lawmakers have been proponents of using this fast-track budget maneuver to repeal the Affordable Care Act (ACA), while others have questioned whether this process could be better used to achieve other policy objectives, such as tax reform. The budget resolution provided for a July 24 deadline for the committees with health care jurisdiction to determine a repeal plan, though there are no consequences for missing this deadline. Senate Majority Leader Mitch McConnell (R-KY) has supported the use of reconciliation to dismantle portions of the ACA, but has stated that there is no definitive timeline.

This Week’s Hearings:

  • Wednesday, July 22: The House Committee on Veterans’ Affairs will hold a hearing titled “To Receive the Secretary’s Testimony Regarding the Pending VA Health Care Budget Shortfall and System Shutdown.”
  • Wednesday, July 22: The House Committee on Ways and Means Subcommittee on Health will hold a hearing with the Medicare Payment Advisory Commission (MedPAC) to discuss hospital payment issues, rural health issues, and beneficiary access to care.
  • Wednesday, July 22: The House Committee on Veterans’ Affairs Subcommittee on Health will hold a markup of pending health care legislation.
  • Wednesday, July 22: The Senate Special Committee on Aging will hold a hearing titled “The Doctor’s Not In: Combating Medicare Provider Enrollment Fraud.”
  • Wednesday, July 22: The Senate Committee on Veterans’ Affairs will hold a markup of pending legislation. The following bills are on the agenda: S. 1493, Veterans’ Compensation Cost-of-Living Adjustment Act of 2015; S. 1203, 21st Century Veterans Benefits Delivery and Other Improvements Act; S. 1028, Department of Veterans Affairs Accountability Act of 2015; S. 833, Department of Veterans Affairs Medical Facility Earthquake Protection and Improvement Act; S. 627, a bill to prohibit the Secretary of Veterans Affairs from awarding bonuses to employees of the Department of Veterans Affairs with respect to whom an adverse finding has been made by the Secretary, and for other purposes; and S. 469, Women Veterans and Families Health Services Act of 2015.
  • Thursday, July 23: The Senate Committee on Health, Education, Labor, and Pensions (HELP) will hold a hearing titled “Achieving the Promise of Health Information Technology: Information Blocking and Potential Solutions.”
  • Friday, July 24: The House Committee on Energy and Commerce Subcommittee on Oversight and Investigations will hold a hearing titled “An Overdue Checkup: Examining the ACA’s State Insurance Marketplaces.”

Regulatory Activity

CMS Proposes Sweeping Changes for LTC Facilities

On Monday, July 13, the Centers for Medicare and Medicaid Services (CMS) released a proposed rule titled “Medicare and Medicaid Programs; Reform of Requirements for Long-Term Care Facilities.” This rule, which was released on the same day as the decennial White House Conference on Aging, proposes to comprehensively update the Medicare and Medicaid conditions of participation for long-term care facilities. Of note, this proposal includes several provisions which would support the use of electronic health records and electronic data sharing in care delivery and transitions of care. These proposals are part of the agency’s larger initiative to support the adoption of health information technology and to promote health information exchange.

The long-term care industry has voiced concerns about the costs associated with complying with this proposed rule. CMS estimates that the industry as a whole will pay over $729 million to meet the requirements during the first year and approximately $638 million per year after that.

The deadline for comments is September 14.

Other Activity

MedPAC Releases 2015 Data Book

On Thursday, July 16, MedPAC released its annual Data Book titled “Health Care Spending and the Medicare Program.” This report builds off of the Commission’s March and June reports to Congress and includes tables and figures on: national health care and Medicare spending; beneficiary demographics; dual-eligible beneficiaries; quality of care in the Medicare program; Medicare beneficiary and other payer liability; access to care in various provider settings; Medicare Advantage; and prescription drug coverage for Medicare beneficiaries.

House Appropriations Panel Approves Homeland Security Spending Bill, Scrutinizes “Sanctuary City” Policies

By Clark Ervin and Ludmilla Kasulke on Posted in Uncategorized

Legislative Activity

House Appropriations Panel Approves Homeland Security Spending Bill, Scrutinizes “Sanctuary City” Policies

This week, the House Appropriations Committee approved its FY 2016 spending bill funding homeland security programs. The measure provides $39.3 billion in discretionary funding for the U.S. Department of Homeland Security (DHS), $337 million below the amount enacted for FY 2015 and $2 billion less than the President’s request.

Debate over sanctuary cities dominated the Committee’s debate of the DHS measure. House appropriators adopted three Republican-led amendments responding to the death of a San Francisco woman shot by an immigrant in the US illegally. One measure adopted along party lines would block sanctuary cities from receiving certain homeland security funding grants, including those related to the Federal Emergency Management Agency (FEMA). Democrats criticized the amendment as limiting the ability of these cities to receive funding to fight natural disasters or to prevent terrorist attacks. Members of both parties supported a manager’s amendment containing provisions that would increase funding for U.S. Immigration and Customs Enforcement’s (ICE) Criminal Alien and Fugitive Operations programs, to boost support for enforcement.

The House measure also withheld funding for implementation of the President’s proposed executive actions on immigration, and included a rider preventing any such funding until an ongoing federal injunction is lifted. The injunction originated as part of a pending federal case filed by a group of states to prevent implementation of the President’s proposals.

The homeland security spending bill is the final to be marked up by the House Appropriations Committee, the first time in six years that all twelve measures have been passed under regular order. However, movement on appropriations bills remains stalled in both chambers at this time.

This Week’s Hearings:

  • Tuesday, July 21: The Senate Judiciary Committee will hold a hearing titled “Oversight of the Administration’s Misdirected Immigration Enforcement Policies: Examining the Impact on Public Safety and Honoring the Victims.”
  • Thursday, July 23: The House Judiciary Subcommittee on Immigration and Border Security will hold a hearing titled “Sanctuary Cities: A Threat to Public Safety.”

Obama Administration Reaches Out to Congress On the Iran Deal; TPP Chief Negotiators To Meet, Push to Conclude A Deal; TIP Report Overdue

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

Iran

Early last Tuesday, President Obama announced that, after two years of negotiations, the P5+1 negotiators reached a comprehensive, long-term deal with Iran that will prevent it from obtaining a nuclear weapon. Congress will now have an opportunity to review the deal, and the Obama Administration has already begun outreach to Members. President Obama also pledged to veto any legislation that would prevent the successful implementation of the deal.

Senate Foreign Relations Committee (SFRC) Chairman Corker and Ranking Member Ben Cardin (D-Maryland) said on Thursday afternoon that they disagreed with the Obama Administration’s intent to push for a United Nations vote on the Iran deal before Congress votes this September to approve or reject it. Senator Cardin questioned Vice President Joe Biden about the matter during a closed door meeting with committee Democrats on Thursday, indicating afterwards that the Vice President’s answer was unsatisfactory. Senator Cardin says that President Obama should hold off on advocating for U.N. consideration of the deal until Congress has had its 60 days to review the bill as set out under law. The 60-day window will begin once the White House has formally submitted the Iran deal to Congress.

President Obama made a series of calls to foreign leaders this week, including to those in the Middle East, to discuss the deal.

U.S. Marines Attacked in Tennessee

Last Thursday, Mohammad Youssuf Abdulazeez, a naturalized U.S. citizen originally from Kuwait, was killed after attacking both a military recruiting center and a nearby Navy-Marine training facility in Chattanooga, Tennessee, killing four Marines and wounding others. President Barack Obama confirmed that the FBI is leading the investigation and is working with the Department of Defense to ensure U.S. military facilities are further protected. Navy Secretary Ray Mabus condemned the attack against military personnel on home soil. Senate Foreign Relations Committee (SFRC) Chairman Bob Corker (R-Tennessee) said the United States is mourning the loss of the four Marines.

Greek Debt Crisis

Last Thursday, Greece’s Parliament approved austerity measures required as a condition of a $96 billion bailout deal, the country’s third financial rescue in five years. On Friday, German lawmakers voted in favor of the new bailout plan agreed to by European leaders early Monday morning, which was the result of contentious negotiations last weekend.

Russia/Ukraine Crisis

The SFRC held a hearing titled “Corruption, Global Magnitsky and Modern Slavery: A Review of Human Rights Around the World.” Assistant Secretary of State for Democracy, Human Rights and Labor Tom Malinowski testified that Russia and China, two of the world’s great powers, are posing serious challenges to universal human rights norms. Assistant Secretary Malinowski also argued that Russia has used its veto in the UN Security Council to oppose the enforcement of human rights norms around the world. Other panelists focused on the Global Magnitsky Human Rights Accountability Act, saying it could be a tool to support U.S. human rights policies by imposing visa bans and asset freezes on foreign officials responsible for gross human rights violations or large-scale corruption.

Assistant Secretary of State for European and Eurasian Affairs Victoria Nuland travelled to Kyiv, where she met last Tuesday with Rada Speaker Groysman and met Wednesday morning with Yuriy Boyko of the opposition bloc faction. On Monday, President Obama and Vice President Joe Biden met with Ukrainian Prime Minister Arseniy Yatsenyuk at the White House. The President and Vice President both expressed unwavering support for Ukraine’s sovereignty and territorial integrity, and underscored the United States’ commitment to maintaining sanctions against Russia until it fully implements the Minsk agreements. The two also commended the Government of Ukraine for the steps it has taken to implement its own obligations under the Minsk agreements, including submitting draft constitutional amendments on decentralization to the Ukrainian Parliament.

