Capital Thinking Update - June 1, 2012

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General Legislative

The House is not in session on Monday, June 4, 2012.  The House will meet at 12:00 p.m. on Tuesday, June 5, for morning hour and at 2:00 p.m. for legislative business.  On Tuesday, the House will continue consideration of H.R. 5325, the Energy and Water Development and Related Agencies Appropriations Act, 2013, sponsored by Rep. Rodney Frelinghuysen (R-NJ).  Thereafter, the House will complete consideration of H.R. 5325, and consider H.R. 436, the Health Care Cost Reduction Act of 2012, sponsored by Rep. Erik Paulsen (R-MN).  The House may also consider H.R. 5855, the Department of Homeland Security Appropriations Act, 2013, sponsored by Rep. Robert Aderhold (R-AL), and H.R. 5882, the Legislative Branch Appropriations Act, 2013, sponsored by Rep. Ander Crenshaw (R-FL). 

Senate will convene at 2:00 p.m. on Monday and recognize the Majority Leader. At 5:00 p.m., the Senate will proceed to Executive Session to consider the nomination of Timothy S. Hillman to be the United States District Judge for the District of Massachusetts.  


Agriculture

LEGISLATIVE ACTIVITY

  • Farm Bill Timeline. The Senate is likely to consider the Farm Bill this week following a cloture vote on the Paycheck Fairness Act. Expected amendments include: (1) caps on commodity subsidies; (2) income eligibility standards on commodity subsidies; (3) increased funding for rural economic development programs and other job creation programs; (4) conservation compliance requirements being attached to crop insurance programs; (5) increased funding to help beginning farmers; and (6) increased support for farm-to-school programs. Senator Dianne Feinstein (D-CA) also introduced the Egg Products Inspection Act Amendments of 2012 to support an agreement between the United Egg Producers and the Humane Society of the United States addressing the welfare of egg-laying hens. The legislation has garnered bipartisan support, including the following original cosponsors: Senators Richard Blumenthal (D-CT), Scott Brown (R-MA); Maria Cantwell (D-WA), Jeff Merkley (D-OR), David Vitter (R-LA), and Ron Wyden (D-OR).

    Prior to the Memorial Day recess, House Majority Leader Eric Cantor (R-VA) released the House Legislative Agenda for June and July, which did not include floor time for the Farm Bill. The House Agriculture Committee is expected to markup the Farm Bill by late June, which will likely include more extensive reforms to the nutrition title, a target price and countercyclical program for crop farmers, and a stronger revenue-based approach than the Senate Farm Bill.
  • Congressional Budget Office Score. On May 25, the Congressional Budget Office (CBO) scored the Senate Farm Bill at $23.6 billion in savings. The CBO reported that the Farm Bill would cost a total of $969 billion from FY 2013 to FY 2022, which exceeds the $23 billion benchmark Senate Agriculture Chairwoman Debbie Stabenow (D-MI) and Ranking Member Pat Roberts (R-KS) established as the goal for savings. The CBO has estimated that the commodity program outlined in the Farm Bill would cost $43.2 billion over 10 years ($19.8 billion less than under current law). As for the proposed crop insurance program, CBO has estimated a cost of $94.6 billion ($5.1 billion more than under current law).
  • Specialty Crops. On May 25, a bipartisan group of 83 House Members sent a letter to House Agriculture Committee Chairman Frank Lucas (R-OK) and Ranking Member Collin Peterson (D-MN) requesting that they give “full and fair consideration to the research, pest management and trade assistance programs” for specialty crops in the Farm Bill. The letter also urged the leadership to pass a Farm Bill before the 2008 Farm Bill expires on September 30.
  • Criticism of Senate Farm Bill Subsidy Costs. On May 30, the American Enterprise Institute released a report finding that the Senate Farm Bill would greatly increase taxpayer spending on farm subsidies due to the proposed shallow-loss program. The report states that the new system could balloon costs to as much as $7.5 billion per year, which is significantly higher than CBO’s estimate of $2.6 billion per year.


Budget, Appropriations

LEGISLATIVE ACTIVITY

  • FY 2013 Appropriations Action. To date, only two FY 2013 appropriations bills have been approved by a full chamber; the House passed the Commerce-Justice-Science bill on May 8 and the Military Construction-Veterans Affairs bill on May 31. In a May 25 memorandum outlining the House Republican Summer Legislative Agenda, Majority Leader Eric Cantor (R-VA) noted that House leaders intend to bring at least four additional FY 2013 appropriations bills in June. The Energy & Water bill was brought to the House floor on June 1 and amendment votes are likely to continue this week. Next on tap for floor consideration in the House is the Homeland Security bill which will be followed soon after by the Legislative Branch spending bill. On May 30, the White House reiterated its threat to veto all House FY 2013 appropriations bills unless they adhere to the discretionary spending cap established in the Budget Control Act of 2011 (“BCA” / P.L. 112-25) (the House is utilizing a spending cap that is $19 billion lower that the BCA figure).

    The Senate is also expected to bring the Commerce-Justice-Science bill to the floor by mid-June.

