Capital Thinking Update - February 28,2011

    View Authors 28 February 2011

    General Legislative

    Both the House and the Senate will return from the Presidents’ Day recess on Monday, February 28.  The House will postpone votes until 6:30 PM, with the following measures considered under suspension of the rules: H.R. 394, the Federal Courts and Venue Clarification Act of 2011; H.R. 386, the Securing Cockpits Against Laser Pointers Act of 2011; H.R. 368, the Removal Clarification Act of 2011; and H.R. 347, the Federal Restricted Buildings and Grounds Improvement Act of 2011.  The Senate will convene at 2:00 PM and proceed with the annual tradition of reading George Washington’s 1796 Farewell Address.


    Budget, Appropriations

    LEGISLATIVE ACTIVITY

    • House Passes FY2011 Continuing Resolution. In the early morning hours of February 19, following days of floor debate and the offering of nearly 600 amendments, the House passed its FY2011 Continuing Resolution (CR) extension. Sixty-seven adopted amendments added $620 million in additional spending cuts to the bill, which now reduces discretionary spending approximately $60 billion from current levels and roughly $100 billion below the President’s FY2011 budget request.
    • Dueling Short-Term CRs. With the current CR set to expire March 4 and an agreement on FY2011 funding not likely to occur next week, an additional short-term CR will be necessary to prevent a government shutdown. Senate Majority Leader Harry Reid (D-NV) intends to introduce a one-month CR at current spending levels, while House Republicans this afternoon proposed a two-week CR which would reduce spending levels by $4 billion through March 18. With the exception of several program reductions / terminations, the proposal maintains federal funding at FY2010 levels, reduced by the amount designated for Congressional earmarks. The House is scheduled to take up the two-week CR on Tuesday, March 1.
    • Senate CR Extension. Senate Democratic leaders are also working on a seven-month FY2011 CR that will include cuts that fall between current funding levels and the $60 billion proposed by House Republicans. It is anticipated that many of the cuts will align with those proposed by the President in his FY2012 budget request. 

     

    Education

    LEGISLATIVE ACTIVITY

    • Higher Education. On March 1, the House Committee on Education and the Workforce will hold a hearing titled, "Education Regulations: Weighing the Burden on Schools and Students." The Executive Director of the Council of Chief State School Officers will testify. Other witnesses have not yet been named.
    • FY2011 Continuing Resolution (CR). The CR passed by the House included significant cuts for programs of importance to the education community. In addition to large decreases in Pell Grant awards and scientific research programs, an amendment passed which would block funding of the Administration’s proposed regulation of “gainful employment.” Funding for many pre-K-12 programs would be eliminated or decreased by the bill as well, including Head Start, literacy programs and STEM education initiatives.

    REGULATORY ACTIVITY

    • K-12. The Department of Education will hold a National Youth Summit in Washington, D.C. on February 26. Nearly 400 students from high schools and middle schools across the country will join Administration officials and education policy leaders to identify what schools and communities need to best prepare students for college and careers.

     

    Energy

    LEGISLATIVE ACTIVITY

    • Recess. With Congress in recess this past week and with much of the focus now on the budget, it has been a relatively quiet week on energy matters.
    • Offshore permitting hearings. A bipartisan group of Gulf State members successfully petitioned House Natural Resources Committee leaders for “an aggressive schedule of hearings on the Obama Administration’s slow-walking of permits and the impacts of the de facto moratorium on our economy, jobs and U.S. energy security.” The Committee had already planned to hear from Interior Secretary Ken Salazar regarding the Administration’s FY2012 budget request on March 3. The Committee has now scheduled additional hearings on March 16 to hear directly from impacted regional interests, on March 30, with Bureau of Ocean Energy Management (BOEM) Director Michael Bromwich to discuss budget and permitting policies, and an April field hearing in Louisiana.
    • Budget hearings. Interior Secretary Ken Salazar will also testify before the Senate Energy and Natural Resources Committee on March 2 regarding the Administration’s proposed FY2012 budget.

    REGULATORY ACTIVITY

    • Offshore Drilling. BOEM will host a March 15 public workshop in New Orleans to provide guidance and to clarify implementation of new safety system requirements for offshore oil and gas companies. New regulations take effect on November 15.

