Outlook for This Week in the Nation's Capital

Fall Agenda. With the Kavanaugh confirmation completed, Senate Republicans want to quickly begin confirming additional circuit court nominees. The Senate should soon act on the Water Resources Development Act, which the House passed before it left for the election recess. One piece of legislation that is unlikely to move is the Homeland Security authorization bill. Senate Homeland Security and Governmental Affairs Chairman Ron Johnson said the whole bill is unlikely to move because of issues related to border security, but smaller pieces of the bill could still become law.

Election Update. Cook Political Report moved Senate races in Montana, Nebraska and New Jersey all in favor of Republicans. The election handicapper also shifted Ohio’s Senate race toward Democrats. The most recent Cook Political Report on the Senate 2018 races is available here.

Last Week in the Nation's Capital

CONGRESS

Budget

Republicans Likely in for a Messy December Funding Fight: House Republican leaders patted themselves on the back for appropriating a large portion of discretionary spending before the start of the fiscal year, but they’ve also set themselves up for messy spending fight come December over border wall funding that could complicate GOP leadership elections and potentially lead to a partial government shutdown. Speaker Paul Ryan promised President Donald Trump that if he let Congress punt the Homeland Security Appropriations bill — where border wall funding would be debated — until after the November midterm elections, then House Republicans would fight for the wall then. (Roll Call)

Health

Senate Easily Passes Opioids Legislation, Sending to President Trump: The Senate passed the final version of a sweeping opioids package and will send it to the White House just in time for lawmakers to campaign on the issue before the November midterm elections. The bill creates, expands and reauthorizes programs and policies across almost every federal agency, aiming to address different aspects of the opioid epidemic, including prevention, treatment and recovery. (The Washington Post)

House Democrats Plan Investigations over Trump Health Policies:  Democrats are quietly preparing to launch a slew of investigations into the Trump administration's health care moves if they retake the House in November. The wide-ranging inquiries, coordinated across multiple committees, would focus on the administration’s most controversial actions on health care, which include chipping away at the Affordable Care Act, urging the courts to gut the health law's protections for pre-existing conditions, and separating migrant families at the border. (Politico)

Tax Reform

The GOP Could Enact Another Tax Cut This Year:  When House Republicans passed their tax 2.0 last week and then recessed until the lame duck session that begins this November, the presumption was that this latest GOP descent into bigger budget deficits was nothing more than a pre-election ploy that would never go any further.  And with Majority Leader Mitch McConnell (R-KY) saying that the Senate had no plans to take up whatever the House passed before the election, that seemed like a safe bet.  But contrary to what’s currently being assumed, 2.0 could definitely become law this year during the lame duck session. (The Budget Guy)

Defense

Senate Eyes Passage of Bill to Check China in Asia-Pacific: The Senate is looking to pass in the coming weeks a bill that would guide U.S. strategy in the Asia-Pacific with an eye toward preventing China from becoming a hegemonic regional power. The Senate Foreign Relations committee last week unanimously advanced a bipartisan bill from Sens. Cory Gardner, R-Colo., and Edward J. Markey, D-Mass., who lead the Asia-Pacific Subcommittee. The measure would authorize more than $1.5 billion in new funds over the next five years for the State Department, U.S. Agency for International Development and the Pentagon to maintain regional political support for the rules-based international order that the United States has championed over the last 70 years. (Roll Call)

Five Changes Democrats will Seek at the Pentagon if they Win Power: Democrats are pledging to rein in or reverse President Trump’s defense agenda if they take back Congress in November. The changes democrats are considering include cutting off military support in Yemen, increasing oversight of special operations, reversing President Trump’s transgender troops ban, blocking the development of a low-yield nuclear weapon, and trimming the defense budget. (The Hill)