    This week -- the House Agriculture and Financial Services Appropriations Subcommittees are currently scheduled to hold a markup of their FY 2013 spending bills on June 6. As of the writing of this report, the Senate Appropriations schedule for this week has not yet been posted; however, we anticipate the Senate Labor-HHS-Education Appropriations Subcommittee markup will occur this week. 
  • House Budget Committee Resumes Consideration of Budget Reform Legislation. On May 31, the House Budget Committee picked up efforts to advance its budget reform legislative package introduced late last year. As reported in the February 13 edition of the Capital Thinking Report, the House approved four of the ten budget reform bills earlier this year. Thursday’s hearing focused on three of the remaining bills: (1) the Review Every Dollar (RED) Act (H.R. 3579), introduced by Representative Jason Chaffetz (R-UT), that would, in part, require periodic reviews of all federal programs and score transfers from the general fund to the Highway Trust Fund as spending (thus requiring an offset); (2) the Balancing our Obligations for the Long Term (BOLT) Act (H.R. 3580), introduced by Representative Mick Mulvaney (R-SC), that would require statutory spending caps on government spending and extend the fiscal outlook of policy proposals from ten to thirty years; and (3) the Spending Control Act (H.R. 3576), introduced by Representative John Campbell (R-CA), that would set statutory spending caps for mandatory spending, which, if exceeded, would trigger a sequestration process. Committee Members discussed and heard testimony on the “broken budget process,” but did not vote on the bills.

Cybersecurity

LEGISLATIVE ACTIVITY


  • Senate Cybersecurity Legislation. Efforts in the Senate continue in order to broker a compromise between Homeland Security and Government Affairs Committee (HSGAC) Chairman Joe Lieberman (I-CT), Ranking Member Susan Collins (R-ME) and Senator John McCain (R-AZ). Current and former heads of the National Security Agency (NSA) have reiterated their view that there needs to be some level of regulation for the most critical of critical infrastructure.

    Specific concerns continue to be raised around the energy sector, with Chairman of the Senate Commerce, Science, and Transportation Committee John Rockefeller (D-WV) focusing on recent U.S. Department of Homeland Security (DHS) cyber threats assessments that were provided to the gas pipeline industry. The Chairman recently sent a letter to the American Gas Association asking about voluntary standards set in 2006, which may not have been fully implemented by the industry since that time.

    Last week, Chairman Lieberman called on Majority Leader Reid to provide a definite timeline for floor action on his cybersecurity bill. At this point, it appears that the Senate could take up the legislation on the floor during the second or third week of June.

EXECUTIVE BRANCH ACTIVITY

  • White House Digital Strategy. The White House released its long-awaited Digital Strategy, “Building a 21st Century Platform to Better Serve the American People,” on May 23. The document aims to ensure that Federal agencies are making government data more accessible to citizens. This will be done through the creation of a Digital Services Advisory Group at the Office of Management and Budget (OMB) and a Digital Services Innovation Center at the General Services Administration (GSA), which will be charged with developing a government-wide contract vehicle for mobile and wireless sources.
  • Thrift Savings Plan Cyber Attack. On May 25, the Federal Retirement Thrift Investment Board (FRTIB) and Serco, Inc., a contractor that provides services to the Thrift Savings Plan (TSP), reported a breach of a Serco computer that occurred in April. The sophisticated cyber attack compromised the personal information of over 123,000 TSP accounts but there have been no indications so far that the data has been misused or that TSP’s website was affected. While the full extent of the attack may not be know for a while, some cybersecurity experts said that the cyber attack could potentially be part of a more extensive breach of U.S. government information, given the similarities to other cyber breaches where hackers seek unauthorized access but do not use the data for identity theft or financial misappropriation.
  • DARPA Cybersecurity Plan X. The Pentagon is completing the development of a cybersecurity research program that is currently dubbed “Plan X.” The goal of the program is to develop an advanced map of cyberspace to help commanders identify and disable targets that are attempting a cyber attack, as well as the creation of a robust operating system that can launch attacks and survive counterattacks. This five-year, $110 million research program will begin seeking proposals this summer through the Defense Advanced Research Projects Agency (DARPA).

Education

LEGISLATIVE ACTIVITY


  • Financial Aid Offer Form. On May 24, Senator Al Franken (D-MN) introduced S. 3244, the “Understanding the True Cost of College Act of 2012.” The legislation aims to add disclosure requirements to the institution financial aid offer form required under the Higher Education Opportunity Act and require all institutions of higher education to make the form available to prospective and enrolled students under the Higher Education Act. The bill appears to target the private loan industry by requiring the disclosure of more information about the terms and conditions of private loans and explaining how government loans are more favorable to students than private loans.

    The legislation has garnered bipartisan support (seven Democrats and one Republican) with the following original cosponsors: Senators Richard Blumenthal (D-CT), Ben Cardin (D-MD), Chuck Grassley (R-IA), Tom Harkin (D-IA), Tim Johnson (D-SD), Barbara Mikulski (D-MD), Chuck Schumer (D-NY), and Ron Wyden (D-OR).
  • National Network for Manufacturing Innovation. The House Science, Space, and Technology Subcommittee on Technology and Innovation held a hearing on May 31 to review the National Network for Manufacturing Innovation (NNMI) proposal included in the President’s FY 2013 Budget Request. The hearing featured Dr. Patrick Gallagher, Under Secretary of Commerce for Standards and Technology and Director of the National Institute of Standards and Technology (NIST), as a witness to discuss the proposed NNMI program.

