Capital Thinking Update - December 24, 2012

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General Legislative

At the conclusion of legislative business last week, Members were advised that the House will return for legislative business “after the Christmas holiday when needed.”

 

The Senate will convene on Monday, December 24, at 12:00 p.m. for a pro forma session.    


Fiscal Cliff

On Thursday evening, Speaker Boehner pulled the House’s “Plan B” tax bill from the floor due to lack of support from House Republicans, many of whom refuse to vote for any tax increases, particularly in the absence of spending cuts of equal magnitude.  Earlier in the evening, the House passed separate legislation, H.R. 6684, the Spending Reduction Act, which is similar to legislation passed earlier this year by the House that would delay the spending sequester for one year.  H.R. 6684 passed on a party line vote of 215-209 and is not expected to gain traction in the Senate, as it reduces spending in a variety of areas strongly opposed by the President and Congressional Democrats.

H.R. 6684 would: (i) repeal automatic defense and non-defense discretionary cuts scheduled to take effect in 2013 under the sequestration provision of the Budget Control Act; (ii) result in net deficit reduction of $217.7 billion over the next 10 years (reflects gross budgetary savings of $314.5 billion through 2022, offset by the $96.8 billion cost through 2022 for the sequester replacement provisions);   (iii) require major spending reductions, including a number of provisions opposed by the President and Congressional Democrats (specifies a cap on total discretionary budget authority for 2013 that is $19.1 billion lower than the total funding level of $1.047 trillion that could be provided under current law).

In a Friday morning press conference, Speaker Boehner placed the onus for next-action squarely on the Senate.  However, Leader Reid indicated several times in the preceding days that the Senate will not consider further fiscal cliff legislation until the House allows a vote on legislation passed by the Senate in July that extends the Bush tax cuts through 2013 for income below $200,000/$250,000 and includes an AMT patch for 2012.  Although the House’s failure to act on “Plan B” places increasing pressure on House Republicans to bring up the Senate-passed tax bill (or some variant thereof), Boehner’s Friday morning statements suggest it is less likely that the House will move until there is a Senate-passed bill to consider, thus making Reid’s position difficult to sustain. 

During a late Friday afternoon press conference, President Obama emphasized that time is short and, while he continues to be willing to negotiate a broad deal, he expects Congress to at least pass a tax cut extension prior to January 1 that protects “98 percent of taxpayers, including 97 percent of small businesses” - meaning extension of the Bush tax cuts for income below $200,000/$250,000.  The President also called for any such measure to include an extension of enhanced UI benefits and “lay the ground work for further work on both growth and deficit reduction” (the meaning of which is not immediately clear).  Left unmentioned by the President were the estate tax, spending sequester, debt ceiling, doc fix, tax extenders, and the various other items comprising the larger fiscal cliff negotiations.  Without providing details, the President indicated that he spoke with Speaker Boehner by phone earlier in the afternoon and similarly met with Leader Reid. 

Thursday’s House events turn the cliff dynamic on its head, and it is hard to predict what is next.  While it is still possible that President Obama agrees to further compromise with Speaker Boehner, it is more likely that the House and Senate pass a tax increase bill (perhaps limiting an extension of the Bush cuts to $200,000/$250,000, or perhaps at a higher income threshold, with an AMT patch) and punt all other issues to next year (debt ceiling, sequester, UI, extenders, doc fix, spending cuts, etc.).  Ultimately, a great deal of what will happen rests with the President – will he, in concert with the Senate, engage in negotiations on a broader deal or will he be content to simply pocket a tax increase, pushing consideration of other issues, including the debt ceiling, to January. 


Agriculture & Food

Legislative Activity

  • Farm Bill. Following House Speaker John Boehner’s failed attempt to whip 218 votes in support of his “Plan B” tax bill (see Fiscal Cliff section), uncertainty has grown about passage of a one-year extension of the 2008 Farm Bill because House Members have viewed a deficit-reduction bill as the likely vehicle for a Farm Bill extension. Early last week, Senate and House Agriculture Committee staff members had started to work behind the scenes on a one-year extension of the 2008 Farm Bill.

    The pressure remains on Congress to pass an extension in order to prevent the 2008 Farm Bill from being replaced by the Agricultural Act of 1949, which would take effect on January 1. The 1949 law applies to “basic agricultural commodity” (i.e., corn, cotton, rice or wheat). Should the 1949 law become effective, milk prices will double (potentially reaching record levels of more than $7 a gallon) and farmers, the food industry, consumers and other stakeholders would likely see significant differences in commodity prices, including corn, rice, milk and peanuts, although Secretary of Agriculture Tom Vilsack has indicated that implementing the 1949 law would “take a while.”
  • House Agriculture Committee. Last week, House Agriculture Committee Chairman Frank Lucas (R-OK) announced the Committee’s leadership and Subcommittee reorganization for the 113th Congress. 
  • Representative Steve King (IA) will chair the Department Operation, Oversight, and Nutrition Subcommittee, which will have jurisdiction over nutrition-related issues and no longer have jurisdiction over credit-related issues.
  • Representative Austin Scott (GA) will chair the new Horticulture, Research, Biotechnology, and Foreign Agriculture Subcommittee. The Subcommittee will have jurisdiction over issues including those related to plant pesticides, organic agriculture, research, education and extension, and biotechnology.  
  • Representative Rick Crawford (AR) will chair the Subcommittee on Livestock, Rural Development, and Credit. In addition to its existing issues, the Subcommittee will have jurisdiction over issues related to rural development, farm security and family farming matters, and agricultural credit.
  • Representative Michael Conaway (TX) will continue to chair the General Farm Commodities and Risk Management Subcommittee.
  • Representative Glenn “GT” Thompson (PA) will continue to chair the Subcommittee on Conservation, Energy, and Forestry.