Deputy Secretary of State Antony Blinken also welcomed the first-ever U.S.-Ukraine Business Forum in Washington and expressed excitement about the potential for increased U.S. business investments in Ukraine. Meanwhile, Lt. Gen. Ben Hodges, the U.S. Army’s top commander in Europe, stated the United States is considering providing training to Ukrainian regular army and special operations forces currently fighting separatists in eastern Ukraine. If approved, this new phase of training would begin in late November. Lt. Gen. Hodges emphasized that the training is still under review and will require approval.

Syria/Iraq

According to a U.S. military statement, the United States and its allies carried out 31 air strikes against Islamic State militants in Syria and Iraq on Wednesday.

Trans-Pacific Partnership

The chief negotiators of the Trans-Pacific Partnership (TPP) will meet in Maui, Hawaii, beginning on 24 July. A TPP Ministerial will follow on 28-31 July, also in Hawaii. In advance of the next round of negotiations, Australia granted market access for processed beef products from the United States and is moving toward approving U.S. fresh beef imports. This could be an effort to obtain better access to the U.S. sugar market and is likely in response to the United States’ signal last week that it is willing to open up this market to TPP countries so long as it does not undermine the U.S. sugar program.

Meanwhile, media sources report Malaysia still has not made commitments on various TPP rules, including on those related to State-Owned Enterprises (SOEs), intellectual property, and government procurement. U.S. Trade Representative Michael Froman apparently told Malaysian lawmakers this week that the United States is ready to conclude a final TPP deal this month with almost all of the parties involved, warning that Malaysia will be “left behind” if it cannot agree to the terms.

Transatlantic Trade & Investment Partnership

The 10th round of the Transatlantic Trade & Investment Partnership (TTIP) negotiations was held in Brussels last week. These negotiations remain on a slower track in comparison with the more advanced state of the Tran-Pacific Partnership (TPP) negotiations. A German news source released a host of secret EU documents on TTIP, including a document revealing France’s view on a U.S. proposal on state-owned enterprises (SOEs) and a European Commission outline of objectives regarding geographical indications (GIs).

Separately, a European Commission proposal that would allow national governments to restrict the use of genetically modified food and feed now faces outright rejection by the European Parliament, leaving the future of the legislation in doubt.

Customs Bill

The House has yet to name its conferees for the Senate-House discussions to reconcile the two chambers’ respective trade facilitation (“customs”) bills but an announcement is expected soon. Both chambers of Congress appear to be committed to finalizing a customs measure before recessing for August.

Ex-Im Bank

Despite hopes to attach reauthorization of the U.S. Export-Import (Ex-Im) Bank to an advancing highway bill, the House passed a short-term highway measure on Wednesday without doing so. However, the Senate could still add the necessary provisions to its version of the highway measure and return the bill to the House before adjourning for the August recess.

Malaysia/Trafficking in Persons Report

Nineteen bipartisan Senators wrote to Secretary of State John Kerry this week urging him to not “prematurely” upgrade Malaysia’s ranking in the overdue release of the State Department’s 2015 Trafficking in Persons Report. The Senators are responding to last week’s reports that the Administration plans to elevate Malaysia to the “Tier 2 Watch List” from its current Tier 3 ranking, saying that any such action would be unjustified and weaken the report’s credibility.

FIFA

On Wednesday 15 July, the Senate Commerce Subcommittee on Consumer Protection, Product Safety, Insurance, and Data Security held a hearing on the Fédération Internationale de Football Association’s (FIFA) alleged culture of corruption, the United States’ participation in the organization, and any human rights violations stemming from the organization’s lapses in integrity. Subcommittee Chairman Jerry Moran (R-Kansas) stated that FIFA President Blatter’s plan to step down provides the United States and U.S. Soccer Federation with an opportunity to work together toward reforming FIFA and to choose the organization’s next leader.

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

Tax-Writers Move on Highway Funding, Tax Extenders

By Squire Patton Boggs on Posted in Tax

Legislative Activity

Tax-Writers Running Out of Time on Highway Bill

Last week, the House of Representatives passed by a vote of 312-119 an $8 billion five-month highway patch that includes various tax compliance-related pay-fors, which themselves raise nearly $5 billion. If the House is successful in getting the Senate to agree to its short-term extension before highway funding runs out at the end of the month, House Ways and Means Committee Chairman Paul Ryan (R-WI) plans to pursue a six-year highway bill, a package of permanent tax extenders, and international tax reform when Congress returns from August recess. Notably, such a proposal may use “deemed repatriation” to help finance both the highway bill and a transition to a hybrid territorial system of taxation.

On the Senate side – and despite the White House’s support for a short-term extension – Senate Majority Leader Mitch McConnell (R-KY) is still pushing to pass a multiyear highway bill before Congress adjourns later this month. While the bill may only extend highway funding through the 2016 Election, Senate Finance Committee Chairman Orrin Hatch (R-UT) appears to have identified pay-fors (not including repatriation) to fund up to a five-year highway bill – though he does not yet appear to have the necessary votes.

As July 31 – the date on which the Highway Trust Fund will run out of money – approaches, it is becoming increasingly less likely that the Senate’s approach will win the day. In addition to disagreements over the pay-fors, the possibility that lawmakers will seek to include a reauthorization of the Export-Import Bank as part of the legislation may also hamper the process, as various Republican Senators have already indicated that they plan to filibuster the highway bill if it contains such a provision. While Senate leadership will soon unveil its proposal in hopes of gaining the necessary support before lawmakers leave Washington at the end of the month, there will likely not be sufficient time for the Senate to come to a consensus on a long-term bill, which would force lawmakers to accept the House’s short-term patch and return to the debate after August recess.

Relatedly, while we do not expect the bill will gain any traction, House Democrats last week offered their own highway bill that would reauthorize highway funding for six years to the tune of $478 billion. Notably, lawmakers would partly pay for the bill with a provision that would restrict corporate tax inversions and raise $41 billion. In responding to the proposal, Chairman Ryan was critical of addressing inversions through more regulation, suggesting that such an approach would make U.S. companies more vulnerable to takeover by foreign firms.  Instead, Chairman Ryan continues to believe that inversions are best addressed through tax reform.

Senate to Move Two-Year Extenders Package

The Senate Finance Committee has announced that it will hold a markup this Tuesday, July 21, to renew 52 expired tax provisions for two years – retroactively for 2015 and prospectively through the end of 2016. In total, the proposal would cost $95.6 billion over the 10 year scoring window.  On the House side, lawmakers are expected to address tax extenders when Congress returns from August recess. Notably, when the House does move forward on tax extenders, they are likely to focus on making tax extenders permanent, rather than simply passing a two-year extension. Presently, it is uncertain whether the Senate or House approach will prevail; however, the process will likely be influenced by how Congress chooses to approach the highway bill and international tax reform. Should the House path ultimately prevail, however, President Obama has indicated he will veto any legislation that makes tax extenders permanent without providing offsets.

This Week’s Hearings:

  • Tuesday, July 21: The Senate Finance Committee will hold a markup of legislation to extend certain expired tax provisions.
  • Thursday, July 23: The House Ways and Means Subcommittee on Oversight will hold a hearing titled “IRS Audit Selection Process.”

Regulatory Activity

IRS Proposes Regulations to Eliminate Property Transfer Election Requirement

On Friday, July 17, the Internal Revenue Services proposed regulations regarding property transferred in connection with the performance of services, which would eliminate the requirement that taxpayers submit a copy of a section 83(b) election with their tax return for the year in which the property subject to the election was transferred. The regulations would take effect on January 1, 2016, and would apply to property transferred on or after that date. Comments are due by October 15.

FCC Announces August Open Meeting Agenda

By Squire Patton Boggs on Posted in Technology and Communications

Legislative Activity

House Commerce Committee Leaders Press FCC to Delay Vote on Incentive Auction Procedures

On July 14, Rep. Fred Upton (R-MI), Chairman of the House Committee on Energy and Commerce (House Commerce Committee), and Rep. Greg Walden (R-OR), Chairman of the Subcommittee on Communications and Technology (Communications Subcommittee) of the House Commerce Committee, wrote a letter to Federal Communications Commission (FCC) Chairman Tom Wheeler asking the FCC to postpone a vote on a Public Notice regarding the Broadcast Incentive Auction (Incentive Auction) procedures, which was set to be considered at the FCC’s July 16 Open Meeting. Citing new simulation data released by the FCC’s Incentive Auction Task Force on July 10, the House Commerce Committee leadership urged the FCC to remove that item from consideration at the July Open Meeting in order to allow interested parties, including FCC staff, sufficient time to analyze the data. After receiving the letter, the FCC removed the Public Notice from consideration at the July Open Meeting. FCC Commissioner Ajit Pai echoed the sentiments of the House Commerce Committee leadership in a statement that called for the FCC to release all relevant simulation data and applauded the postponement of the item. The FCC has rescheduled the vote on the Incentive Auction procedures for the FCC’s next open meeting on Thursday, August 6.

Anti-Spoofing Act Introduced in Senate Following Introduction in House

On July 14, Sen. Bill Nelson (D-FL) introduced S.1759, a bill to prevent caller identification (Caller ID) “spoofing,” which is a technique that allows a caller to change the phone number that appears on the called party’s caller ID. The technique is frequently used to trick consumers or law enforcement officials. This issue has now received consideration by both the Senate and the House of Representatives (House). On June 4, Rep. Grace Meng (D-NY) introduced a similar bill, H.R. 2669, in the House. The Senate bill has been referred to the Senate Committee on Commerce, Science, and Transportation.