    As part of its focus on American manufacturing, the Obama Administration requested a one-time mandatory fund of $1 billion for NNMI as part of the NIST budget for FY 2013 to roll out a multi-agency (Department of Commerce’s National Institute of Standards and Technology, the National Science Foundation, the Department of Defense, and the Department of Energy) initiative, which will work to leverage new investment from industry, state and local government, and the research community. At the hearing, several lawmakers expressed concerns for the initiative related to potential duplicative efforts, its focus on the manufacturing sector versus the larger business community, and lack of authorization for the program. Dr. Gallagher addressed the role of universities in the initiative, explaining that this network would work with researchers that will help to identify potential areas for workforce development. NIST also would utilize the NNMI institutes to spin off training programs at some of the participating universities, according to Dr. Gallagher.
  • Student Loan Interest Rates. On May 31, House and Senate Republican leaders offered new offsets for extending the current 3.4 percent Stafford student loan interest rates set to expire in July. As part of the plan, laid out in a letter to President Obama, House Speaker John Boehner (R-OH), Senate Minority Leader Mitch McConnell (R-KY), House Majority Leader Eric Cantor (R-VA), and Senate Minority Whip Jon Kyl (R-AZ) proposed two new offset schemes:
    • Increasing federal employee retirement contributions – an idea backed by the Administration in its FY 2013 Budget Request and estimated to generate $18 billion over ten years;
    • Combined funding scheme – as part of this funding scheme, the duration of borrowers’ in-school interest subsidy for subsidized federal student loans would be limited to 150 percent of the normal time required to complete their degree. This idea also was included in the President’s FY 2013 Budget Request and is estimated to generate $1.1 billion over ten years. This plan would also be combined with a phase down in the Medicaid provider tax threshold to 5.5 percent beginning next year and would generate $11.3 billion over ten years. The proposal is included in the House-passed sequester bill (H.R. 5652), and the Administration included a similar phasing down (to 3.5 percent) in its FY 2013 Budget Request. A final component of the combined scheme includes a requirement to state and local government pension payers to identify whether a pension is based on government employment. The proposal is designed to prevent Social Security overpayments and is expected to generate $2 billion over ten years. The Administration called for the plan as part of its FY 2012 Budget Request and was later passed by the House.

      While the White House seemed receptive to the plans, Speaker Boehner told his Republican colleagues last week that the extension could be done retroactively if Congress does not agree on an offset before July 1.
  • Upcoming Hearings. The Senate Health, Education, Labor and Pensions (HELP) Committee will hold a hearing on Friday, June 8 entitled “Bully-Free Schools: How Local, State and Federal Efforts Can Help” and a hearing on Thursday, June 28 entitled “Beyond Seclusion and Restraint: Creating Positive Learning Environments for All Students.”

REGULATORY ACTIVITY

  • Race to the Top. On May 22, the Department of Education announced proposed criteria for the 2012 Race to the Top (RTT) program for public comment. The proposed 2012 program criteria invites applications from districts or groups of districts serving at least 2,500 students with 40 percent or more qualifying for free or reduced price lunch. Districts will choose to apply for funding to support learning strategies that personalize education in all or a set of schools, within specific grade levels, or select subjects. The Department will award nearly $400 million in grants, with awards ranging from $15 million to $25 million.

    House Republicans have criticized the Department’s new program, as they believe the Department is using the program to require local school districts to adopt “sweeping” mandates in order to be eligible for federal grants. House Education and the Workforce Subcommittee on Early Childhood, Elementary, and Secondary Education Chairman Duncan Hunter said “The Department’s proposal represents an unprecedented expansion of federal instruction into local education decisions, adding to the boondoggle of bureaucracy already challenging teachers, principals, and superintendents.”

    The deadline to submit public comments on the proposed RTT criteria is Friday, June 8. The Department plans to release the application in July with an October submission deadline. Awards will be announced no later than December 31.
  • Advanced Manufacturing Jobs and Innovation Accelerator Challenge. On May 29, the Obama Administration announced a $26 million multi-agency Advanced Manufacturing Jobs and Innovation Accelerator Challenge to foster innovation-fueled job creation through public-private partnerships. Approximately 12 projects are expected to be chosen through a competitive interagency grant process.

    Applicants are encouraged to submit proposals that will help grow a region’s industry clusters by strengthening connections to regional economic development opportunities and advanced manufacturing assets, enhance a region’s capacity to create high-quality sustainable jobs, develop a skilled and diverse advanced manufacturing workforce, increase exports, encourage the development of small businesses and accelerate technological innovation.

    This is the third round of the Jobs Accelerator competition, which is being funded by the U.S. Department of Commerce’s Economic Development Administration as well as the National Institute of Standards and Technology, the U.S. Department of Energy, the U.S. Department of Labor’s Employment and Training Administration, the Small Business Administration and the National Science Foundation. In addition to the six funding partners, the initiative is supported by eight other federal agencies: the U.S. Departments of Agriculture, Education, Housing and Urban Development; the U.S. Department of Commerce’s International Trade Administration; the Environmental Protection Agency; the Denali Commission; the Minority Business Development Administration; and the U.S. Patent and Trademark Office.
  • Innovative Transit Workforce Development Program. The Federal Transit Administration published a funding opportunity announcement on May 31 to support a highly-skilled transit workforce through innovative solutions. Eligible applicants include public transit agencies, state transportation departments, tribes, and non-profit universities, and applications are due July 6. Award will range between $100,000 to $1 million.
  • No Child Left Behind Waivers. On May 30, the Department of Education announced that it approved eight additional No Child Left Behind waiver requests for the following states: Connecticut, Delaware, Louisiana, Maryland, New York, North Carolina, Ohio and Rhode Island. These states are now required to set new performance targets for student achievement, establish accountability systems to reward high-performing schools, and address the needs of the lowest performing schools.

