Capital Thinking Update - February 21, 2011

    View Authors 21 February 2011

    General Legislative

    Following House adjournment later today or tomorrow, both Chambers will be in recess, reconvening the week of February 28.


    Budget, Appropriations

    LEGISLATIVE ACTIVITYto

    • House Close to Passage of FY2011 Continuing Resolution. On Tuesday, the House began debate on its FY2011 Continuing Resolution (CR) extension (the current CR is set to expire March 4). After reaching a deal to reduce the number of amendments slated for debate from over 500 to just 129, it is possible a vote will occur later today or early tomorrow, at which point the House will adjourn for the President’s Day week-long recess. The Senate has already adjourned and is scheduled to return on February 28, leaving only a few days for the House and Senate to come up with a compromise on FY2011 spending to avoid a possible government shutdown.

    OTHER BUDGET, APPROPRIATIONS NEWS

    • President’s FY2012 Budget Release. On February 14, President Obama delivered a $3.73 trillion FY2012 budget proposal to Congress, aiming to reduce the federal deficit by $1.1 trillion over the next 10 years. The budget proposes a five-year freeze on discretionary funding which will save an additional $400 billion over the next 10 years. Billed as “belt-tightening,” the budget proposes more than 200 terminations and reductions to programs across the entire government that result in over $30 billion in savings. Building on his State of the Union address, the President also proposes targeted, increased investment in the areas of education, technology, infrastructure and job training.

     


    Education

    LEGISLATIVE ACTIVITY

    • K-12. On February 16, Chairman John Kline (R-MN) of the House Education and Workforce Committee hosted a briefing session on the reauthorization of the Elementary and Secondary Education Act (ESEA) for new committee members. Meanwhile, Senate Democratic leaders restated their intention this week to complete reauthorization of the ESEA this year. President Obama hosted Education Secretary Arne Duncan and members of Congress at the White House February 17 to build bipartisan momentum for the reauthorization bill, stressing that completion of a bill before the fall is a top priority. Participating House members left early due to the floor voting schedule, and Chairman Kline did not participate at all.
    • Higher Education. On February 17, the House Science and Technology Committee held a hearing on the federal research and development priorities in the President’s FY2012 budget. In his opening statement, Chairman Ralph Hall (R-TX) expressed discontent with the research priorities laid out by the President and warned against blanket increases in federal spending. Also on February 17, Chairman Kline and Representative Alcee L. Hastings (D-FL) offered an amendment to the Fiscal Year 2011 Continuing Resolution on Gainful Employment that would block funding of the Administration’s proposed regulation. The amendment is anticipated to pass the House, but will face more difficulty in the Senate and will likely be vetoed by the President. The Department of Education is expected to finalize the proposed rule soon.

    REGULATORY ACTIVITY

    • FY2012 Budget. While visiting a middle school in Baltimore, MD on February 14, the President unveiled his FY2012 budget, which provides $77.4 billion for the Department of Education, with K-12 receiving one of the only significant increases in the entire FY2012 request. The request includes an increase of nearly $2 billion, or a 4.3 percent increase over FY2010 enacted levels. The budget also maintains the maximum award for the Pell Grant program and increases other funding sources to help families pay for college. Moreover, additional dollars for energy research, information technology and STEM education were included.
    • Higher Education. A report released by the Department of Education February on 16 shows that an increasing number of for-profit colleges are becoming more heavily reliant on federal student aid, with many receiving at or near the 90 percent cap.

     


    Energy

    LEGISLATIVE ACTIVITY

    • Transmission. House Subcommittee on Energy and Power Chairman Ed Whitfield (R-KY) believes improvements are needed in the Federal Energy Regulatory Commission’s (FERC) ability to site electric transmission lines. Following court decisions that limited the federal government’s ability to provide “backstop siting authority” authorized in the 2005 energy bill, Whitfield called for clarifying FERC’s authority to intervene when states do not act or deny electric transmission siting approvals. He also said that Congress should leave the controversial issue of transmission cost allocation to regulators and stakeholders – not Congress – although his Committee is expected to hold hearings later this year. (By contrast, Senate Energy and Natural Resources Committee Chairman Jeff Bingaman (D-NM) had introduced legislation in the 111th Congress to address these very issues.) Energy Secretary Steven Chu has also said that FERC may need additional statutory authority to address cost allocation issues for gas lines.
    • Interior nominee hold. Louisiana Senators David Vitter (R) and Mary Landrieu (D) have placed a procedural “hold” on President Obama’s nominee to head the U.S. Fish and Wildlife Service, Dan Ashe. They are blocking his appointment until Interior begins re-issuing deepwater permits in the Gulf of Mexico.
    • Budget hearings. Interior Secretary Ken Salazar will testify before the Senate Energy and Natural Resources Committee on March 2 and the House Natural Resources Committee on March 3, regarding the Administration’s proposed FY2012 budget.