This Week’s Hearings:

  • Wednesday, July 22:  The Communications Subcommittee of the House Commerce Committee will hold a hearing entitled “Promoting Broadband Infrastructure Investment.” This is the rescheduled date for this hearing, which was originally supposed to take place on July 14.

Regulatory Activity

FCC Announces Tentative Agenda for August Open Meeting

On July 16, the FCC announced that the following items are tentatively on the agenda for the FCC’s Open Meeting scheduled for Thursday, August 6:

  • Emerging Wireline Networks and Services. The FCC will consider a Report and Order, Order on Reconsideration, and Further Notice of Proposed Rulemaking that, according to the Open Meeting announcement, “will advance longstanding competition and consumer protection policies on a technologically-neutral basis” and “further the technology transitions underway in our Nation’s fixed communications networks.” This item and the item immediately below are discussed in our post here.
  • Ensuring Continuity of 911 Communications. The FCC will consider a Report and Order that “would protect consumers through the transitions from legacy copper networks by adopting rules to ensure that consumers have options . . . to maintain 911 communications at home during power outages.”
  • Mobile Spectrum Holdings. The FCC will consider an Order on Reconsideration addressing petitions for reconsideration of “certain aspects of the Mobile Spectrum Holdings Report and Order” issued by the FCC June 2, 2014. In that Order, the FCC updated its “spectrum screen” – a gauge for spectrum holdings that the agency uses to determine whether a spectrum transaction warrants increased scrutiny – to reflect changes in spectrum bands used by wireless providers. This item and the item regarding Incentive Auction Procedures were originally on the FCC’s July 16 Open Meeting agenda, but were removed. Chairman Wheeler discussed these items in a June 25 FCC Blog post.
  • Incentive Auction Procedures. As the “next step” to commencing the Broadcast Incentive Auction in the first quarter of 2016, the FCC will consider the Incentive Auction Procedures Public Notice. The FCC stated that this item “adopts a balanced set of auction procedures that will ensure an effective, efficient, and timely auction [and] establishes final procedures for setting the initial spectrum clearing target, qualifying to bid, and bidding in the reverse and forward auctions.”
  • Unlicensed Operations in TV Bands and 600 MHz Band. The FCC will consider a Report and Order adopting rules for unlicensed services in the “broadcast television bands and in the post-incentive auction 600 MHz band” that are “intended to maximize unlicensed access to spectrum while ensuring that licensed services are protected from harmful interference.” Chairman Wheeler posted to the FCC Blog on July 16 discussing this item and the item regarding Wireless Microphones. Chairman Wheeler’s post stated the item will “assure unlicensed spectrum is available in every market” – thus providing consumers with the “benefit . . . of increased investment and innovation in unlicensed products and services” – and proposes technical standards for unlicensed operations that aim to reduce the risk of interference to licensed users and “create certainty for unlicensed device users and manufacturers.”
  • Wireless Microphones. The FCC will consider a Report and Order that “adopts a plan to accommodate the long-term needs of wireless microphone users by providing new opportunities for their use in the broadcast television bands and in several other frequency bands.” Chairman Wheeler’s post stated that the item will “address the long term needs of wireless microphone users” by “altering operational parameters and expanding access to spectrum.”

The FCC’s Open Meeting will be held Thursday, August 6 at 10:30 a.m. in Room TW-C305 of the FCC”s headquarters and will be streamed live at fcc.gov/live.

FCC Revises Competitive Bidding Rules for Spectrum Auctions

On July 16, the FCC adopted a Report and Order, Order on Reconsideration, Third Order on Reconsideration, and Order revising the FCC’s “Designated Entity Rules,” as noted in a News Release and a Fact Sheet accompanying the vote to adopt the item (the text of which has not yet been released). “Designated entities” or “DEs” include certain small businesses, rural service providers, and businesses owned by members of minority groups and women. The FCC’s DE Rules are “designed to facilitate [DEs’] ability to participate in spectrum auctions and the wireless marketplace” by offering “bidding credits” to DEs. A “bidding credit” is a percentage discount on the winning bid amount of a DE in a spectrum auction.

According to the News Release, the FCC has: (1) eliminated the “attributable material relationship rule” that limited the amount of spectrum a small business could lease “in order to provide small businesses the flexibility to leverage leasing and other spectrum use agreements to gain access to capital and operational experience”; (2) adopted a 15 percent bidding credit for “qualifying service providers that provide commercial communications service to a customer base of fewer than 250,000”; (3) established a cap on the total amount of bidding credits that a “small business or rural service provider” can receive in any particular auction, which will vary by auction (in the Broadcast Incentive Auction, the cap will be $150 million); (4) modified the FCC’s attribution rules by limiting the amount of spectrum that “non-controlling disclosable interest holders of a [DE] – such as investors – can use” in the five years after the spectrum is obtained by the DE; and (5) prohibited “joint bidding and multiple applications by one party as well as parties with common controlling interests except in limited circumstances.”

D.C. Circuit Upholds FCC Justification for Applying Nielsen Market Contours in Allowing Cumulus to Purchase Licenses for Florida, Alabama Radio Stations

On July 17, the Court of Appeals for the District of Columbia Circuit (D.C. Circuit) affirmed the FCC’s decision to allow Cumulus – a radio broadcasting company – to acquire radio licenses in the Pensacola, Florida and Mobile, Alabama markets over an objection from Cumulus’ competitor ADX Communications. FCC rules cap the number of radio stations that one entity can own in a radio market; the FCC defines a “radio market” according to contours set by The Nielsen Company (Nielsen).

When Cumulus proposed to purchase the Pensacola and Mobile radio licenses at issue in the case, ADX petitioned the FCC objecting to the transaction. ADX’s principal argument was that although Nielsen treated the Pensacola and Mobile markets separately, because the markets were served by 14 radio stations in common, the FCC should deviate from the Nielsen markets and treat the region as one market. The FCC dismissed ADX’s objection, finding that there was nothing “new or unique” about adjacent Nielsen markets sharing “numerous stations” and that the Media Bureau had conducted a “full public interest analysis” and concluded that post-transaction competition in the market would be preserved.

ADX appealed the FCC’s decision to the D.C. Circuit, arguing that the FCC’s “robotic” application of its rules did not adequately consider the competitive realities of the market and was therefore arbitrary and capricious. The D.C. Circuit disagreed, finding the agency’s application of the Nielsen market system rational as the FCC had found that the previous market definition system – the “contour-overlap methodology” – was flawed in that it created “perverse incentives” to consolidate ownership and “often did not meaningfully capture the actual state of competition in a given area.” The D.C. Circuit also reasoned that although the transaction would result in an increase in market concentration, the FCC’s reliance on the public interest analysis was rational as the transaction would preserve the diversity of media ownership in the market by holding constant the number of owners.

FCC Reaches $17.5 Million Settlement with T-Mobile for Nationwide 911 Outages

On July 17, the FCC announced that the agency’s Enforcement Bureau (EB) had reached a $17.5 million settlement with T-Mobile to resolve EB’s investigation into two 911 service outages that occurred on the company’s national network on August 8, 2014. According to an FCC News Release, the outages together prevented T-Mobile customers from reaching 911 services for “approximately three hours.” To resolve EB’s investigation, T-Mobile will pay a $17.5 million fine and has agreed to implement a “compliance program” that will “strengthen its 911 resilience and its 911 risk management processes” including filing “detailed compliance reports” with EB. Rear Admiral (ret.) David Simpson, Chief of the FCC’s Public Safety and Homeland Security Bureau, stated that the settlement will “not only . . . address risk of 911 service failure, but also [] improve [T-Mobile’s] 911 call center reporting and its ability to recognize, respond to, and rapidly recover from 911 disruptions.”

FCC Adopts Order to “Modernize” Field Operations

On July 16, the FCC adopted and released an Order to “modernize” the agency’s field operations within the FCC’s EB. In the Order, the FCC states that “technological changes and increasingly limited resources” necessitated the agency taking a “fresh look” at the field office model first established in 1996. Specifically, the FCC has: (1) closed 11 field offices around the country (fewer than the 16 field offices the FCC originally proposed to close, as discussed in our post here) and relocated three others to nearby FCC-owned properties; (2) required that all EB field agents have “electrical engineering backgrounds”; (3) “devote[d] resources” to provide field staff with “training and [portable, cost-effective devices as well as remotely-operated spectrum monitoring equipment deployable on a permanent or temporary basis] to address new interference threats”; (4) directed EB to establish procedures for “industry and public safety complainants to escalate their complaints within the [field office] organization”; (5) committed to “work[ing] with outside stakeholders to develop a comprehensive policy and enforcement approach to the issue of unlicensed radio broadcasting” (i.e., pirate radio); and (6) implemented a “nationwide outplacement effort” to help the displaced field office employees find other positions.

Finally, a News Release accompanying the Order stated that the FCC will be stationing “rapid deployment teams” in Columbia, Maryland and Denver, Colorado to “supplement the enforcement efforts of other field offices when necessary and support high-priority enforcement actions nationwide.”