    In February, the Department approved the following states’ waiver requests: Colorado, Florida, Georgia, Indiana, Kentucky, Massachusetts, Minnesota, New Jersey, Oklahoma, and Tennessee.
  • FAFSA Completion Project. On May 31, the Department of Education announced that 92 additional school districts (in 30 states) will have access to individualized data to assist their students with completing the Free Application for Federal Student Aid (FAFSA). Last year, the Department selected 18 school districts to receive data for the 2011-2012 school year as part of the FAFSA Completion Project’s initial pilot. The most recent cohort of school districts will be able to track whether high school seniors have completed the FAFSA starting in the 2012-13 school year.
  • State-Tribal Collaboration. On May 31, the Department of Education announced a new $1.9 million competitive grant program titled, “State-Tribal Education Partnership” (STEP). The program will award grants to tribal education agencies to perform certain state-level functions for specific federal grant programs. The deadline to submit applications is July 13.
  • GEAR UP. On June 1, the Department of Education published a notice in the Federal Register outlining the priorities and plan for the proposed College Savings Account Research Demonstration Project. The Department will allocate $8.7 million of federal GEAR UP funds to support the program. The program aims to provide about 10,000 high school students with college savings accounts for students participating in the GEAR UP program, which is designed to increase the college readiness of low-income middle school and high school students. In addition, the project will research the impact of savings accounts on college access and success by comparing the outcomes of students receiving savings accounts with a control group, which will allow the project to inform strategies at the federal, state, and local level.

    The notice provides 30 days for the public to share feedback with the Department about the proposed approach. More specifically, the Department is interested in comments on:
    • The merits and drawbacks of different types of college savings accounts, and whether a single type of account should be prescribed for this project;
    • How directory information could be used to open accounts without need for a Social Security Number or other Taxpayer Identification Number to facilitate automatic enrollment; and
    • The expected take-up rate for the savings accounts.
  • The Department plans to publish a final notice inviting applications, reflecting any changes made based on public comments or other information available to the Department, in July, and expects to announce awards for this project by September 30. Students will receive savings accounts by the second week of class in the 2013-2014 academic year. Initial results will be published in 2017. Final results, tracking students into college, will be available by 2020.

Energy

LEGISLATIVE ACTIVITY


  • House Legislative Outlook. In June, House Republicans are expected to focus on efforts to promote job growth and address out-of-pocket consumer expenses affected by domestic energy production. Natural Resources Committee Chairman Doc Hastings (R-WA) and Energy and Commerce Committee Chairman Fred Upton (R-MI) are expected to bring a series of bills to the House floor during the week of June 18 that would encourage energy development on federal lands and reduce federal regulatory barriers.
  • Congressional Hearings. On Wednesday, June 6, a House Science Subcommittee will hold a hearing entitled “EPA’s Impact on Jobs and Energy Affordability: Understanding the Real Costs and Benefits of Environmental Regulations.”

REGULATORY ACTIVITY

  • DOE Wind and Power Program. The 2012 Wind and Water Power Program/Wind Power Peer Review Meeting, to review wind technology development and market acceleration and deployment projects, will be held June 19 - 21 in Alexandria, Virginia.
  • Massachusetts WEA. The Bureau of Ocean Energy Management has defined nearly 743,000 acres offshore of Massachusetts as a “Wind Energy Area” for potential commercial wind leasing. The Bureau will next prepare an Environmental Assessment to consider potential impacts and mitigation measures. 
  • Atlantic OCS Exploration. The public comment deadline for the Draft Programmatic Environmental Impact Statement for oil/gas-, renewable-, and marine minerals-related exploration activities along the Mid- and South-Atlantic Outer Continental Shelf Planning Area has been extended to July 2.
  • Renewables at Federal Facilities. The Department of Energy will accept public comments and recommendations on its draft guidebook, “Federal Renewable Energy Guide: Developing Large-Scale Renewable Energy Projects at Federal Facilities Using Private Capital” through July 2.
  • FERC Order No. 1000. The Federal Energy Regulatory Commission affirmed its basic determinations in Order No. 1000, “Transmission Planning and Cost Allocation by Transmission Owning and Operating Public Utilities”, which will become effective on July 2. These transmission planning reforms and cost allocation requirements are intended to ensure that Commission-jurisdictional services are provided at just and reasonable rates and on a basis that is also not unduly discriminatory or preferential.

Environment

LEGISLATIVE ACTIVITY


  • Water Payment. On Wednesday, June 6, the House Committee on Natural Resources, Subcommittee on Water and Power will hold a hearing on the “Accelerated Revenue and Repayment Act” which would direct the Secretary of the Interior to allow for prepayment of repayment contracts between the United States and water users.
  • Water and Power. On Monday, June 4, the House Committee on Natural Resources, Subcommittee on Water and Power will hold a field hearing concerning Arizona’s water and power costs. The hearing will take place in Phoenix, Arizona.
  • Environmental Regulations. On Wednesday, June 6, the House Committee on Science, Space and Technology, Subcommittee on Energy and Environment, will hold a hearing on costs and benefits of environmental regulations. Invited witnesses are scheduled to include: The Honorable Cass Sunstein, Administrator, Office of Information and Regulatory Affairs, Office of Management and Budget; Dr. Michael Honeycutt, Chief Toxicologist, Texas Commission on Environmental Quality; Mr. Eugene Trisko, Attorney at Law, On behalf of the American Coalition for Clean Coal Electricity; Mr. Tom Wolf, Executive Director, Energy Council, Illinois Chamber of Commerce; Mr. David Hudgins, Director of Member and External Relations, Old Dominion Electric Cooperative; and Mr. Richard Trzupek, Principal Consultant, Trinity Consultants.