     

    Environment

    LEGISLATIVE ACTIVITY

    • Ethanol. The House-passed version of the bill to finish FY2011 appropriations contains a provision that would prevent the Environmental Protection Agency (EPA) from increasing the percentage of ethanol in gasoline from 10 percent to 15 percent. The provision would also prevent the EPA from approving any gas station surveys that are required before they can sell E15 gasoline and would prevent the EPA from providing subsidies to gas stations currently being retrofitted to sell the E15 blend.
    • Wild Lands Designation Policy. On March 1, the House Committee on Natural Resources will hold a full Committee oversight hearing titled, “The Impact of the Administration’s Wild Lands Order on Jobs and Economic Growth.” This hearing is meant to challenge the Bureau of Land Management’s authority to designate appropriate areas with wilderness characteristics under its jurisdiction as “Wild Lands” and to manage them to protect their wilderness value. Witnesses will include Governor Butch Otter of Idaho and Governor Gary Herbert of Utah.
    • U.S. Department of Interior FY2012 Budget. On Wednesday, March 2, the Senate Committee on Energy and Natural Resources will hold a hearing to consider the President’s Fiscal Year 2012 proposed budget for the U.S. Department of Interior. Interior Secretary Ken Salazar will testify.
    • U.S. Forest Service FY2012 Budget. On Thursday, March 3, the Senate Committee on Energy and Natural Resources will hold a hearing to consider the President’s Fiscal Year 2012 proposed budget for the U.S. Department of Agriculture’s Forest Service. The Honorable Tom Tidwell, Chief of the U.S. Forest Service, will testify.

    REGULATORY ACTIVITY

    • Gulf Coast Ecosystem Restoration Task Force Second Meeting. On February 28, the Gulf Coast Ecosystem Restoration Task Force will hold its second Task Force meeting – this time in New Orleans. The first meeting of the Task Force was held November 8 in Pensacola, Florida. During the meeting, EPA Administrator Lisa Jackson, a New Orleans native who chairs the Task Force, will review progress on the group’s restoration strategy and provide guidance to intergovernmental teams on the timeline of actions and the objectives of the President’s Executive Order. The strategy is intended as a blueprint for action for restoring the Gulf’s ecosystem. The meeting will cover the following topics: restoration strategy work plan reports, a Deepwater Horizon spill cleanup status report and a status report on seafood safety. The meeting will also include a public comment period and public listening sessions for academia, local governments and business and industry.
    • Texas Air Quality. The EPA has announced it is taking final action to approve revisions to the Texas State Implementation Plan (SIP) concerning air quality implementation plans to control volatile organic compound emissions from consumer related sources. The EPA is approving revisions to Title 30 of the Texas Administrative Code Chapter 115, which the State submitted on March 4, 2010. These revisions remove the Texas Portable Fuel Container rule as an ozone control strategy from the Texas SIP for the Control of Ozone Air Pollution. In the submittal, Texas demonstrates that federal portable fuel container standards promulgated by EPA in 2007 are expected to provide equal to or greater emissions reductions than those resulting from the State regulations. The EPA is approving these revisions pursuant to section 110 of the Clean Air Act. The rule will take effect on April 25, 2011.

     

    Financial Services

    LEGISLATIVE ACTIVITY

    • Bernanke to Deliver Semiannual Monetary Policy Report. On March 1, Federal Reserve Chairman Ben Bernanke will appear before the Senate Banking Committee to deliver the Federal Reserve’s semiannual monetary policy report to Congress.
    • HFSC to Investigate Housing Policy. The House Financial Services Committee will hold two hearings related to housing policy on March 1. In the morning, the Committee will hold a hearing titled, “Mortgage Finance Reform: An Examination of the Obama Administration’s Report to Congress.” That afternoon, the Committee will hold a hearing titled, “Oversight of the Department of Housing and Urban Development,” and will include an appearance from Shaun Donovan, Secretary of the Department of Housing and Urban Development. On Wednesday, March 2, the Subcommittee on Insurance, Housing, & Community Opportunity will hold a hearing titled, “Legislative Proposals to End Taxpayer Funding for Ineffective Foreclosure Mitigation Programs.”
    • Senate Agriculture Committee to Discuss Derivatives Regulation. On March 3, the Senate Agriculture Committee will hold a hearing titled “Implementation of Title VII of the Wall Street Reform and Consumer Protection Act.” Expected witnesses will include Commodity Futures Trading Commission (CFTC) Chairman Gary Gensler, Securities and Exchange Commission (SEC) Chairman Mary Schapiro and market participants, including a representative from the end-user community, a futures exchange, a swap data repository and a large financial institution.

    REGULATORY ACTIVITY

    • CFTC Technology Advisory Committee to Meet. The CFTC’s Technology Advisory Committee, chaired by Commissioner Scott O’Malia, will meet on Tuesday, March 1. The Committee will discuss pre-trade functionality, direct market access controls and costs and technology challenges in implementing the trade execution, processing and records management requirements of the Dodd-Frank Act.
    • SEC to Hold Dodd-Frank Rulemaking Open Meeting. The SEC will hold a public meeting on Wednesday, March 2 to consider the issuance of proposed rulemakings related to (i) incentive-based compensation practices at certain financial institutions; (ii) the operation and governance of clearing agencies; (iii) reopening the comment period for previously proposed Regulation MC, to mitigate conflicts of interest at security-based swap clearing agencies, security-based swap execution facilities and national security exchanges; and (iv) references to credit ratings in the Securities Act of 1933 and the Investment Company Act of 1940.