Comments Due August 17 in Lifeline Reform Proceeding

As discussed in our post here, the FCC has issued a Second Further Notice of Proposed Rulemaking (SFNPRM) seeking comment on various proposals to “modernize and restructure” the Lifeline program. Per the SFNPRM, the FCC is seeking comment on proposals to: (1) establish minimum service levels for voice and broadband Lifeline service to “ensure value for our [Universal Service Fund] dollars and more robust services for low-income Americans,” (2) “reset” the Lifeline eligibility rules, (3) “ensur[e] the effectiveness of [the FCC’s Lifeline] administrative rules while also ensuring that they are not unnecessarily burdensome”, (4) “enhance consumer protection”, and (5) “improve administration and ensure efficiency and accountability in the program.”

According to the SFNPRM’s publication in the Federal Register, comments are due August 17, and reply comments are due September 15.

Senate Continues Work on Education Bill, House Considers California Drought Relief Legislation

By Squire Patton Boggs on Posted in Uncategorized

Senate Legislative Activity

The Senate will meet on Monday, July 13, at 3:o0pm. Following any Leader remarks, the Senate will be in a period of morning business for one hour, with Senators permitted to speak for up to 10 minutes each. Following morning business, the Senate will resume consideration of S.1177, the Every Child Achieves Act.  At 5:30pm, the Senate will vote on the following amendments:

  1. Senator Orrin Hatch (R-UT) SA #2080 (student privacy policy)
  2. Senator Tim Kaine (D-VA) SA #2118 (post-secondary remediation)

There are also eight other amendments currently pending to S.1177, the Every Child Achieves Act:

  1. Senators Lamar Alexander (R-TN) and Patty Murray (D-WA) SA #2089 (substitute)
  2. Senator Gary Peters (R-MI) SA #2095 (financial literacy)
  3. Senator Elizabeth Warren (D-MA) SA #2120 (crosstabulation)
  4. Senator Mark Kirk (R-IL) SA #2161 (student resources)
  5. Senator Tim Scott (D-SC) SA #2132 (low-income children)
  6. Senator Orrin Hatch (R-U)- Senator Ed Markey (D-MA) SA #2080 (student privacy)
  7. Senator Al Franken (D-MN) SA #2093 (student non-discrimination)
  8. Senator Tim Kaine (D-VA) SA #2118 (post-secondary remediation)

House Legislative Activity

On Monday, July 13, 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. 1023 – Small Business Investment Company Capital Act of 2015;
  2. H.R. 2670 – Microloan Modernization Act of 2015;
  3. H.R. 2499 – Veterans Entrepreneurship Act of 2015;
  4. H.R. 208 – Superstorm Sandy Relief and Disaster Loan Program Improvement Act of 2015;
  5. H.R. 387 – Economic Development Through Tribal Land Exchange Act; and
  6. S. 179– To designate the facility of the United States Postal Service located at 14 3rd Avenue, NW, in Chisholm, Minnesota, as the “James L. Oberstar Memorial Post Office Building”

On Tuesday, July 14, the House will meet at 10:00am for morning hour and at 12:00pm for legislative business. The following legislation will be considered under suspension of the rules:

  1. H.R. 251 – Homes for Heroes Act of 2015;
  2. H.R. 432 – SBIC Advisers Relief Act;
  3. H.R. 1047 – Housing Assistance Efficiency Act;
  4. H.R. 1334 – Holding Company Registration Threshold Equalization Act of 2015;
  5. H.R. 1408 – Mortgage Servicing Asset Capital Requirements Act of 2015;
  6. H.R. 1529 – Community Institution Mortgage Relief Act of 2015;
  7. H.R. 1675 – Encouraging Employee Ownership Act of 2015;
  8. H.R. 1723 – Small Company Simple Registration Act of 2015;
  9. H.R. 1847 – Swap Data Repository and Clearinghouse Indemnification Correction Act of 2015, as amended;
  10. H.R. 2064 – Improving Access to Capital for Emerging Growth Companies Act;
  11. H.R. 2354 – Streamlining Excessive and Costly Regulations Review Act;
  12. H.R. 2482 – Preservation Enhancement and Savings Opportunity Act of 2015; 
  13. H.R. 2722 – Breast Cancer Awareness Commemorative Coin Act, as amended; and
  14. H.R. 2997 – Private Investment in Housing Act of 2015

On Wednesday, July 15, the House will meet at 10:00 am for morning hour and at 12:00 p.m. for legislative business. On Thursday, July 16, the House will meet at 9:00 am for legislative business, with last votes expected no later than 3:00 pm.  The House will consider H.R. 2898 – Western Water and American Food Security Act of 2015, Rules Committee Print (Subject to a Rule).  The House may also consider motion to go to conference on H.R. 644 – Trade Facilitation and Trade Enforcement Act. Additional items may be added to the calendar.

On Friday, July 17, no votes are expected in the House.

Appropriations Process on the Floor Comes to a Standstill, in Both Houses; Heading Towards a Shutdown or a Continuing Resolution

By Capital Thinking on Posted in Budget and Appropriations

Legislative Activity

Appropriations Process on the Floor Comes to a Standstill, in Both Houses

After an unplanned public fight over a confederate flag amendment in the Interior-Environment Appropriations Bill the House appropriations process has stalled, effectively bringing appropriations efforts on the floor for both Houses of Congress to a standstill just three weeks before the August recess. The House Financial Services Appropriations Bill was expected to hit the floor this week, and would have likely been the last appropriations bill the House considered before the August recess, but Republican leadership has pulled it from consideration.

The committee appropriations process is expected to continue, with the House Appropriations Committee considering its last bill, the Homeland Security Appropriations Bill, this week. The Senate has two remaining appropriations bills to markup, the Agriculture and Financial Services bills, but has not signaled when it will do so.

Heading Towards a Shutdown or a Continuing Resolution

After Congress returns from the August recess, it will only have a few weeks before government funding runs out and either causes a shutdown or forces Congress to pass a Continuing Resolution (CR), as a budget deal or an omnibus spending bill is unlikely before the end of September. House Appropriations Chairman Hal Rogers (R-KY) said it “remains to be seen” if leadership will begin working towards a CR to keep the government running beyond September, but many believe that is the most likely outcome.

While Republicans continue to work under spending levels established under current law, Senate Democrats have been pushing for negotiations on a budget deal to adjust the sequester’s spending caps for months, sticking with their strategy to stop any appropriations bills from coming to the Senate floor. President Obama has issued numerous veto threats, while both the President and House Minority Leader Nancy Pelosi (D-CA) have also been calling for budget deal negotiations.

The appropriations process will likely remain at a standstill and either result in a government shutdown or the passage of a short-term CR. While they continue to blame Democrats for any potential shutdown, Republicans are eager to show the American public that they can govern and are likely to push a CR through Congress at the end of September. Whether or not they will consent to budget negotiations at that point is unknown, but Democrats have shown a willingness to continue to force the issue.

This Week’s Hearings:

FY 2016 Appropriations Committee/Subcommittee Markup Hearings

  • Tuesday, July 14: The House Appropriations Committee will hold a markup of the FY 2016 Homeland Security Appropriations Bill.

Senate to Complete ESEA work; Free community college legislation introduced; Department seeking comments on pay as you earn proposed rules

By Capital Thinking on Posted in Education

Legislative Activity

Elementary and Secondary Education Act Reauthorization

Last week, the House and Senate brought their respective versions of the Elementary and Secondary Education Act (ESEA) to the floor in each chamber. While the House passed its bill, the Student Success Act (H.R. 5), by a 218-213 vote on Wednesday, the Senate will continue to consider amendments to its bill, the Every Child Achieves Act (S. 1177), through this week. Senate Majority Leader Mitch McConnell has indicated that the Senate will likely complete its work on reauthorizing ESEA by Wednesday.

Last week, the White House issued a Statement of Administration Policy (SAP) on the Senate ESEA bill, which indicated that the President would not veto the bill but did note that the White House does not fully support S. 1177 in its current form. The SAP noted specific sections the Administration is looking to improve, including the accountability provisions in the bill, which the White House and Senate Democrats would like to change to expand data collection and put new requirements in place for improving low-performing schools. When the House first began considering the Student Success Act in February, the White House issued a SAP indicating that it would veto the House version of the bill if it were to reach the President’s desk.

Once the Senate completes its work on the Every Child Achieves Act, the House and Senate will appoint conferees to work out the differences between the two ESEA bills and conference them together. The conference negotiations are likely to stretch into the fall given that both chambers will be on recess during the month of August. Once the conference is complete and a negotiated bill is finalized, both chambers must approve the legislation before it can move to the President for his signature. Given the bipartisan nature of the Senate measure and the fact that there is little in the House bill for the White House to support, we expect a negotiated conference bill to emerge that is more similar to the Senate’s ESEA bill. House Republican leadership likely will have to rely on House Democrats to pass the conferenced bill given that many conservative Republicans in the House are unlikely to vote for a more moderate version that has the potential of being signed into law by the President.

House and Senate Introduce Free Community College Legislation

Last week, House Education and the Workforce Committee Ranking Member Bobby Scott (D-VA) and Senator Tammy Baldwin (D-WI) introduced the America’s College Promise Act in both chambers, which models President Obama’s proposal for state and federal funding to cover community college tuition for two years. Similar to the President’s proposal, the federal government would match every dollar spent by states to waive community college tuition and fees with three dollars of federal funding. The legislation also proposes a new $10 billion federal grant program to cover the first-two years of tuition and fees of low-income students who attend minority-serving institutions that enroll large numbers of low-income students. Currently, the House version has 65 Democratic co-sponsors, while the Senate version introduced has 13 Democratic co-sponsors. No Republicans have sponsored either bill at this time, a likely indication that it will stall as a standalone bill; however, there will be an effort by Democrats to incorporate it into the Higher Education Act reauthorization bill.