REGULATORY ACTIVITY

  • EPA Creates Great Lakes Advisory Board. The U.S. Environmental Protection Agency (EPA) is establishing the Great Lakes Advisory Board (GLAB). The purpose of the GLAB is to provide advice to the EPA Administrator in her capacity as Chair of the Inter-Agency Task Force established per Executive Order 13340 (May 18, 2004) on matters related to Great Lakes restoration and protection. The major objectives will be to provide advice and recommendations on Great Lakes protection and restoration policy; long term goals and objectives for Great Lakes protection and restoration; and annual priorities to protect and restore the Great Lakes that may be used to help inform budget decisions. The GLAB will be composed of approximately fifteen members who will be comprised of representative members and government employees. The GLAB expects to meet two times a year and will exist until the EPA determines that the GLAB is no longer needed. The charter will be in effect for two years and may be renewed. In selecting members, EPA will consider candidates representing a broad range of interests relating to the Great Lakes, including, but not limited to, environmental groups, business, agricultural groups, citizen groups, environmental justice groups, foundations, academia and state, local and tribal governments. We anticipate an upcoming solicitation for nominations.
  • Hazardous Releases. As hurricane season approaches, the EPA has issued a Hazardous Weather Release Prevention and Reporting alert to remind facility operators of regulations that require minimization of chemical releases during process shutdown operations. The alert specifies operational release minimization requirements and clarifies reporting requirements, including exemptions. The EPA points out that, unlike with some natural disasters, the onset of a hurricane is predictable and allows for early preparations to lessen its effect on a facility. Before hurricane force winds and associated storm surge flooding damage industrial processes, the alert recommends that operators take preventive action by safely shutting down processes, or otherwise operate safely under emergency procedures. The alert and requirements are available at http://www.epa.gov/region4/r4_hurricanereleases.html.
  • NASCAR. The EPA and the National Association for Stock Car Auto Racing (NASCAR) have signed an agreement to raise awareness of environmentally friendly products and solutions in an effort to address America’s environmental challenges. The memorandum of understanding is intended to focus on areas such as sourcing more sustainable concessions at NASCAR events, expanding the use of safer chemical products, conserving water, reducing waste and promoting recycling.

Financial Services

LEGISLATIVE ACTIVITY


  • Senate Banking Committee to Hear from Regulators on Dodd-Frank Implementation. On Wednesday, June 6, the Senate Banking Committee will hold a hearing titled, “Implementing Wall Street Reform: Enhancing Bank Supervision and Reducing Systemic Risk.” Witnesses will include Neal Wolin, Deputy Secretary, U.S. Department of the Treasury; Daniel Tarullo, Member, Board of Governors of the Federal Reserve System; Tom Curry, Comptroller of the Currency, Office of the Comptroller of the Currency; Martin Gruenberg, Acting Chairman, Federal Deposit Insurance Corporation; and Richard Cordray, Director, Consumer Financial Protection Bureau.
  • House Committee to Consider Investment Adviser Oversight. On Wednesday, June 6, the House Financial Services Committee will hold a hearing to consider the Investment Adviser Oversight Act of 2012 (H.R. 4624). The legislation, introduced by Chairman Spencer Bachus (R-AL) and Congresswoman Carolyn McCarthy (D-NY), would amend the Investment Advisers Act of 1940 to provide for the registration and oversight of national investment adviser associations.
  • House Subcommittee to Discuss CARD Act. On Wednesday, June 6, the House Financial Services Financial Institutions and Consumer Credit Subcommittee will hold a hearing titled, “An examination of the Federal Reserve’s Final Rule on the CARD Act’s ‘Ability to Repay’ Requirement.”
  • Fed Chairman Bernanke to Address Congress. On Thursday, June 7, Chairman of the Board of Governors of the Federal Reserve System Ben Bernanke will testify before the Joint Economic Committee at a hearing titled, “The Economic Outlook.”
  • House Subcommittee to Debate Investor Protection. On Thursday, June 7, the House Financial Services Subcommittee on Capital Markets and Government Sponsored Enterprises will hold a hearing titled, “Investor Protection: The Need to Protect Investors from the Government.”
  • House Subcommittee to Discuss FHA Oversight. On Thursday, June 7, the House Financial Services Insurance, Housing, and Community Opportunity Subcommittee will hold a hearing titled, “Oversight of the FHA’s Multifamily Insurance Programs.”

REGULATORY ACTIVITY

  • CFTC to Host Staff Roundtable on Exchange Trading of OTC Derivatives. On Tuesday, June 5, the Commodity Futures Trading Commission staff to discuss the proposed regulations implementing Core Principle 9 for designated contract markets. The roundtable discussion will focus on centralized market trading requirement, certain aspects of the requirements for exchange of derivatives for related position transactions; and reporting timeframe for block transactions in futures contracts.
  • Federal Reserve to Hold Open Meeting. On Thursday, June 7, the Board of Governors of the Federal Reserve System will hold an open meeting to discuss (i) proposed interagency rulemakings for strengthening and harmonizing the regulatory capital framework for banking organizations, including proposed rules for implementing Basel III for banking organizations and proposed consolidated capital requirements for savings and loan holding companies; and (ii) a final interagency rulemaking on market risk capital.
  • SEC to Discuss JOBS Act Implementation. On Friday, June 8, the Securities and Exchange Commission Advisory Committee on Small and Emerging Companies will hold a public meeting to discuss provisions of the Jumpstart Our Business Startups (JOBS) Act and other matters relating to rules and regulations affecting small and emerging companies under the federal securities laws.