Banking & Housing

Warren Wades into CRA Overhaul With Revamp Plan of Her Own:  Sen. Elizabeth Warren, (D-MA), on Tuesday threw a new twist into efforts to reform the Community Reinvestment Act.  Just as the federal bank regulators try to modernize their CRA policy through reforms authorized under the current law, Warren released a bill that would apply CRA requirements to a broader array of institutions — including credit unions — and make penalties tougher for any violations. "Obligations under the Community Reinvestment Act ... to provide credit to lower-income and middle-class communities are too weak," according to a summary of the bill, which includes other housing and economic proposals. "The bill extends the law to cover more financial institutions, promotes investment in activities that help poor and middle-class communities, and strengthens sanctions against institutions that fail to follow the rules." (American Banker)

Homeland Security

Senate Passes Bill to Create Official DHS Cyber Agency: The Senate unanimously passed legislation Oct. 3 that would redesignate the Department of Homeland Security’s National Protection and Programs Directorate as the Cybersecurity and Infrastructure Security Agency. Rather than cybersecurity being merely an office within NPPD, the new agency would be centrally responsible for leading cybersecurity and critical infrastructure security programs, operations and associated policy, while coordinating with other federal and non-federal entities on cyber issues. (Fifth Domain)

Agriculture

Farm Bill Tensions Simmer: House and Senate agriculture leaders emerged from an hour long meeting in the basement of the Capitol on Thursday trying to send a signal of unity: The four lawmakers posed for a photo with locked arms. Behind the scenes, however, talks have been slow and tense. The expectation had long been that the House’s insistence on implementing new work requirements for the Supplemental Nutrition Assistance Program would sink the whole bill, at least politically. But deep differences between the two chambers on farm subsidies and other spending priorities have stymied progress as lawmakers have met over the past several weeks — so much so that SNAP has barely been a focus. (Politico)

Transportation

Sen. Peters Calls for Driverless Car Bill Done by End of Year: Sens. John Thune (R-S.D.) and Gary Peters (D-Mich.) want to get new self-driving car legislation agreed to by early next week, quickly check that language among members, and hold a vote on the Senate floor before the chamber leaves at the end of October. (Bloomberg)

Senate Sends FAA Authorization to Trump’s Desk: The Senate easily cleared a five-year authorization of the Federal Aviation Administration (FAA), sending the measure to President Trump’s desk. The bill provides funding and puts in place new safety regulations, including changes to the rest and duty rules for pilots and flight attendants. It also creates minimum dimensions for legroom on commercial flights and bans airlines from involuntarily removing passengers after boarding. (The Hill)

Trade

Three-Way NAFTA Trade Deal Headed to Congress: U.S. Trade Representative Robert Lighthizer announced a three-country ‘modernized’ NAFTA agreement, clearing away one potential objection from key lawmakers who appeared ready to challenge a trade pact without Canada. Lighthizer and Canadian Foreign Affairs Minister Chrystia Freeland announced the agreement last week after frenzied negotiations to resolve outstanding issues. If the preliminary accord is approved by Congress it will be renamed the United States-Mexico-Canada Agreement (USMCA). President  Trump and his Mexican and Canadian counterparts are expected to sign the updated agreement by Dec. 1. (Roll Call)

EXECUTIVE BRANCH

HHS

HHS Grants to Fund Improvements to Disaster Response: The Department of Health and Human Services is awarding grants to demonstrate the potential effectiveness and viability of building regional disaster health response systems. Regional Disaster Health Response Systems are envisioned to work with local healthcare coalitions and trauma centers to create a tiered system of disaster care that integrates local medical response capabilities with emergency medical services, burn centers, pediatric hospitals, laboratories and outpatient services. (Health Data Management)

CMS to Boost Oversight of Accreditation Organizations through Posting of Performance Data: The Centers for Medicare and Medicaid Services has announced new oversight efforts it said would increase transparency around the performance of Medicare Accreditation Organizations (AOs). This is to be done through the public posting of AO performance data, a redesigned process for AO validation surveys and the continued release of the Annual Report to Congress. (Healthcare Finance)

NIH Director’s Awards for High-Risk, High-Reward Research Program Announced: The National Institutes of Health has awarded 89 grants that will provide funding to extraordinarily creative scientists proposing highly innovative research to address major challenges in biomedical science. The grants are part of the NIH High-Risk, High-Reward Research Program, which supports ideas with potential for great impact in biomedical research from across the broad scope of the NIH. (NIH News Releases)