Ranking Member Collin Peterson (D-MN) also announced that the following four newly-elected Democrats will serve on the House Agriculture Committee next year: Michelle Lugan Grisham (NM); Ann Kuster (NH); Gloria McLeod (CA); and Filemon Vela (TX).


Budget, Appropriations

Legislative Activity

  • Supplemental Appropriations for Disaster Aid. The Senate is poised to pass a $60.4 billion emergency disaster appropriations bill (H.R. 1) when they return this week. As part of an agreement reached late Friday afternoon, 21 amendments will be considered, including the $23.8 billion Republican alternative. Democrats were unable to waive a budget point-of-order raised by Senator Pat Toomey (R-PA) which removes the emergency designation from $3.4 billion proposed for the Army Corps of Engineers for mitigation activities. Hence, these funds must be offset in future FY 2013 appropriations. The bill could be sent to the House as early as Thursday, where Republican support remains uncertain.

Energy

Regulatory Activity

  • Nuclear Waste Fund. The Department of Energy is required to submit its analysis to a federal appeals court next month on why it should continue collecting approximately $750 million in annual fees from nuclear power plant owners and operators that are intended to cover the full cost of the government’s long-term disposal for civilian nuclear waste when no such permanent repository or program exists.
  • Offshore Wind. Virginia’s Department of Mines, Minerals and Energy has requested an offshore lease for wind energy research activities from the Bureau of Ocean Energy Management (BOEM). Comments on that request and the proposal, and any indication of competitive interest for a research lease by a state or federal entity, must be postmarked to BOEM by January 22, 2013. The Bureau is also intending to prepare an environmental assessment to consider environmental consequences associated with issuing a lease to Southern Company for renewables data collection offshore Georgia; comments are due by January 14, 2013.
  • OESC Meeting. The Ocean Energy Safety Advisory Committee will next meet at the Interior Department on January 9-10, 2013.
  • Draft OCS Safety Culture Policy Statement. Comments on the Bureau of Safety and Environmental Enforcement’s (BSEE) Draft Statement of Policy are due by March 20, 2013. The policy outlines BSEE’s “expectation that individuals and organizations performing or overseeing activities regulated by BSEE establish and maintain a positive safety culture commensurate with the significance of their activities and the nature and complexity of their organizations and functions.”
  • Nuclear SRP. The comment period for the Nuclear Regulatory Commission’s proposal to revise its Standard Review Plan for the Review of a License Application for a Fuel Cycle Facility has been extended for two months, to March 7, 2013. Staff has proposed revising “NUREG-1520” to provide guidance and clarify several technical areas.
  • NPR-A. The Interior Department has issued the Integrated Activity Plan and Final Environmental Impact Statement for the National Petroleum Reserve in Alaska. The preferred alternative would allow for the development of 72 percent of the estimated economically recoverable oil while protecting vital resources for Alaska Natives and wildlife habitats. A formal Federal Register notice is expected to be published on December 28, beginning a minimum review period of 30 days prior to the issuance of a final secretarial decision. Secretary Salazar also issued a memo to the Bureau of Land Management confirming that the preferred alternative will potentially allow for the construction of pipelines carrying oil or gas from operations in the Chukchi and Beaufort Seas through NPR-A. Senate Energy and Natural Resources Committee Ranking Member Lisa Murkowski (R-AK) has said, “I continue to be concerned that the management plan chosen by the Administration greatly restricts access to our nation’s oil and natural gas resources, especially in the eastern portion of the petroleum reserve.”

Financial Services

Legislative Activity

  • HFSC Chairman-Elect Announces Committee Leadership. Congressman Jeb Hensarling (R-TX), who will be Chairman of the House Financial Services Committee in the next Congress, announced Republican Committee leadership. Representative Gary Miller (CA) will be Vice Chairman. Representative Lynn Westmoreland (GA) will serve as Committee Whip. Representative Randy Neugebauer (TX) will chair the Insurance, Housing and Community Opportunity Subcommittee; Representative Shelley Moore Capito (WV) will chair the Financial Institutions and Consumer Credit Subcommittee; Representative Scott Garrett (NJ) will remain Chair of the Capital Markets and Government-Sponsored Enterprises Subcommittee; Representative Patrick McHenry (NC) will chair the Oversight and Investigations Subcommittee; and Representative John Campbell (CA) will chair the Domestic and International Monetary Policy Subcommittee.
  • Newly-elected Democrats to Join House Financial Services Committee. The House Democratic Steering Committee announced six new freshman Members of the House Financial Services Committee for the next Congress. They include Congressmen-elect Beatty (OH), Delaney (MD), Foster (IL), Kildee (MI), Murphy (FL), and Sinema (AZ).



 

Topics:  Farm Bill, Federal Budget, Fiscal Cliff, Nuclear Power, Offshore Wind

Published In: Agriculture Updates, Elections & Politics Updates, Energy & Utilities Updates, Finance & Banking Updates, Tax Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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