Health Care

LEGISLATIVE ACTIVITY


  • FDA User Fee Reauthorization. As expected, the House of Representatives approved the FDA user fee bill (PDUFA/GDUFA/MDUFA/BsUFA) this week by a vote of 387-5. This legislation also includes permanent reauthorization of the Best Pharmaceuticals for Children Act (BPCA) and the Pediatric Research Equity Act (PREA). A number of policy differences will be addressed, including provisions related to drug shortages, antibiotics, the safety of the drug supply chain, and a smattering of device issues. The legislation now heads to a conference committee to reconcile the House and Senate versions of the bill. Senate and House leaders are hoping to send a completed bill to President Obama before the July 4 recess.
  • Health Bills Move to House Floor. The House Committee on Ways and Means approved a number of bills during the week ending June 1, including H.R. 436, the “Protect Medical Innovation Act of 2011;” H.R. 5842, the “Restoring Access to Medication Act;” H.R. 1004, the “Medical FSA Improvement Act of 2011;” and H.R. 5858, “To amend the Internal Revenue Code of 1986 to improve health savings accounts, and for other purposes.” Two of the bills reported by the Committee would repeal portions of the Democrats’ health care law and two would advance new opportunities to lower costs and increase flexibility for patients. All of the legislation was voted favorably out of the Committee, and are expected to be brought to the floor of the House for consideration as early as next week.
  • House VA Hearing. The House Committee on Veterans’ Affairs has scheduled a hearing on Wednesday, June 6, on the Department of Veterans’ Affairs pharmaceutical prime vendor contract.
  • Energy and Commerce Hearings. The House Committee on Energy and Commerce Subcommittee on Oversight and Investigations will hold a hearing on Friday, June 8, entitled “Medicare Contractors’ Efforts to Fight Fraud- Moving Beyond ‘Pay and Chase.’” The Subcommittee on Health will also meet on Friday, June 8, for a hearing on “Examining the Appropriateness of Standards for Medical Imaging Technologists.”

REGULATORY NEWS

  • EHB Rule. The Department of Health and Human Services (HHS) released a proposed rule to establish data collection standards for defining essential health benefits (EHBs). The rule outlines the data on applicable plans to be collected from certain issuers to support the definition of EHBs and follows the December 16, 2011 bulletin on HHS’ intended benchmark approach to defining EHBs. This proposed rule would also establish a process for the recognition of accrediting entities for purposes of certification of qualified health plans.

OTHER HEALTH NEWS

  • IOM Meeting. The Evidence Communication Innovation Collaborative has scheduled a meeting on Thursday June 7 to explore strategies, obstacles and feasibility for collaborative communication efforts to improve patient engagement in heath care decision-making.

International, Defense, Homeland Security

LEGISLATIVE ACTIVITY


  • Homeland Security Bills. Last week, the House of Representatives passed five homeland security bills on the expedited Suspension Calendar. Four of the bills passed by voice vote. The remaining bill, Congressman Henry Cuellar’s (D-TX) legislation (H.R. 915) to foster Federal, state, and local law enforcement cooperation via a Border Enforcement Security Task Force, passed by a 391-2 margin. Among the bills passing by voice vote was H.R. 1299, Congresswoman Candice Miller’s (R-MI) effort to require the President to present a comprehensive border security strategy to Congress within five years. Also passing on May 30 was H.R. 3670, Congressman Tim Walz’s (D-MN) bill to require the Transportation Security Administration (TSA) to retain positions for TSA security screeners who are called to active military duty. Senator Joe Lieberman (I-CT) has introduced companion legislation (S. 1990) to Representative Walz’s bill. H.R. 2764, sponsored by Congressman Patrick Meehan (R-PA), also passed May 30. Representative Meehan’s bill is intended to spur sharing of intelligence and other data with state, local, and international actors to combat the spread of biological, chemical, and nuclear weapons of mass destruction. Also on May 30, Congresswoman Jackie Speier (D-CA) succeeded in moving H.R. 3140 through the House. Representative Speier’s bill would direct the Department of Homeland Security to prioritize the sharing of intelligence involving mass transit systems in high-threat areas. If the Senate were to vote on the five bills over the course of the rest of the year, it likely will do so as part of a larger piece of legislation.
  • Intelligence Developments. On May 31, the House passed the Fiscal Year 2013 (FY 2013) intelligence authorization bill, H.R. 5743, sponsored by House Intelligence Committee Chairman Mike Rogers (R-MI). H.R. 5743 passed on a 386-28 roll call vote, with only a loose coalition of libertarian Republicans and liberal Democrats voting no. If enacted into law, the bill would authorize operations for the sixteen agencies in the U.S. intelligence community. The legislation proposes a slight increase from President Obama’s FY 2013 request of $71.8 billion for the intelligence budget. Congressman John Conyers (D-MI) succeeded in attaching an amendment to the bill that would require Director of National Intelligence (DNI) James Clapper to report on the likely effects of a military attack on Iran. Representative Conyers offered his amendment in order to spur caution on Iran, given the hesitancy about a U.S.- or Israeli-led attack on Iran among many in the U.S. intelligence community, but some hawks view the amendment as potentially producing the opposite effect in Congress. Meanwhile, the Senate Intelligence Committee may begin at least behind-the-scenes consideration of its version of the intelligence authorization over the remainder of the summer. Also occurring this week, the House Judiciary Committee’s Subcommittee on Crime, Terrorism, and Homeland Security held a hearing to examine a possible extension of the 2008 law that updated the Foreign Intelligence Surveillance Act (FISA).  In response to the Obama Administration and Subcommittee Chairman James Sensenbrenner’s (R-WI) support for extending the FISA law, some Subcommittee Democrats expressed varying degrees of skepticism about continuing to allow warrantless surveillance of communications involving U.S. citizens and foreign targets. The House Intelligence Committee, which also has jurisdiction over FISA issues, may take up the FISA extension later this year as well.