    REGULATORY ACTIVITY

    • Oil Shale. Interior will review, and update where necessary after public input, Bush Administration-era oil shale rules and plans to account for Western state water demands and ensure sufficient taxpayer return. Stakeholders will be asked to comment on whether the commercial oil shale production royalty rate should be set after more is known about emerging technologies, whether future lease applications should include resource protection plans, and whether certain existing regulations need clarification. The Bureau of Land Management will also solicit public input on which public lands are most suitable for oil shale and tar sands development. House Natural Resources Committee Chairman Doc Hastings (R-WA) immediately criticized the move as hindering oil production at time of rising consumer gas prices.
    • Offshore Drilling. U.S. District Court Judge Martin Feldman has ordered the Obama Administration to decide whether to grant a set of five deep-water drilling permits within 30 days. In his ruling, Feldman said the Administration's lengthy delays on permitting applications are “unreasonable, unacceptable and unjustified.”

    OTHER ENERGY NEWS

    • President’s FY2012 Budget Proposal. The Administration has requested enough funding for the Interior Department to triple the number of offshore inspectors (to 150) and offset additional regulatory costs, proposing a new fee on industry operators to pay for the processing of permits and rig inspections. The President also proposed to increase the Department of Energy’s budget by 12 percent to support clean energy, energy efficiency and additional research and development initiatives. House Natural Resources Committee Chairman Doc Hastings criticized the budget proposal stating that, “President Obama doubles down on his Administration’s anti-energy agenda by imposing over $60 billion in tax and fee increases over ten years on American energy production. With gasoline prices steadily on the rise, this Administration should be looking to promote domestic production, not punish American-made energy that creates American jobs.”

     


    Environment

    LEGISLATIVE ACTIVITY

    • Greenhouse Gases. A major legislative fight is brewing over greenhouse gases and the Environmental Protection Agency’s (EPA) regulatory authority in Congress. H.R. 1, the Full-Year Continuing Appropriations Act, contains language that would restrict the EPA from regulating greenhouse gas emissions for the remainder of the fiscal year. The Administration and many senators oppose the measure.

    REGULATORY ACTIVITY

    • Indian Country Emissions. EPA intends to issue a final rule before March addressing emissions. This final rule intends to fill existing regulatory gaps in Indian country by promulgating two parts of the New Source Review (NSR) program in Indian country: the nonattainment and minor NSR programs. The major NSR rule would require sources to install emissions controls that meet the requirements of Lowest Achievable Emission Rate control technology, obtain emissions offsets, certify compliance and complete a net air quality benefit analysis. The minor NSR rule includes requirements for pollutant emissions limits for minor sources. Congress established the NSR permitting program as part of the 1977 Clean Air Act Amendments. NSR is a preconstruction permitting program that serves two purposes. The program ensures that air quality is not significantly degraded from the addition of new and modified factories, industrial boilers and power plants. In areas with unhealthy air, NSR assures that new emissions do not slow progress toward cleaner air. Also, in areas with clean air, especially pristine areas such as national parks, NSR assures that new emissions do not significantly worsen air quality.

     