At the state level, last week Oregon announced its Oregon Promise plan, making it the second state to adopt a free community college plan after Tennessee.

Executive Branch Activity

Department Seeking Comments on Pay As You Earn Proposed Rules

On Thursday, July 9, the Department of Education published a Notice of Proposed Rulemaking (NPRM) to implement President Obama’s Revised Pay As You Earn (or REPAYE) plan by expanding the income-based repayment program for all Direct Loan student borrowers regardless of when the borrower took out the loans. Specifically, the rule would establish a third income-contingent repayment (ICR) under which a borrower’s monthly payment amount is determined based on his or her income and family size, potentially affecting an additional six million borrowers. The effort to make ICR more widely available was first announced in a June 2014 Presidential Memorandum, followed by a December 2014 Notice of Intent to Establish a Negotiated Rulemaking Committee. In April 2015, negotiators reached consensus on the Department’s proposed regulations. While negotiators and the organizations they represent must refrain from commenting negatively on the proposed language, the Department is seeking feedback from the public on its proposal. The regulations also seek to address the following:

  • Expand the circumstances under which an institution may challenge or appeal the potential consequences of a draft or official cohort default rate based on the institution’s participation rate index.
  • Reduce the burden on active duty servicemembers who may be eligible for a lower interest rate under the Servicemembers Civil Relief Act.
  • Improve communication and assistance to borrowers who rehabilitate a defaulted loan and transition to repayment.

The deadline for comment is August 10, 2015. Comments must be submitted online through the Federal eRulemaking Portal at www.regulations.gov.

Moody’s Investors Service Higher Education Ratings Methodology

On Wednesday, July 8, Moody’s Investors Service announced that it is requesting comment on its new methodology proposal for higher education ratings. The Request for Comment (RFC) proposal consolidates two ratings methodologies: (1) the US Not-for-Profit Private and Public Higher Education Rating Methodology published in August 2011; and (2) the Public Universities Outside of the US Rating Methodology published in August 2007. According to Moody’s, the combined proposed methodology “incorporates the continued evolution of public universities outside of the US into market-driven organizations.” It includes a scorecard to provide guidance for the four most important factors Moody’s considers when assigning a credit rating to colleges and universities, including:

  1. Market Profile (measured by operating revenue)
  2. Operating Performance (measured by annual change in operating revenue)
  3. Wealth and Liquidity (measured by operating cash flow margin and revenue diversity)
  4. Leverage (measured by total cash and investments, spendable cash and investments to operating expenses, and monthly days cash on hand)

Moody’s expects that this new consolidated ratings system proposal will affect less than 5% of its “rated universe,” which includes approximately 230 US four-year public universities and university systems, 275 not-for-profit private colleges and universities, and 21 universities outside of the US. The proposed methodology, according to Moody’s, will allow investors, colleges and universities, and other interested market participants to better understand how key quantitative and qualitative characteristics are likely to affect rating outcomes of colleges and universities.

Moody’s is accepting comments on the RFC until September 9, 2015.

House to Consider Future Fracking on Federal Lands; EPA Will Solicit Local Government Advice On Climate Change

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

Regulatory Activity

Local Government Input for EPA

EPA has announced its upcoming meeting of the Local Government Advisory Committee (LGAC) to be be held Thursday, July 30 and its meeting for the Small Communities Advisory Subcommittee, which will be held on Friday, July 31. According to the agency, the LGAC will discuss “issues pertaining to protecting America’s waters; hydrofracturing; cleaning up our communities; air, climate and energy; and climate change resiliency and sustainability.” The Subcommittee will discuss rural strategy and recommendations to the Administrator regarding environmental issues affecting small communities. The meetings are open to the public.

Legislative Activity

Fracturing

On Wednesday, July 15, the House Natural Resources Committee, Subcommittee on Energy and Mineral Resources, will hold an oversight hearing titled “The Future of Hydraulic Fracturing on Federally Managed Lands.”

OCS

On Tuesday, July 14, the House Natural Resources Committee, Subcommittee on Energy and Mineral Resources, will hold a hearing on seismic surveying involved in energy exploration on the outer continental shelf (OCS).

Pipeline Safety

On Tuesday, July 14, the House Energy and Commerce Committee, Subcommittee on Energy and Power, will hold a hearing, according to the committee, “to examine how the Pipeline and Hazardous Materials Safety Administration has progressed, or not, in implementing reforms established under the Pipeline Safety Act of 2011.”

Energy for Islanded Systems

On Tuesday, July 14, the Senate Energy and Natural Resources Committee will hold a hearing to examine energy challenges for islanded systems including Alaska, Hawaii and the U.S. Territories.

Forests

On Thursday, July 16, there will be two separate hearings regarding national forests and forest related items. One will be held by the Senate Agriculture, Nutrition and Forestry Committee and the other by the Senate Energy and Natural Resources Committee, Subcommittee on Public Lands, Forests, and Mining.

Fed, CFPB Heads to Testify; SEC, CFTC to Hold Meetings

By Squire Patton Boggs on Posted in Financial Services

Legislative Activity

Regulators to Testify on Capitol Hill

This week, Janet Yellen, Chair of the Board of Governors of the Federal Reserve, will appear before the House Financial Services and Senate Banking Committees to provide the Board’s semiannual monetary policy report to Congress.  The House Financial Services Committee will also hold an additional hearing to discuss transparency and accountability at the Federal Reserve. Separately, the Senate Banking Committee will also be focused on oversight of the Consumer Financial Protection Bureau (CFPB), with CFPB Director Richard Cordray set to provide the agency’s semiannual report.

This Week’s Hearings:

  • Tuesday, July 14: The House Financial Services Subcommittee on Oversight and Investigations will hold a hearing titled “Fed Oversight: Lack of Transparency and Accountability.”
  • Wednesday, July 15: The House Financial Services Committee will hold a hearing titled “Monetary Policy and the State of the Economy.”
  • Wednesday, July 15: The Senate Banking Committee will hold a hearing titled “The Consumer Financial Protection Bureau’s Semi-Annual Report to Congress.”
  • Thursday, July 16: The Senate Banking Committee will hold a hearing titled “The Semiannual Monetary Policy Report to the Congress.”

Regulatory Activity

SEC to Host Investor Advisory Committee Meeting, Compliance Outreach Program

On Thursday, July 16, the Securities and Exchange Commission (SEC) will hold a meeting of its Investor Advisory Committee to discuss, among other things: (1) background checks as a means to address elder financial abuse, which may include a recommendation; (2) the Department of Labor’s Fiduciary Rule proposal; (3) shareholder rights; (4) investment management and the disclosure of fees and risks in fund products.

Earlier in the week, on Thursday, July 14, the SEC and the Financial Industry Regulatory Agency (FINRA) will co-host a compliance outreach program targeted at broker-dealers.  The program will review, among other items: (1) cybersecurity; (2) anti-money laundering; and (3) firm and branch supervision.

CFTC to Host Public Roundtable

The Commodity Futures Trading Commission’s (CFTC) Division of Market Oversight will hold a public roundtable on Wednesday, July 15, to discuss the Commodity Exchange Act’s trade execution requirement and the process of making Made Available to Trade (MAT) determinations. Specifically, the roundtable will discuss: (1) approaches to mandatory exchange trading in various jurisdictions; (2) academic perspectives on, and data-based assessment of, MAT; and (3) industry analysis of the MAT process.

Republicans Consider Obamacare Repeal; CMS Releases Proposed Update to Physician Fee Schedule; Obama Nominates Slavitt to Lead CMS; GAO Releases Report on 340B Drug Pricing Program

By Squire Patton Boggs on Posted in Healthcare

Legislative Activity

Republicans Consider Obamacare Repeal Through Reconciliation

Some GOP lawmakers continue to advocate for an Affordable Care Act repeal via the budget reconciliation process. Others, however, have been questioning whether this budget tactic would be better used for different policy objectives, such as tax reform.

The budget resolution provided a July 24 deadline for the committees with health care jurisdiction to determine a repeal plan. House Committee on Ways and Means Chairman Paul Ryan (R-WI) is reportedly planning to meet the deadline. He has said that many House Republicans “want to use reconciliation to go after Obamacare.” However, Sen. John Barrasso (R-WY) has noted there is “no timeline on the reconciliation bill, so it can be used at any point.” Senate Committee on Finance Chairman Orrin Hatch (R-UT) and Senate Committee on Health, Education, Labor, and Pensions (HELP) Chairman Lamar Alexander (R-TN) have both stated that they have not written reconciliation plans. Both chairmen believe such plans should be drawn up by Senate leadership.

This Week’s Hearings:

  • Tuesday, July 14: The House Committee on Energy and Commerce Subcommittee on Oversight and Investigations will hold a hearing titled “Medicare Part D: Measures Needed to Strengthen Program Integrity.”
  • Tuesday, July 14: The House Committee on Veterans’ Affairs Subcommittee on Health will hold a hearing focused on health care legislation titled “H.R. 272; H.R. 353; H.R. 359; H.R. 421; H.R. 423; H.R. 1356; H.R. 1688; H.R. 1862; H.R. 2464; H.R. 2914; H.R. 2915; H.R. 2016; and, Draft Legislation to Authorize VA Major Medical Facility Construction Projects for FY 2015 and to Make Certain Improvements in the Administration of VA Medical Facility Construction Projects.”
  • Tuesday, July 14: The Senate Committee on Commerce, Science, and Transportation Subcommittee on Space, Science, and Competitiveness will hold a hearing titled “Unlocking the Cures for America’s Most Deadly Diseases.”
  • Wednesday, July 15: The Senate Special Committee on Aging will hold a hearing titled “Diabetes Research: Improving Lives on the Path to a Cure.”
  • Thursday, July 16: The Senate Committee on Finance will hold a hearing titled “Reviewing HealthCare.gov Controls.”