Tax

LEGISLATIVE ACTIVITY


  • Baucus Expected to Unveil Vision for Tax Reform. On June 11, Senate Finance Committee Chairman Max Baucus (D-MT) is expected to deliver a speech at the Bipartisan Policy Center outlining his vision for fundamental tax reform. Chairman Baucus will be introduced by Pete Domenici, former New Mexico Senator and co-author of the Domenici-Rivlin Deficit Reduction Plan. After the Chairman’s remarks, there will be a panel discussion featuring former White House Budget Director Alice Rivlin, former Senate Finance Committee Chairman Bob Packwood, former House Ways & Means Committee Chairman Bill Thomas, and President of the Center on Budget and Policy Priorities Robert Greenstein. 
  • Pelosi Advocates Extension of Tax Cuts for Sub-$1 Million Earners. House Speaker John Boehner (R-OH) has announced that the House will vote in July on a straight one-year extension of the 2001 and 2003 tax provisions – the so-called “Bush-era tax cuts.” Last week, House Minority Leader Nancy Pelosi (D-CA) sent a letter to House Majority Leadership proposing extension of the cuts only for those making less than $1 million annually. Pelosi’s proposal places her at odds with the Obama Administration’s current stance on the issue, which would make permanent the current rates only for those making less than $250,000 annually. In rejecting Pelosi’s proposal, Boehner reiterated that the House will vote to extend all of the tax cuts, arguing that any increase in taxes in a still recovering economy is “a big mistake” with the potential to negatively impact small business owners.
  • House Ways and Means Approves Medical Device Tax Repeal. On May 31, the House Ways and Means Committee favorably reported four bills that would affect healthcare taxes, including one repealing the 2.3 percent excise tax on medical devices – the Protect Medical Innovation Act of 2012 (H.R. 436). The Joint Committee on Taxation estimates that repeal of the provision would cost the government $29 billion over 10 years.  The committee approved the measure by a vote of 23 to 11, with two Democrats - Ron Kind of Wisconsin and Shelley Berkley of Nevada – voting in favor of Chairman Dave Camp’s (R-MI) substitute amendment to the bill.

    The Committee also approved bills that would (1) repeal the limitation on reimbursement of over-the-counter medications from some health savings accounts and health reimbursement accounts (costing $4 billion over 10 years); (2) permit individuals to receive up to $500 in distributions of unused amounts from their healthcare flexible spending arrangements (costing $4.1 billion over 10 years); and (3) allow the section 25B savers credit to be applied to contributions to health savings accounts (HSA), permit spouses to provide catch-up contributions to the same HSA, and allow qualified distributions to early retirees (costing $4.7 billion over 10 years).

    The full House is expected to vote on all four bills the week of June 4. 
  • Tax Hearings Next Week. The following tax hearings are scheduled next week in the House Ways and Means and Senate Finance Committees:
    June 8:  House Ways and Means Committee, Subcommittee on Select Revenue Measures hearing on the Framework for Evaluating Certain Expiring Tax Provisions

TechComm

LEGISLATIVE ACTIVITY


  • Privacy. Google Chairman Eric Schmidt is preparing for questioning by the Federal Trade Commission (FTC) as part of its probe into whether the company has violated anti-trust laws. The deposition could occur as early as next week. The FTC is investigating whether Google unfairly manipulates its search formula to ensure that its own services, such as YouTube, and Google Plus, appear at the top of the results. The FTC hired litigator Beth A. Wilkinson in April to assist with its investigation of Google. Wilkinson presented the closing argument that resulted in the death penalty for Oklahoma City bomber Timothy McVeigh and is now a partner in private practice. Wilkinson’s hire represents only the third time in the last decade that the FTC has brought on an outside lawyer to help with a case.
  • Internet. Internet pioneer Vint Cerf told a House subcommittee on May 31 that proposals to give the United Nations more control will “determine the future of the Internet.” “The open Internet has never been at a higher risk than it is now,” Cerf testified at a hearing of the House Energy and Commerce’s Subcommittee on Communications and Technology. Proposals to give the U.N.’s International Telecommunication Union (ITU) more control over the governance of cybersecurity, data privacy, technical standards and the Internet’s address system may be raised at the December World Conference on International Telecommunications meetings in Dubai. Those measures also would permit foreign, government-owned Internet providers to charge extra for international traffic and allow for more price control. The Internet is currently governed under a “multi-stakeholder” approach that gives power to a host of nonprofits, rather than governments.

    Deputy Assistant Secretary of State Philip Verveer said negotiators at the Dubai conference will likely try to achieve consensus before approving changes but that the measures could be adopted in up or down votes. He noted that the United States does not have veto power at the ITU as it does at the U.N. Security Council. He said it is unclear whether there are enough votes among the 193 ITU members to adopt the changes. Verveer identified Japan, Canada, Mexico and many European countries as members that share the U.S. view on the governance of the Internet. Federal Communications Commissioner (FCC) Robert McDowell said if the ITU tries to regulate the Internet, the United States could opt out of provisions, but that the changes could create a “balkanized” Internet. In his testimony, McDowell also said foreign government officials have mentioned plans to create an international fund allowing state-owned telecommunications companies to charge for access to certain Web sites on a per-click basis to fund deployment of Internet networks. McDowell cited Google, Facebook and Netflix among possible targets for the fees.