    International, Defense, Homeland Security

    • Trade Developments. The effort to pass the Korea, Colombia and Panama Free Trade Agreements (FTAs) took a step forward this week, while becoming more complicated at the same time. On the one hand, U.S. Trade Representative Kirk, Treasury Secretary Geithner and other top members of the Obama Administration’s economic team signaled their intention to move all three FTAs through Congress this year, despite having previously only committed to the Korea agreement (KORUS). On the other hand, Senate and House Republicans are growing increasingly restless at what they see as the White House’s lack of a plan to accomplish that goal with respect to the Panama and Colombia agreements. Senate Finance Committee Republicans and Committee Chairman Max Baucus (D-MT) want Ambassador Kirk to lay out the details of that plan in a committee hearing on trade policy set for March 9.  However, since a USTR working delegation has engaged in only preliminary discussions in Colombia this week, and since the Panamanian legislature has yet to act on tax and labor provisions agreed to by U.S. and Panamanian negotiators, it is unlikely Ambassador Kirk will be able to satisfy their demands at the hearing. Further complicating the picture is the Congressional deadlock over Trade Adjustment Assistance (TAA). Pro-trade Democrats view full funding for TAA as a necessary precursor or corollary to the FTAs, but most conservative Republicans consider TAA to be wasteful spending, and many are willing to tie progress on the FTAs to further cuts in the program. Finally, the European Parliament passed the EU-Korea FTA this week, providing the White House and Congress with an additional incentive to enact KORUS before the EU-Korea agreement goes into effect on July 1.
    • Budget Battles. Secretary of State Clinton and Secretary of Defense Gates criticized House Republicans’ spending cuts for U.S. foreign operations spending in H.R. 1, the proposed Continuing Resolution to fund the government for the remainder of FY2011. Both Secretaries particularly pointed to proposed cuts to foreign assistance and diplomatic budgets as jeopardizing the U.S. war effort in Iraq and Afghanistan, as well as needed U.S. humanitarian efforts elsewhere in the world. Still, other cuts to the foreign operations budget moved forward, including successful House floor amendments to eliminate funding for the U.S. Institute of Peace and the East-West Center. Both proposed cuts met with a tepid reaction from key Senators, including Senate Foreign Operations Appropriations Subcommittee Chair Patrick Leahy (D-VT) and Senate Foreign Relations Committee Ranking Member Richard Lugar (R-IN). Meanwhile, Senator Leahy and Senate Foreign Operations Appropriations Subcommittee Ranking Member Lindsey Graham (R-SC) professed general support for the Obama Administration’s proposed FY2012 foreign assistance budget. On Monday, the Administration proposed cuts in certain areas, such as assistance for Southeastern Europe, but maintained targeted funding for the Middle East and elsewhere. Senator Graham voiced particular support for maintaining foreign assistance funding for democratization efforts in the Middle East, given the ongoing unrest across the region. On the defense side, in a House Armed Services Committee (HASC) hearing Thursday, Secretary Gates defended the Administration’s proposed net $78 billion reduction to the Department of Defense budget over the next five fiscal years. HASC Chairman Buck McKeon (R-CA) and other Committee Republicans continue to criticize the proposal. However, in an amendment to H.R. 1 on Wednesday, Congressman Tom Rooney (R-FL) and other budget-cutting Republicans teamed with a majority of Democrats to strip funding for the General Electric/Rolls Royce alternative engine for the F-35 Joint Strike Fighter. The Senate still must consider the issue.

     


    Financial Services

    LEGISLATIVE ACTIVITY

    • House Moves to Restrict SEC Budget. The House voted on a series of budget measures late Thursday evening, including the Republican-led passage of a measure that would result in the Securities and Exchange Commission (SEC) losing $131 million to carry out its newly-assigned responsibilities under the Dodd-Frank Wall Street Reform and Consumer Protection Act. This measure is in direct conflict with the President’s proposed budget, which sought $1.4 billion for the SEC in FY2012, a 27 percent increase from current spending levels.
    • Legislation Introduced to Move Consumer Financial Protection Bureau to Treasury. Representative Randy Neugebauer (R-TX) introduced the Consumer Financial Protection Oversight Act of 2011 (H.R. 557). The legislation would shift the Consumer Financial Protection Bureau from the Federal Reserve Board to the Treasury Department and, as a result, increase Congressional oversight of the Bureau’s actions. The proposal is now pending before the House Financial Services Committee.

    REGULATORY ACTIVITY

    • CFTC to Hold Dodd-Frank Rulemaking Open Meeting. The Commodity Futures Trading Commission will hold a public meeting on Thursday, February 24 to consider the issuance of proposed rulemakings related to (i) registration of intermediaries; (ii) antidisruptive trading practices authority; (iii) amendments to commodity pool operator and commodity trading advisor regulations; (iv) swap data recordkeeping and reporting requirements for pre-enactment and transition swaps; and (v) requirements for processing, clearing and transfer of customer positions.

    OTHER FINANCIAL SERVICES NEWS

    • SIGTARP Resigns. Neil Barofsky, the Special Inspector General for the Troubled Asset Relief Program (SIGTARP), announced his intention to resign on March 30. The SIGTARP’s responsibility, as set forth in the Emergency Economic Stabilization Act of 2008, is to conduct, supervise and coordinate audits and investigations of the purchase, management and sale of assets under the Troubled Asset Relief Program. His post will be filled by Christy Romero, the current deputy.