Regulatory Activity

CMS Announces ICD-10 Transition Period

On Monday, July 6, the Centers for Medicare and Medicaid Services (CMS) announced that it will offer providers flexibility during the transition from ICD-9 to the ICD-10 coding standard for health care claims. Under current law, ICD-10 is set to become the coding standard of the United States on October 1. For the first year, CMS has stated that Medicare claims will not be denied solely based on the specificity of the diagnosis code, provided that the code is from the appropriate family of ICD-10 codes. This transition period is intended to give providers time to become accustomed to the more complex ICD-10 coding set.

CMS Proposes Payment Changes for HHAs

On Monday, July 6, CMS published a proposed rule titled “Medicare and Medicaid Programs; CY 2016 Home Health Prospective Payment System Rate Update; Home Health Value-Based Purchasing Model; and Home Health Quality Reporting Requirements.” In addition to other provisions, this rule proposes changes to the Medicare home health prospective payment system for the 2016 calendar year. The proposal would reduce the standard payment rate to home health agencies (HHAs) for 60-day episodes of care by $80.95.

Additionally, the proposed rule would launch the Home Health Value-Based Purchasing Model, a pilot program which would aim to move HHAs from volume-based payments to value-based purchasing. In the nine states that the agency proposes to launch the pilot, HHAs would have their payments adjusted by up to eight percent based on their performance across a series of quality metrics.

The deadline for comments is September 4.

CMS Releases Proposed Update to Physician Fee Schedule

On Wednesday, July 8, CMS issued a proposed rule titled “Medicare Program; Revisions to Payment Policies under the Physician Fee Schedule and Other Revisions to Part B for CY 2016.” This proposed rule includes updates to the physician fee schedule, the Physician Quality Reporting System, and the Physician Value-Based Payment Modifier for the 2016 calendar year. Of note, this rule would be the first update to the physician payment schedule since the sustainable growth rate was repealed in April and marks the beginning of the agency’s implementation of the Merit-Based Incentive Payment System.

Comments are due by September 8. The agency has stated that it plans to issue the final rule by November 1.

CMS Introduces Payment Model for Joint Replacements

On Thursday, July 9, CMS released a proposed rule titled “Medicare Program; Comprehensive Care for Joint Replacement Payment Model for Acute Care Hospitals Furnishing Lower Extremity Joint Replacement Services.” This rule proposes to test a new Medicare Part A and Part B payment model for lower extremity joint replacement (LEJR) procedures, including hip and knee replacements. Under the agency’s proposal, participating acute care hospitals would receive bundled payments for LEJR episodes, which would continue for 90 days following discharge. Depending on the hospital’s performance on quality and episode spending measures, CMS proposes that the hospital would receive an additional payment from Medicare or be required to repay Medicare for a portion of the episode spending. The agency proposes to test this payment model for a five year performance period, which would begin on January 1, 2016.

Comments are due by September 8.

Obama Nominates Slavitt to Lead CMS

On Thursday, July 9, President Barack Obama formally nominated Andy Slavitt to be the next CMS administrator. Slavitt has served as acting CMS administrator since Marilyn Tavenner resigned in January. In previous roles, Slavitt has served as Group Executive Vice President for Optum and CEO of HealthAllies. Slavitt’s appointment is contingent on confirmation by the Senate.

Agencies Issue Final Rule on Preventive Services Coverage

On Friday, July 10, CMS, the Internal Revenue Service, and the Employee Benefits Security Administration jointly released a final rule titled “Coverage of Certain Preventive Services under the Affordable Care Act.” This rule finalizes coverage of defined recommended preventive services as required by the Affordable Care Act. These recommended preventive services include certain routine immunizations and contraceptive services for women. Among other provisions, the rule establishes a process for eligible organizations to notify the Department of Health and Human Services of their religious objection to contraceptive services coverage.

This rule is slated for publication in the Federal Register on July 14 and will be effective 60 days thereafter.

Other Activity

GAO Releases Report on 340B Drug Pricing Program

On Monday, July 6, the Government Accountability Office (GAO) published a report titled “Medicare Part B: Action Needed to Reduce Financial Incentives to Prescribe 340B Drugs at Participating Hospitals.” The report compared 340B hospitals with non-340B hospitals and found that Medicare Part B drug spending was substantially higher at 340B hospitals than at non-340B hospitals; in 2012, the average per beneficiary spending at 340B hospitals was $144, compared to approximately $60 at non-340B hospitals. The report concluded that there is a financial incentive for 340B hospitals to prescribe more drugs or more expensive drugs to Medicare beneficiaries. This unnecessary spending has negative implications for the Medicare program and raises concerns about the appropriateness of health care provided to beneficiaries. GAO recommended that Congress consider “eliminating the incentive to prescribe more drugs or more expensive drugs than necessary to treat Medicare Part B beneficiaries at 340B hospitals.”

House Appropriations Panel to Consider Homeland Security Measure; House Judiciary Committee to Hold DHS Oversight Hearing

By Ludmilla Kasulke on Posted in Uncategorized

Legislative Activity

House Appropriations Panel to Consider Homeland Security Measure

This Tuesday, the House Appropriations Committee will meet to consider its draft FY 2016 bill funding homeland security programs. The Subcommittee on Homeland Security unanimously approved the measure, which provides $39.3 billion in discretionary funding, on Thursday, July 9. Though the subcommittee vote was unanimous, Democrats on the panel voiced concerns that the bill provided $2.1 billion less in funding than the President’s request, including $70 million less than requested for the Transportation Security Administration and $157.8 million less for U.S. Immigration and Customs Enforcement. The legislation also provides no funding for implementation of the President’s proposed executive actions on immigration; last year’s final measure funding the U.S. Department of Homeland Security (DHS) was delayed by Republican concerns with these proposals.

House Judiciary Committee to Hold DHS Oversight Hearing

On Tuesday, July 14, the House Judiciary Committee will hold an oversight hearing with DHS Secretary Jeh Johnson. The hearing will focus on the enforcement of U.S. immigration laws, including the use of “prosecutorial discretion” and “administrative legalization” by U.S. Immigration and Customs Enforcement and U.S. Citizenship and Immigration Services, as well as implementation of the President’s executive actions on immigration announced in November 2014.

 This Week’s Hearings:

  • Tuesday, July 14: The House Appropriations Committee will meet to mark up its draft FY 2016 spending bill for homeland security programs.
  • Tuesday, July 14: The House Homeland Security Subcommittee on Border and Maritime Security will hold a hearing titled “Securing the Maritime Border: The Future of CBP [Customs and Border Protection] Air and Marine.”
  • Tuesday, July 14: The House Homeland Security Subcommittees on Cybersecurity, Infrastructure Protection, and Security Technologies and on Emergency Preparedness, Response, and Communications will hold a joint hearing titled “Weapons of Mass Destruction: Bolstering DHS to Combat Persistent Threats to America.”
  • Tuesday, July 14: The House Judiciary Committee will hold an oversight hearing on the U.S. Department of Homeland Security with Secretary Jeh Johnson.
  • Wednesday, July 15: The Senate Homeland Security and Governmental Affairs Committee will hold a hearing titled “Securing the Border: Understanding Threats and Strategies for the Maritime Border.”
  • Wednesday, July 15: The House Homeland Security Committee will hold a hearing titled “The Rise of Radicalization: Is the U.S. Government Failing to Counter International and Domestic Terrorism?”
  • Thursday, July 16: The House Homeland Security Subcommittee on Transportation Security will hold a hearing titled “Examining the Federal Air Marshal Service and Its Readiness to Meet the Evolving Threat.”

Possible Announcement of a Comprehensive Deal with Iran; Greek Debt Crisis Still Unresolved; TTIP Negotiators Meet in Brussels; TPP Chief Negotiators to Meet at the End of the Month in Hawaii

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

Iran

According to the press, the P5+1 negotiators and Iran plan to announce today that they have reached a historic deal that would address Iran’s nuclear program in return for sanctions relief. Though negotiators said that they had hoped to reach a nuclear agreement with Iran by last Friday, Secretary of State John Kerry announced on Thursday that talks would continue into the weekend. He observed that all were focused on the quality of an agreement that must withstand the test of time.

Under a U.S. law passed earlier this year, any final deal finalized after 10 July will be subject to a 60-day period of congressional review, instead of 30 days, to provide Congress with additional time to account for the month-long August congressional recess.

Greek Debt Crisis

While a full summit meeting of the European Union’s 28 heads of state planned for Sunday was abruptly canceled, Eurozone leaders met on Sunday and into this morning on the Greek debt situation. At the time of publication, no final solution to avert a historic fracture in the Continent’s common currency had been reported. Without an infusion of cash from the European Central Bank this week, Greece’s banking sector is expected to collapse. President Obama addressed the Greek debt crisis with EU leaders last week through a series of telephone calls.