    Ambassador David A. Gross, former U.S. Coordinator for International Communications and Information Policy at the U.S. Department of State, testified on behalf of the World Conference on International Telecommunications Ad Hoc Working Group and said, “There should be no top down control of the Internet, directly or indirectly, associated with any international governmental institution, including the ITU.” Rep. Marsha Blackburn (R-TN) criticized the Obama administration for opposing the U.N. effort to control the Internet but supporting net-neutrality regulations that restrict Internet providers from slowing or speeding up access to web sites.

    Rep. John Dingell (D-MI) used the hearing as an opportunity to question Verveer about a provision in the Middle Class Tax Relief and Job Creation Act that he and Congressman Brian Bilbray (R-CA) authored to ensure that the FCC maintains continued viewer access to television station signals along the Canadian and Mexican borders before the agency repacks stations to clear spectrum for an upcoming auction. Verveer noted that treaty obligations protect broadcasters in border areas and that future concerns about interference must be worked out by agreement between the two countries. While Verveer noted this is a “complicated engineering matter,” he assured Dingell that “treaty and statutory obligations will be adhered to.”

    Rep. Mary Bono Mack (R-CA), chairman of the Subcommittee on Commerce, Manufacturing, and Trade, along with Chairman Fred Upton (R-MI), Ranking Member Henry A. Waxman (D-CA), Communications and Technology Subcommittee Chairman Greg Walden (R-OR), and Ranking Member Anna Eshoo (D-CA), recently introduced a resolution, H.Con. Res. 127, to reject the proposed international takeover of the Internet and preserve the current “multi-stakeholder” model of governance.
  • FCC Oversight. The FCC’s five commissioners may return to Congress soon for another oversight hearing, this time before the House Energy and Commerce Subcommittee on Communications and Technology, Rep. Greg Walden told the press recently. The Commissioners recently testified before the Senate Commerce Committee shortly after new Commissioners Ajit Pai and Jessica Rosenworcel were confirmed. Walden did not provide details on timing.
  • FCC Reporting Act. The House passed by voice vote the Federal Communications Commission Consolidated Reporting Act of 2012, H.R.3310, as amended. Rep. Steve Scalise (R-LA) introduced the bill last year, which was approved by House Energy and Commerce Committee on March 6, 2012. The bill would amend the Communications Act to require the FCC to publish on its web site and submit to Congress a biennial report on the state of the communications marketplace. The measure also would consolidate eight separate congressionally mandated reports on the communications industry into a single comprehensive report.
  • Hearings. The House Energy and Commerce Subcommittee on Communications and Technology has scheduled a hearing on Wednesday, June 6, on “The Future of Audio.” Witnesses have not yet been announced.

    The House Homeland Security Subcommittee on Emergency Preparedness, Response and Communications will hold a hearing on Wednesday, June 6, on “The National Preparedness Report: Assessing the State of Preparedness.”

REGULATORY NEWS

  • Repacking Workshop. The Commission announced details for its June 25 repacking cost workshop. The focus of this workshop will be the design of the Commission’s program to reimburse the costs that some broadcasters are likely to incur as a result of channel reassignments in connection with the repacking authorized by the Middle Class Tax Relief and Job Creation Act of 2012, also known as the Spectrum Act. The Act established a $1.75 billion TV Broadcaster Relocation Fund from which the Commission is to reimburse those costs when the broadcast spectrum is repacked following the FCC’s first incentive auction. Panelists will discuss the categories of costs that they believe the FCC should consider when designing the program. They will also discuss possible models and lessons learned from similar programs that paid the relocation expenses of spectrum incumbents that were assigned new frequencies. The workshop will be held at the FCC’s headquarters in Washington. Panelists include: Jay Adrick, Vice President, Broadcast Technology, Harris Corporation; Brett Haan, Principal, Deloitte Consulting, LLP; Jane Mago, Executive Vice President and General Counsel, NAB; and Patricia Tikkala, Vice President, Spectrum, Sprint Nextel Corporation. FCC Media Bureau Chief will make opening remarks and provide an overview of the workshop.
  • Preventing Interference on Public Safety Frequencies. The FCC is seeking comment on a petition for rulemaking by Harris Corporation asking the FCC to take specific actions: “that, due to recent activity, are necessary to protect public safety first responders from interference that will jeopardize critical communications, and that will enhance realization of interoperability on the designated mutual aid channels in the VHF, UHF and 800 MHz spectrum.” Comments are due to the Commission by July 2.

Transportation

LEGISLATIVE ACTIVITY


  • SAFETEA-LU Reauthorization. Beginning Tuesday, June 5, both chambers will be in session for the first time since mid-May. During their alternating recess periods, staffs of surface transportation reauthorization conferees have continued negotiations in an attempt to produce a Conference Report before the June 30 expiration of the current extension. Senate EPW Chairman Barbara Boxer (D-CA), who is also Chair of the Conference Committee, and her staff have continued to express optimism over the prospects of producing a Conference Report before the impending deadline. Boxer specifically called for all substantive agreements to be reached by Thursday, June 7.

    With the Chairman and her Senate colleagues gone this past week, developments have fractured, to a degree, the optimistic tone of negotiations, with House Republican Conferees expressing criticism that they have not been able to make progress or provide sufficient input on key issues. Reports are that the House Conferees are particularly frustrated with respect to their objectives on the environmental streamlining provisions and the “transportation enhancements” issue.

    Whether House conferees believe they are being given the degree of input they desire during negotiations has posed additional challenges for the Conference Committee and may interfere with its ability to finalize a Conference Report before June 30 – potentially requiring another extension of current law, of an undetermined length of time.

    Despite the concerns of House conferees, the Senate may proceed with a report draft as early as next week in order to stay on track with Chairman Boxer’s desired timeline.



 

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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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