     


    Health Care

    LEGISLATIVE ACTIVITY

    • Health Reform Repeal Activities. On Thursday, the House Ways and Means Committee approved two pieces of legislation to repeal the 1099 reporting requirement: H.R. 4, the Small Business Paperwork Mandate Elimination Act Of 2011 to repeal the 1099 reporting requirement and H.R. 705, the Comprehensive 1099 Taxpayer Protection and Repayment of Exchange Subsidy Overpayments Act of 2011 that would repeal the new Form 1099 information reporting requirements that were imposed on small businesses by the Affordable Care Act, repeal an additional Form 1099 information reporting requirement on owners of rental real estate, and reduce certain overpayments of exchange subsidies. The Joint Committee on Taxation estimates that the repeal will cost $21.9 billion over 10 years. Chairman Dave Camp's (R-MI) legislation to offset the cost of repeal would allow the federal government to recapture overpayments to consumers who purchase health coverage through state-based health insurance exchanges. The House has indicated the 1099 repeal is a priority and is expected to take up action upon their return.

      The House Committee on Energy and Commerce also approved H.R. 358 that would close potential loopholes presented by the Affordable Care Act in using federal funds for abortion coverage. The House Judiciary Committee also approved medical malpractice legislation, a legislative priority that was not included in health care reform.
    • Deficit Reduction Package. Details are beginning to emerge regarding a Senate package aimed at reducing the deficit that would include cuts to Medicare and Medicaid. The legislative package is being developed by a bipartisan group of Senators, including Budget Chairman Kent Conrad (D-ND), Majority Whip Dick Durbin (D-IL), Senator Tom Coburn (R-OK), Senator Mike Capo (R-ID), Senator Mark Warner (D-VA) and Senator Saxby Chambliss (R-GA). Stakeholders have been anticipating inclusion of unpopular cuts and potential elimination of funding laid out in President Obama's deficit reduction report released late last year. Much like the Independent Payment Advisory Board established by the Affordable Care Act, the plan would arrange a set of budget cuts if Congress fails to meet designated deficit reduction goals including spending targets for Medicare and Medicaid.

    REGULATORY ACTIVITY

    • Accountable Care Organizations. The Centers for Medicare and Medicaid Services has not yet released its proposed regulation regarding accountable care organizations as laid out in the Affordable Care Act.  Stakeholders are expected to actively participate in the open comment period to seek clarification and guidance regarding payment and network design, patient designation and provider networks.

    OTHER HEALTH NEWS

    • Institutes of Medicine. The IOM Committee on Patient Safety and Health IT has scheduled a meeting on February 24 and 25. The Committee will review the available evidence and the experience from the field on how the use of HIT affects the safety of patient care and will make recommendations on how public and private actors can maximize the safety of HIT-assisted health care services. The IOM's final report will be both comprehensive and specific in terms of recommended options and opportunities for public and private interventions that may improve the safety of care that incorporates the use of EHRs and other forms of HIT.

      The IOM will also host a roundtable on “Reducing Disparities in Life Expectancy.” This workshop will explore and discuss factors that influence life expectancy and the role of prevention in influencing these factors, focusing specifically on racial and ethnic minorities and low income populations. The workshop will also consider (a) the demographics of life expectancy in the United States, and the factors that affect life expectancy; (b) how underlying inequities affect life expectancy in the United States; (c) how we can improve life expectancy for all Americans with a "Health in all Policies" lens; and (d) the National Prevention Strategy and other federal efforts to address prevention.

     


    Tax

    LEGISLATIVE ACTIVITY

    • Enhanced 1099 Reporting Repeal. On February 17, the House Ways and Means Committee approved two bills to repeal the enhanced Form 1099 reporting regime enacted as part of the 2010 health care reform law. One of the bills would also repeal a similar law that requires rental property owners to submit a Form 1099 for rental property expenses, which was enacted as part of the 2010 small business jobs bill. The Small Business Paperwork Mandate Elimination Act of 2011 (H.R. 4), introduced by Representative Daniel E. Lungren (R-CA), would repeal the much maligned provision requiring a business to file a Form 1099 for payments made to any single vendor for goods and services totaling more than $600 annually. H.R. 4 is not offset and would add $21.9 billion to the deficit over 10 years. The Committee also approved by a 21-15 vote a bill introduced by Chairman Dave Camp (R-MI) (H.R. 705) that eliminates the same requirement as Representative Lundgren's bill, as well as a similar requirement for rental property owners. Chairman Camp's bill would be paid for by changing the income thresholds for the repayment of advance premium assistance associated with the health insurance exchanges enacted in the health care reform law, raising $24.9 billion over 10 years. The Joint Committee on Taxation (JCT) has estimated that H.R. 705 would bring in $166 million over 10 years. Representative Joseph Crowley (D-NY) attempted to strike the offset from H.R. 705 but his amendment was voted down. An aide to the Committee said the process for bringing a bill to the House floor had not yet been worked out.