Defense

White House Warns of ‘Domestic Extinction’ of Suppliers in Industrial Base Report - and DoD is Ready to Help with Cash: A combination of Chinese influence and budgetary uncertainty means America’s defense industrial base is decaying at the lower levels, with some vital suppliers facing “domestic extinction,” a new study from the Trump administration is warning — and direct investment from the administration appears to be the solution. The study, the result of an executive order issued by president Donald Trump last July, also warns that if the situation is not remedied, the Pentagon faces “limited capabilities, insecurity of supply, lack of R&D, program delays, and an inability to surge in times of crisis.” (Defense News)

Pentagon Breakdown Led to Industry Payments Rule Being Published, Shanahan Says: Deputy Secretary of Defense Patrick Shanahan killed a proposed change to the way the Pentagon handles industry cash flow, following complaints from industry and members of Congress. Speaking to reporters, Shanahan, the number two at the Pentagon, said he had not seen the proposed rule until he got a letter from the Hill raising objections, and indicated there was some sort of process breakdown in the shop of Ellen Lord, the undersecretary of defense for acquisition and sustainment. (Defense News)

Labor & Workforce

Acosta: More Deregulation on the Way as DOL Eyes Overtime Rule:  Deregulation remains a priority for the U.S. Department of Labor (DOL), Secretary Alexander Acosta told attendees at a U.S. Chamber of Commerce event last Wednesday — and overtime is on the docket.  "The president's regulatory agenda should be issued in the coming weeks," Acosta said. "We are just getting started — there's a lot more to do." Acosta said the department had just completed "a couple of hearings across the nation" on overtime regulations under the Fair Labor Standards Act, with one remaining. DOL previously announced a series of listening sessions in late August, seeking public input on a rule that has been a compliance pain point for employers. Topics listed for those events included an appropriate salary threshold for overtime eligibility, DOL's methodology for determining the salary threshold and the benefits and costs of an increased threshold for both employees and employers.  (HR Drive)

Labor Department to Clarify Franchise Rule, Acosta Says:  DOL is “giving serious consideration to writing a rule” to clarify when a franchise is liable for acts by its franchisees, Secretary Alexander Acosta told a hospitality industry group Sept. 12.  “I want to let you know that we’re in the process of considering how to provide a more clear and more permanent approach to joint employer,” Acosta said to applause. “It’s so important to know the rules of the road” when it comes to joint employer liability, he said.  The DOL has been working on an initiative to restrict situations in which one business can be liable for wage and hour violations of a related company’s employees. (BNA)

DOE

Research Aims to Advance Development of Software for Exascale Computing: The U.S. Department of Energy  announced $21.6 million in funding for 10 research awards to develop advanced software for the design of new chemicals and chemical processes for energy production and a range of other potential applications. The current projects build on scientists’ growing capabilities to model chemical processes computationally, a product of advances both in chemical theory and in the power of today’s computers.  Increasingly, such computational design based on computer modeling is beginning to supplant the traditional trial-and-error approach that has characterized much if not most discovery in the field of chemistry in years past. (DoE Press Releases)

Space, NASA & NOAA

NASA Confirms New Delays in Commercial Crew Test Flight Schedule:  A day after a SpaceX executive expressed doubts that his company would be able to carry out its first commercial crew test flight before the end of the year, NASA issued an updated schedule that delayed that mission to 2019.  In an Oct. 4 statement, NASA said the revised date for the uncrewed test flight of SpaceX’s Crew Dragon spacecraft was now January 2019. The vehicle could be ready for launch in December, the agency added, but scheduled it for January “to accommodate docking opportunities at the orbiting laboratory.”  The announcement came a day after Hans Koenigsmann, vice president of build and flight reliability for SpaceX, said in a speech at the 69th International Astronautical Congress here that he had doubts that the mission, previously scheduled for November, would launch before the end of the year. (Space News)