Russia/Ukraine Crisis

During a visit to a Western Ukraine training base, General Ray Odierno, Chief of Staff of the US Army, acknowledged that Ukraine’s Government has requested expanded US military training, but declined to say whether he would support this request. Lt. Gen. Ben Hodges, U.S. Army Europe Commander, accompanied General Odierno on this visit. The two held talks with senior officials of the Ukrainian Armed Forces, led by Col. Gen. Viktor Muzhenko, and reportedly discussed the situation in Eastern Ukraine and potential joint training activities in the second half of 2015 and in 2016.

General Joe Dunford – President Barack Obama’s nominee to serve as the next Chairman of the Joint Chiefs of Staff – described Russia as the greatest threat to U.S. national security at his confirmation hearing last week, saying its behavior as nothing short of alarming. General Dunford also told SASC Chairman John McCain (R-Arizona) that it would be reasonable for the United States to provide sophisticated anti-tank and artillery assistance to the Ukrainian government, arguing that Ukrainians will not be able to protect themselves against alleged Russian aggression without that support.

Syria/Iraq

During a hearing last Tuesday before the SASC on the Administration’s strategy to counter ISIL, Secretary of Defense Ashton Carter admitted that the United States has only trained 60 Syrian opposition fighters since the program, originally intended to train as many as 5,400 fighters a year, was launched in May. While the Secretary said the vetting process to approve recruited opposition fighters is being streamlined, the acknowledged low number of recruits may provide ammunition to those critics of President Obama’s strategy to combat ISIL.

National Defense Authorization Act (NDAA) Update

Last Thursday, the Senate formally named its representatives to discussions with the House aimed at developing a compromise draft of the FY 2016 National Defense Authorization Act (NDAA). SASC Chairman McCain will lead the Senate group. With informal discussions already underway, Republican leaders hope to present the bill to President Obama for signature before the end of July.

State-Foreign Operations Appropriations

The Senate Appropriations Committee marked up and approved its Fiscal Year (FY) 2016 State, Foreign Operations, and Related Programs (SFOPs) Appropriations bill last Thursday. The Committee adopted a manager’s package of amendments, as well as three standalone amendments. SFOPs Subcommittee Chair Lindsey Graham (R-South Carolina) expressed support for funding to support allies like Israel and Jordan, to protect religious freedom, to counter violent extremism, and to assist global health efforts. He noted that the bill prohibits funding for external email servers at the State Department.

SFOPs Subcommittee Ranking Member Patrick Leahy (D-Vermont) explained that he may offer amendments relating to Cuba during floor debate of the measure. The approved manager’s package included one amendment proposed by Senator Jon Tester (D-Montana) that would require the State Department, in consultation with the Defense Department, to submit a report to Congress describing the Administration’s actions towards encouraging NATO member states to increase national budget allocations on defense to at least two percent of respective gross domestic product.

Trans-Pacific Partnership (TPP)

Last week, the Office of the U.S. Trade Representative (USTR) announced the next TPP chief negotiators will be held in Maui, beginning on 24 July, ahead of the Ministerial meeting scheduled for 28-31 July in Hawaii. House Ways & Means Chair Paul Ryan (R-Wisconsin) mentioned that if TPP Ministers are unable to resolve all outstanding issues by the end of July, he will still aim for Congress to consider a final TPP deal before the end of the year.

However, even if a final deal is reached by 31 July, TPA establishes a 90-day layover period before the United States could actually sign the agreement. TPA also requires that the U.S. International Trade Commission (USITC) complete its economic impact assessment of the agreement before the implementing bill could be submitted to Congress. The USITC has up to 105 calendar days to submit its report to the President and Congress. Realistically, the earliest Congress could conclude review and approval of the trade deal would be November or December.

Transatlantic Trade & Investment Partnership (TTIP)

The 10th round of TTIP negotiations will begin next Monday in Brussels. The European Parliament passed a resolution last Wednesday outlining its priorities in the Transatlantic Trade and Investment Partnership (TTIP), including a carefully worded investor-state dispute settlement (ISDS) amendment. The ISDS provision essentially calls for a series of reforms to the investor protections while still advocating for a system to resolve disputes between investors and states.

Ex-Im Bank Update

While a related amendment was not offered at a Senate Appropriations markup last week, Senator Dianne Feinstein (D-California) used the opportunity to advocate for renewing the U.S. Export-Import (Ex-Im) Bank charter, stressing it benefits small businesses in California. She said the Bank should not be viewed as corporate welfare but should instead be recognized as necessary for the U.S. to compete internationally. Senator Richard Shelby (R-Alabama) rose in opposition to this view, while Senator Richard Durbin (D-Illinois) and Senator Jeanne Shaheen (D-New Hampshire) rose in support.

Upcoming AGOA Event

On Tuesday, 21 July, the U.S.-Africa Chamber of Commerce (USACC) will host an expert panel at our Washington, DC, office to discuss the African Growth and Opportunity Act (AGOA).  Frank Samolis, a partner at the firm who leads International Trade Practice Group, will join Dennis Matanda, a consultant to the African Union Commission, on the panel.

Looking Ahead

Washington will likely focus on the following upcoming matters:

  • 13 July: President Obama to host Conference on Aging
  • 13-17 July: 10th Round of TTIP negotiations in Brussels
  • 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

Tax-Writers Likely to Debate Highway Funding, Vote on Inversions-Related Amendment

By Squire Patton Boggs on Posted in Tax

Legislative Activity

Senate Finance Committee Tax Reform Working Groups Release Reports

Last week, on Tuesday, July 8, the Senate Finance Committee released the long-awaited reports from its five bipartisan Tax Reform Working Groups, which were formed to “spur congressional comprehensive tax reform efforts in the 114th Congress.” The groups focused on: (1) Individual Income Tax; (2) Business Income Tax; (3) International Tax; (4) Savings & Investment; and (5) Community Development & Infrastructure. Specifically, the groups were tasked with analyzing current tax law and examining policy trade-offs and available reform options within their designated topic areas.

Despite lawmakers’ best efforts this Congress, comprehensive tax reform (i.e., reform of both individual and corporate income tax laws) is largely considered to be off the table until after the 2016 elections given the two political parties’ diametrically opposed views on individual tax reform. Moreover, while some had hoped that perhaps business-only tax reform was achievable before 2016, that now appears highly unlikely to occur. Significantly, however, the more limited objective of international tax reform has gained traction given the actions that countries are taking with respect to the Organisation for Economic Co-operation and Development’s (OECD’) Base Erosion and Profit Shifting (BEPS) project to address a variety of tax avoidance practices of multinational business enterprises.

Tax-Writers Likely to Address Highway Funding

Toward to end of this week, the Senate is likely to take up legislation that would fund the Highway Trust Fund for a period of two years. The effort, which is being driven by Senate Majority Leader Mitch McConnell (R-KY), may run into problems given timing constraints, as the Highway Trust Fund will run out of funding by July 31. Alternatively, House lawmakers are in favor of using a short-term patch through the end of the year, with hopes of passing a six-year highway bill, a package of permanent tax extenders, and international tax reform at some point later in the year. Notably, such a proposal may use deemed repatriation described above to help finance both the highway bill and a transition to a hybrid territorial system of taxation.

Confirming the House’s commitment to such an approach, House Ways and Means Committee Chairman Paul Ryan (R-WI) announced on Thursday, July 9 that Congress will act “soon” to enact another short-term highway funding extension, which will set the stage to move forward with international tax reform and other tax priorities when Congress returns from the upcoming August recess. While there seems to be a broad bipartisan consensus on the general parameters for an international tax reform package, there are equally broad areas of uncertainty with respect to many of the critical details that remain to be resolved before international tax reform can successfully navigate the Congressional process and convert that broad consensus into final legislation. Nevertheless, the topic will remain at the forefront of debate for tax-writers for the balance of this year, particularly in light of the two political imperatives for reform (BEPS and the need for revenues) and the fact that the U.S. system for taxing international income is arguably out of step with contemporary international norms.

Separately, it appears likely that Senate tax-writers will take up tax extenders (likely a two-year package) the week of July 20. The House, which appears more focused on making tax extenders permanent, will also likely move soon in an effort to avoid another year-end race to extend these expired provisions.

Congress Renews Focus on Inversions

This week the House is likely to vote on Senator Bob Casey’s (D-PA) anti-inversion amendment to S. 1177, the Every Child Achieves Act of 2015 – the education bill the Senate is presently debating. Similar to the Stop Corporate Inversions Act of 2014, legislation introduced last Congress by former Senator Carl Levin (D-MI) and Representative Sandy Levin (D-MI),  Senator Casey’s amendment would lower from 80 percent to 50 percent the section 7874 threshold of the share of stock ownership in an inverted company that can be held continuously by former shareholders or partners in the original domestic business, above which the inverted company would be considered domestic for tax purposes. The amendment would apply to direct or indirect acquisitions completed after July 31, 2015. Importantly, the amendment provides a broader exception to the section 7874 change than legislation last Congress, as it would exempt inverted corporations that had substantial business activities in their new foreign jurisdiction of legal residence compared with their total business activity.

Additionally, the Senate Permanent Subcommittee on Investigations is planning a hearing on inversions later this month. The hearing will likely focus on the impact inversions have on jobs, wages, and benefits in the United States. The Subcommittee will specifically examine the role the tax Code plays in impacting U.S. companies’ level of competitiveness with non-U.S. companies. According to Senator Portman, “we really want to dig into this.”