      In the Senate, the recently passed FAA reauthorization bill (S. 223), as further detailed below, renewing the authority of the Federal Aviation Administration (FAA), includes a provision to repeal the Form 1099 requirements enacted under the health care reform law, but does not alter the requirements for rental property owners.
    • Senate Passes FAA Bill. On February 17, the Senate passed by a 87-8 vote S. 223, the FAA Air Transportation Modernization and Safety Improvement Act, which reauthorizes the FAA. The bill includes an amendment by Finance Committee Chair Max Baucus (D-MT) that extends the taxes supporting the Airport and Airway Trust Fund through September 30, 2013 and raises the excise tax on aviation-grade kerosene used for non-commercial aircraft from 21.9 cents to 35.9 cents per gallon. The bill includes the amendment offered by Senator Debbie Stabenow (D-MI) to repeal the enhanced Form 1099 reporting requirements enacted by the health care reform law, though there is no provision to repeal the similar requirement for rental property owners enacted as part of the small business jobs act last year. 

    OTHER TAX NEWS

    • Tax Reform. Speculation continues on whether and to what extent Congress and the Administration will pursue tax reform. There appears to be support among lawmakers for both corporate and international tax reform, though the prospect for reforming the corporate and international tax regimes without attempting comprehensive reform of both the corporate and individual tax systems is unclear.

      Further, at a Tax Council Policy Institute meeting this past week, business leaders talked about the need to change the “tone” of the tax reform debate to present a more realistic picture of U.S. multinationals. An executive from Honeywell International said corporations have been portrayed as moving large numbers of jobs out of the U.S. The Honeywell executive said that, on the contrary, Honeywell has been strengthening its U.S. operations. However, he and other panelists urged that a primary factor in corporate tax reform should be the focus on creating U.S. jobs. In this regard, an executive from Proctor & Gamble stated that corporations need to advocate for tax reform, rather than sit on the sidelines, in order to steer the debate to a successful reform effort. While panelists thought a one-time repatriation holiday was unwise because the repatriation holiday provided in 2004 did not create jobs, the panelists stated that transition to a territorial tax system (where offshore income of U.S. companies would not be subject to U.S. tax) would be beneficial to the economy and aid in job creation in the U.S. However, JCT Chief Thomas Barthold, speaking at the same meeting, stated that a territorial system could in fact encourage U.S. companies to move operations to low-tax jurisdictions. 

     