White House Push for Space Competitiveness Becomes a Factor in Ligado Debate:  The years-long fight over a proposal to recast satellite spectrum near the GPS frequencies for a terrestrial network is now being raised as an issue that could impact efforts to support competitiveness in satellite communications and other sectors of the growing commercial space industry.  Allowing Virginia-based Ligado Networks (formerly LightSquared) to develop a terrestrial service using frequencies zoned for and relied upon by satellite operators could undermine the long-term prospects of the commercial space industry by increasing spectrum uncertainty, half a dozen organizations asserted.  Both the White House and Congress want to ensure that for-profit satellite constellations and other private sector space operations are in the best possible competitive position. To help do that they are taking similar actions, including ordering studies, to ensure that the way the federal government handles spectrum does not hamper the global market prospects of space companies and those who rely on their services. (Inside GNSS)

Extremely Distant Solar System Object Discovered:  Carnegie's Scott Sheppard and his colleagues -- Northern Arizona University's Chad Trujillo, and the University of Hawaii's David Tholen -- are once again redefining our solar system's edge.  They discovered a new extremely distant object far beyond Pluto with an orbit that supports the presence of an even-farther-out, super-Earth or larger Planet X.  The newly found object, called 2015 TG387, will be announced Tuesday by the International Astronomical Union's Minor Planet Center.  A paper with the full details of the discovery has also been submitted to The Astronomical Journal. (Space Ref)

IRS

Meals Continue to be Deductible Under New IRS Guidance: The IRS on Wednesday issued guidance clarifying that taxpayers may generally continue to deduct 50% of the food and beverage expenses associated with operating their trade or business, despite changes to the meal and entertainment expense deduction under Sec. 274 made by the tax law known as the Tax Cuts and Jobs Act, P.L. 115-97 (Notice 2018-76). According to the IRS, the amendments specifically deny deductions for expenses for entertainment, amusement, or recreation, but do not address the deductibility of expenses for business meals. This omission has created a lot of confusion in the business community, which the IRS is addressing in this interim guidance. Taxpayers can rely on the guidance in the notice until the IRS issues proposed regulations. (Journal of Accountancy)

Interior

Interior Dept. Implements New Science Policy: The Interior Department has implemented a new policy that it says is meant to boost transparency and integrity of the science that its agencies use to make decisions. The policy, outlined in an order issued last week by Deputy Secretary David Bernhardt, mandates that officials only use scientific studies or findings whose underlying data are publicly available and reproducible, with few exceptions. Like a similar policy that the Environmental Protection Agency has proposed, critics say the new “Promoting Open Science” policy is meant to restrict Interior’s ability to write regulations or make other decisions, by putting unnecessary restrictions on officials’ ability to use sound science. (The Hill)

DOT

DOT Issues New Guidance for Automated Vehicles: The Department of Transportation has released new guidance for automated vehicles that identifies and supports the development of voluntary technical standards, defines government's roles, describes a risk-management framework for safety and provides a process for working with the department on this technology. This non-binding guidance, “Preparing for the Future of Transportation: Automated Vehicles 3.0,” was announced by the department on Oct. 4. (GCN)

DHS

Nielsen Outlines How U.S. Reassessing Cyber Risk: U.S. leaders have changed how they view threats in cyberspace and will now increase their focus on the capabilities of potential bad actors, Secretary of Homeland Security Kirstjen Nielsen said Oct. 3 at the Atlantic Council. “We no longer assume that because a nation state or a criminal organization has the capability they will not use it,” Nielsen said. “We are changing to a posture of assuming that if the capability exists, it could in fact be used against us, and we have to prepare accordingly.” (Fifth Domain)

FEC

FEC Releases New Guidance for Disclosure of Certain Donors to Political Nonprofits: Political nonprofit groups must publicly disclose the names of donors who have given more than $200 toward advertisements or other initiatives that call for the election or defeat of a candidate, according to new guidance from the Federal Election Commission. The guidance was issued in response to a court ruling that expanded the disclosure requirements. That meant the FEC needed to come up with new rules to determine which contributors’ information must be disclosed to the public. The rulemaking process will take several months, which complicates matters for groups that are now in the heat of political advertising season with just weeks left until the midterm elections. The guidance was issued in the meantime. (The Washington  Post)