Regulatory Activity

IRS to Publish Rule on Coverage of Preventative Services

On Tuesday, July 14, the Internal Revenue Service will publish in the Federal Register final regulations regarding coverage of certain preventive services under section 2713 of the Public Health Service Act (PHS Act), added by the Patient Protection and Affordable Care Act, as amended, and incorporated into the Employee Retirement Income Security Act of 1974 and the Internal Revenue Code. Section 2713 of the PHS Act requires coverage without cost sharing of certain preventive health services by non-grandfathered group health plans and health insurance coverage. These regulations will finalize provisions from three rulemaking actions: (1) interim final regulations issued in July 2010 related to coverage of preventive services; (2) interim final regulations issued in August 2014 related to the process an eligible organization uses to provide notice of its religious objection to the coverage of contraceptive services; and (3) proposed regulations issued in August 2014 related to the definition of “eligible organization,” which would expand the set of entities that may avail themselves of an accommodation with respect to the coverage of contraceptive services. Comments are due within 60 days after the rule’s publication.

FCC Chairman Announces Proposals for New Copper Retirement Rules

By Squire Patton Boggs on Posted in Technology and Communications

Legislative Activity

House Subcommittee Asks FCC for Nationwide Number Portability

On July 9, all the members of the Communications and Technology Subcommittee (Communications Subcommittee) of the House Energy and Commerce Committee (House Commerce Committee) wrote a letter to Federal Communications Commission (FCC) Chairman Tom Wheeler asking him to ensure that consumers may take their existing phone numbers with them if they choose to switch carriers. Specifically, the Communications Subcommittee members noted that under the FCC’s current number portability rules, consumers that switch from nationwide carriers to non-nationwide carriers may not be able to keep their numbers, which puts non-nationwide carriers at a disadvantage as consumers generally prefer to keep their numbers when they switch carriers. Citing a recent white paper by the North American Numbering Council (NANC), the Communications Subcommittee members argued that the inability of consumers to port-in existing numbers would lead to consumer confusion when attempting to switch providers. They urged the FCC to support nationwide wireless number portability across all providers.

Telehealth Bill Returns to House for Consideration

On July 7, Reps. Mike Thompson (D-CA), Gregg Harper (R-MS), Diane Black (R-TN), and Peter Welch (D-VT) introduced H.R.2948, the Medicare Telehealth Parity Act of 2015. A prior version of this bill, H.R.5380, discussed here, was introduced in 2014 by Rep. Thompson and was projected to be reintroduced in 2015. The bill proposes to expand the coverage of telehealth to include services such as remote monitoring for specific chronic conditions. The bill also aims to remove the geographic barriers existing under current law to allow telehealth services in rural and underserved areas with the ultimate goal of putting telehealth services on par with in-person healthcare. The legislation has the support of several health industry groups, including the American Heart Association, American Stroke Association, and the American Telemedicine Association. The bill was referred to the House Commerce Committee and the House Committee on Ways and Means (House Ways and Means Committee).

This Week’s Hearings:

  • Tuesday, July 14:  The Communications Subcommittee of the House Commerce Committee will hold a hearing entitled “Promoting Broadband Infrastructure Investment.”
  • Wednesday, July 15:  The House Committee on Small Business will hold a hearing entitled “Taking Flight:  Small Business Utilization of Unmanned Aircraft.” The hearing will examine how small businesses might use unmanned aircraft for commercial activities and the progress of the Federal Aviation Administration (FAA) of integrating them into the national airspace system.

Regulatory Activity

FCC Releases Omnibus Order Addressing 21 TCPA Petitions & Requests

On July 10, the FCC released its Declaratory Ruling and Order (Order) adopted June 18 addressing 21 “requests for clarification” of the FCC’s rules implementing the Telephone Consumer Protection Act (TCPA). The content of the Order was discussed in our post here.

FCC Chairman Announces Proposals for New Copper Retirement Rules

On July 10, FCC Chairman Tom Wheeler released a Fact Sheet discussing proposals to protect “consumers, competition and public safety” as telecommunications providers replace copper networks with “next-generation” networks. The proposals are contained in two items on which the FCC will vote at its August 6 Open Meeting. According to the Fact Sheet, the first item, a Report and Order, would require providers of networks that “need backup power to keep operating during a power outage” to offer consumers the option to buy up to 8 hours of standby backup power “so they can use their home phones during power outages.” Within three years, those providers would be “required to offer an option for 24 hours of standby power.”

A separate Report and Order, Order on Reconsideration and Further Notice of Proposed Rulemaking, if adopted, would:  (1) “protect consumers” by requiring that consumers and interconnecting carriers be notified of plans to retire copper networks and by defining “retirement” so as to “prevent retirement of networks by neglect” (sometimes referred to as “de facto” retirement); and (2) “preserve competition” by requiring that “replacement services” be offered to competitive providers at rates, terms and conditions “reasonably comparable” to those of existing services (which would be an interim measure pending the FCC’s completion of a proceeding on the issue) and by clarifying that wholesale-only carriers are still required to follow discontinuance procedures if the discontinuance would ultimately impact retail users. The item also seeks comment on the criteria the FCC should use to evaluate whether to grant a carrier’s request to discontinue, reduce, or impair service when the carrier is installing a replacement service. According to the Fact Sheet, some of the criteria on which the FCC is seeking comment are whether replacement networks will provide the same level of connectivity to 911 services and interoperable devices (such as alarms and medical monitoring) as the legacy network, and whether the replacement network will provide the same level of network security as the legacy network.

Chairman Wheeler also posted to the FCC Blog to discuss the items circulated. The post stated that the items will “update the FCC’s rules to help deliver the promise of dynamic new networks, provide clear rules of the road for network operators, and preserve our core values, including protecting consumers and promoting competition and public safety.”

TerraCom and YourTel to Pay $3.5 Million to Resolve Consumer Privacy & Lifeline Investigations

On July 9, the FCC announced that its Enforcement Bureau (EB) had entered into a Consent Decree with TerraCom, Inc. and YourTel America, Inc. (collectively, the companies) to resolve the EB’s investigation into whether the companies “failed to protect the confidentiality of [customer] proprietary information” provided to the companies in applications for Lifeline phone services. The information at issue included names, addresses, dates of birth, Social Security numbers, and driver’s licenses. The Consent Decree states that the “vendor” for the companies stored this information in “clear, readable text” on servers accessible to the public over the Internet, which the FCC alleged violated the companies’ obligations to protect the confidentiality of proprietary information and was an unjust and unreasonable practice under the Communications Act. To resolve the matter, the companies will pay a civil penalty of $3.5 million, and will “develop and implement a compliance plan to ensure appropriate procedures” to prevent similar data breaches in the future.

Comments Due August 5 on Small Provider Exemption to Open Internet Enhanced Transparency Requirements

In the 2015 Open Internet Order, the FCC adopted “enhancements” to the Internet “transparency” requirements that require providers of broadband Internet access service (BIAS) to disclose certain information about their business and network practices. Specifically, BIAS providers are required to disclose:  (1) commercial terms including prices, fees, and data cap allowances, (2) performance characteristics including packet loss and performance, and (3) network practices relating treatment of traffic and degradation of service. Responding to “concerns from smaller providers about the compliance burden of the enhancements,” the FCC temporarily exempted from the transparency requirements all providers with fewer than 100,000 broadband subscriber connections in a June 22 Public Notice (PN).

The FCC’s Consumer and Governmental Affairs Bureau (CGB) is now seeking comment on whether to maintain that exemption, as the CGB was directed to do by the Commission in the Open Internet Order. The PN notes that the FCC did not adopt all of the transparency requirements it originally proposed in the Open Internet proceeding, that it found the requirements it did adopt to be “modest in nature,” and that the FCC did not adopt many of the requirements to which smaller providers objected, such as real-time disclosures. The CGB is also seeking comment on whether the FCC, if it maintains the exemption, should modify the small provider “threshold” of 100,000 connections. Comments on the exemption are due August 5, and reply comments are due September 4.

FCC Modifies Experimental Radio Service Rules and Seeks Further Comment

In a 2013 Report and Order, the FCC revised its rules to “modernize” its Part 5 Experimental Radio Service (ERS) rules, which “prescribe the manner in which the radio spectrum may be made available to a variety of entities to experiment with new radio technologies, equipment designs, characteristics of radio wave propagation, or service concepts related to the use of the radio spectrum.” Among the revisions adopted by the FCC were the creation of 3 new ERS licenses:  (1) a program experimental license for colleges, research laboratories, manufacturers and health care institutions “to allow broad experimental authority under a single license”; (2) a compliance testing license available to FCC-recognized testing laboratories; and (3) a medical testing license to permit health care facilities “to undertake clinical trials of cutting-edge wireless medical technologies.”

In a Memorandum Opinion and Order (MO&O) released July 8, the FCC modified its ERS rules to allow conventional ERS licensees and compliance testing licensees to use spectrum bands allocated to “passive services” (which are non-transmitting, receive-only services such as radio astronomy) in “some circumstances.” The FCC also:  (1) granted a request from Medtronic that the FCC allow limited cost recovery for medical licensees (which is otherwise prohibited under rules banning the marketing of radio frequency devices prior to equipment authorization) if the recovery is conducted pursuant to the FCC”s market trial rules, and (2) granted a request from Sirius XM and EchoStar clarifying that all participants in the Emergency Alert System are entitled to notification of and protection from interference from program experiments that might affect them.

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