    TechComm

    LEGISLATIVE ACTIVITY

    • Net Neutrality. Following hearings before the House Judiciary and Energy and Commerce Committees on February 15 and 16, respectively, Republicans began in earnest efforts to undo the FCC’s December net neutrality order. On February 16, identical resolutions of disapproval of the FCC order were introduced in the House and Senate. The resolutions are sponsored by Energy and Commerce Chairman Fred Upton (R-MI) and Communications and Technology Subcommittee Chairman Greg Walden (R-OR) in the House and Senate Commerce Committee Ranking Member Kay Bailey Hutchison (R-TX), Senate Majority Leader Mitch McConnell (R-KY) and Senator John Ensign (R-NV) in the Senate.  At the same time, as debate on a bill to fund the government through the end of FY2011 began, Subcommittee Chairman Walden introduced an amendment to prohibit the FCC from using funds to implement the order; it was adopted on February 17 by a 244-181 vote. At the House Energy and Commerce hearing, many Republicans objected to the FCC’s action. Chairman Upton spoke about a trend of unelected officials moving their own agenda without congressional authority and said that net neutrality is a "case in point." Subcommittee Chairman Walden questioned the Commission’s use of Section 706(b) of the Telecommunications Act of 1996 as the statutory authority for regulating broadband providers. Chairman Walden and Representatives Cathy McMorris Rogers (R-WA) and Steve Scalise (R-LA) asked FCC Chairman Julius Genachowski why the FCC order did not include Google, Skype or content providers. Chairman Genachowski replied that the historical focus of net neutrality has been on Internet service providers. Many Committee Democrats supported the FCC order. Subcommittee Ranking Member Anna Eshoo (D-CA) said that because of the FCC’s net neutrality order, consumers can choose what content to access. Meanwhile, she noted incidents where the FCC was forced to act, including Cingular blocking PayPal, and Comcast slowing BitTorrent. Representative Ed Markey (D-MA) said that government intervention was sometimes necessary to spur innovation. Representative Frank Pallone (D-NJ) voiced concern that independent agencies may sometimes exceed their statutory authority.
    • Public Safety Spectrum. On February 14, President Obama unveiled his proposed FY2012 budget, which includes a proposal to spend $7 billion to help build an interoperable public safety broadband network. The plan would allocate the D block in the 700 MHz spectrum band for public safety use – a goal shared by President Obama and the 9/11 Commission, although FCC Chairman Genachowski maintains that that spectrum should be auctioned for commercial use. The D block is currently valued at $3.2 billion, making the total public safety network commitment more than $10 billion. The National Telecommunications Information Administration would administer the initiative.  Meanwhile, at a February 16 Senate Commerce Committee hearing, Committee Chairman Jay Rockefeller (D-WV) stated that his bill to reallocate D block spectrum to public safety officials instead of auctioning it off is his “highest legislative priority for this Committee,” and that the Committee “will work to get it done before we reach the 10th anniversary” of the 9/11 terrorist attacks. Among those who testified was House Homeland Security Chairman Peter King (R-NY), who recently introduced legislation, H.R. 607, which would reallocate the D block to public safety and provide funding for the network. Chairman King said current first-responder communications capabilities are “simply unacceptable,” and he expressed a desire to work with his Senate colleagues to reach consensus on the nationwide public safety broadband network. In addition, Senator Kay Bailey Hutchison (R-TX) said she will be introducing comprehensive spectrum legislation that would reallocate the D block to public safety, but would fund the network through a combination of grants financed by auction revenue and zero-interest loans. Also testifying was New York City Police Commissioner Raymond Kelly, who said his department still relies primarily on two-way voice radios, which impair the ability to properly respond to small- and large-scale crises. With the D block spectrum, the department could utilize advanced technology to identify suspects, coordinate efforts to combat crime and prepare for large-scale disasters.
    • Intellectual Property/Patent Reform. Senate Majority Leader Harry Reid (D-NV) indicated that patent reform legislation reported by the Senate Judiciary Committee on February 3 (S. 23) is next in line for Senate consideration following final action on the FY2011 Continuing Resolution.  
    • Spectrum Inventory. A bipartisan group of Congressmen last week urged FCC Chairman Julius Genachowski to conduct a comprehensive spectrum inventory prior to spectrum auctions. “As we move forward, it would be beneficial to have a comprehensive inventory of the nation’s airwaves – both governmental and commercial – so, as legislators, we have a complete picture of who is licensed to use what airwaves and how effectively they are being used,” the members wrote to Chairman Genachowski, noting that the House last year overwhelmingly passed a bill that would have provided a framework for the FCC to initiate an inventory. Signing the letter that promotes “efficient use of the public airwaves” were House Communications and Technology Subcommittee Chairman Greg Walden (R-OR), and Representatives Joe Barton (R-TX), Robert Latta (R-OH), John Barrow (D-GA), Jim Matheson (D-UT), Brett Guthrie (R-KY), Charlie Bass (R-NH), Gene Green (D-TX), Marsha Blackburn (R-TN), Brian Bilbray (R-CA) and Cathy McMorris Rodgers (R-WA). The letter also noted that to the extent the FCC conducts voluntary incentive auctions, such an “arrangement will need to address several questions. If a licensee opts to participate in a voluntary incentive auction, what will be the effect on those licensees who opt to retain their spectrum? Where and how will they be relocated? Will there be assurances to those licensees that their new channels will be as strong and robust as their previous channels? How do you plan to protect and educate those viewers who rely on existing over-the-air services?”
    • Universal Service Fund. At the February 16 House Energy and Commerce net neutrality hearing, Representative Doris Matsui (D-CA) announced her intention to re-introduce her Broadband Affordability Act in the near future. That bill would direct the FCC to expand the Universal Service Fund’s Lifeline Assistance program to provide low-income Americans with assistance in obtaining affordable broadband Internet access. Her bill in the last Congress had 16 cosponsors.
    • Committee Organization. On February 14, the Senate Judiciary Committee announced that Senator Al Franken (D-MN) will chair the newly formed Privacy, Technology and the Law Subcommittee. Subcommittee members include: Senators Charles Schumer (D-NY), Sheldon Whitehouse (D-RI), Richard Blumenthal (D-CT), Ranking Member Tom Coburn (R-OK), Orrin Hatch (R-UT) and Lindsey Graham (R-SC). The Subcommittee’s jurisdiction includes: (1) the collection, protection, use and dissemination of commercial information by the private sector, including online behavioral advertising, privacy within social networking websites and other online privacy issues; (2) enforcement and implementation of commercial information privacy laws and policies; (3) use of technology by the private sector to protect privacy, enhance transparency and encourage innovation; (4) privacy standards for the collection, retention, use and dissemination of personally identifiable commercial information; and (5) privacy implications of new or emerging technologies.

    REGULATORY ACTIVITY

    • FY2012 Proposed Budget. President Obama’s proposed FY2012 budget includes $354.2 million to fund the FCC. The proposed funding would support core activities including: “implementing the National Broadband Plan; overhauling the Commission’s data systems and processes, to streamline the FCC and make it even more effective; continuing to modernize and reform the FCC; strengthening the audit and investigation function of the Office of the Inspector General; and supporting the Commission’s public safety and cyber-security roles.”
    • March 3 Open Meeting. The FCC will hold its monthly open meeting on March 3 and is expected to consider the following items, among others:
      • NPRM on Retransmission Consent: A Notice of Proposed Rulemaking seeking comment on changes to rules governing or affecting retransmission consent negotiations between broadcasters and multichannel video programming distributors.
      • Advanced Communications Services NPRM: A Notice of Proposed Rulemaking seeking comment on rules implementing provisions of the Twenty-First Century Communications and Video Accessibility Act of 2010. The NPRM proposes rules requiring providers of advanced communications services and manufacturers of equipment used for those services to make their products accessible to people with disabilities. Also implementing the Act, a Video Description Notice of Proposed Rulemaking proposes to reinstate the video description rules adopted by the Commission in 2000, as directed by Congress.
      • Native Nations Spectrum NPRM: A Notice of Proposed Rulemaking to close the wireless gap on Tribal Lands.
      • Lifeline/Link Up Reform and Modernization NPRM: A Notice of Proposed Rulemaking to reform the Universal Service Fund’s Lifeline and Link Up programs to eliminate waste, fraud and abuse; improve program administration and fiscal responsibility; and modernize the program in light of market and technology changes, including to support pilot programs for broadband adoption.

     


    Transportation

    LEGISLATIVE ACTIVITY

    • FAA Reauthorization. The Senate passed its version of the FAA reauthorization bill (S. 223) Thursday, February 17, by a final vote of 87-8. The House Transportation and Infrastructure Committee reported its version out of Committee on Wednesday, February 16.
    • SAFETEA-LU Reauthorization. The President’s FY2012 budget contained the Administration’s proposal for a six-year, $556 billion reauthorization of the nation’s surface transportation laws. The President’s proposal calls for a total of $336 billion for highways (a 48 percent increase over SAFETEA-LU); $119.2 billion for transit (a 128 percent increase over SAFETEA-LU); $53.6 billion for high speed and intercity passenger rail; and $30 billion for a national infrastructure bank. Approximately $50 billion of the increase is frontloaded in FY2012 to provide an “up front economic boost.” The budget calls for $231 billion in new revenue over six years to finance the proposal. It does not provide a revenue source, stating that the “Administration intends to work with Congress on a bipartisan basis to develop the specific revenues to be included in the reauthorization.” There is a dramatic gap between the President’s proposal and House Transportation and Infrastructure Committee Chairman John Mica’s (R-FL) focus on “doing more with less” in light of the lack of any current revenue source to fund the program at even currently authorized levels. House Committee hearings this week focused on reducing red tape as a means to lower costs and expedite project delivery, objectives shared by the Administration although differences are likely to emerge as to streamlining of the NEPA process in particular. The House will continue to hold field hearings next week, some jointly with the Senate Environment and Public Works Committee (EPW), as well as a regular hearing on the nation’s rail system.