    FINANCIAL SERVICES NEWS

    • White House Jobs Council Holds First Meeting. The President’s Jobs and Competitiveness Council convened its first meeting at the White House on Thursday, February 24. The Council, chaired by Jeffrey Immelt, Chairman and CEO of GE, is made up of 26 members appointed by the President to represent various sectors of the economy to offer perspectives on how the federal government can foster growth, competitiveness, innovation and job creation.

     

    International, Defense, Homeland Security

    • Air Force Tanker Decision. The Air Force’s decision to award to Boeing an approximately $35 billion contract for next-generation KC-46A aerial refueling tankers was not altogether surprising, despite the robust efforts by competitor EADS North America. Nor was Deputy Secretary of Defense Lynn’s vocal support for the decision considered surprising. However, the accelerated timing of the announcement did take some observers by surprise. EADS must now decide whether to protest the award, an action the Defense Department clearly hopes to avoid. Lawmakers from Washington State, home to Boeing, voiced their support for the decision, while the Members of the Alabama Congressional delegation, where the EADS version of the tanker would be built, questioned the Air Force’s move.
    • Middle East Developments. The Obama Administration faced criticism from some Republicans this week regarding its supposedly timid response to the crisis in Libya. However, such critics, including prospective Presidential contenders such as former Governor Tim Pawlenty (R-MN) and former Governor Sarah Palin (R-AK), have not specified how they would have responded more assertively. The White House’s decision to join the British and French governments in seeking sanctions against the Gadhafi regime at the U.N. Security Council may not stem such criticism, since it is unclear how timely and comprehensive such sanctions will be, assuming they avoid a Russian or Chinese veto. Notably, some Congressional Republicans, including Senate Foreign Operations Appropriations Subcommittee Ranking Member Lindsey Graham (R-SC), have commended the Administration for its handling of the situation in Libya and the region as a whole. Meanwhile, the White House and State Department remain hesitant to waver on their support for the governments of their allies in Jordan and Bahrain, despite the continuing calls for political liberalization in both countries. The government of Saudi Arabia, for one, appreciates the U.S. stance regarding Bahrain, but some observers wonder if it may shift if the situation on the ground changes.

     

    TechComm

    LEGISLATIVE ACTIVITY

    • Net Neutrality. Net neutrality advocates Senator John Kerry (D-MA), Chairman of the Commerce Subcommittee on Communications, Technology and the Internet, as well as Senators Ron Wyden (D-OR), Maria Cantwell (D-WA) and Al Franken (D-MN) sent a February 23 letter to Majority Leader Harry Reid (D-NV) and Minority Leader Mitch McConnell (R-KY) opposing use of the appropriations process or the Congressional Review Act (CRA) to block the Federal Communications Commission (FCC) from implementing its net neutrality rules. The House-passed Continuing Resolution for the balance of FY2011 would bar the FCC from using funds to implement its net neutrality order, which the agency adopted in December amid objections from Republicans. “We ask you to object to any similar efforts here in the Senate,” the letter to Reid and McConnell stated. “Such action aims to strip the FCC of its legal authority over modern communications and hand control of the Internet over to the owners of the wires that deliver information and services over them.” The letter adds that the net neutrality rules “lay down guidelines for how telephone and cable companies can treat information that travels over their wires and connect Americans to the Internet. It [the order] very clearly does not regulate that information any more than the regulation of telephone service regulates what Americans can say to each other or whom they can call or not call,” the letter notes, adding, “Telephone and cable companies do not own the Internet. But if the amendment the House passed is not struck or if their CRA effort is successful, they will.” Meanwhile, Senate Commerce Committee Ranking Member Kay Bailey Hutchison (R-TX), Subcommittee Ranking Member John Ensign (R-NV) and Minority Leader McConnell introduced a resolution of disapproval last week to repeal the FCC rules through the CRA. Majority Leader Reid said that Senate Democrats would not accept riders attached to the Continuing Resolution by the House.
    • Public Safety Spectrum. House Homeland Security Committee Chairman Peter King (R-NY) said he is open to revising his legislation, H.R. 607, which seeks to reallocate 10 MHz of the so-called D Block to build a nationwide public safety network. "We will listen to and work with anyone who has an interest in this important legislation," Chairman King said. His comments came after the Society of Broadcast Engineers expressed concern about a provision of the bill that calls for the FCC to auction off spectrum between 420 and 440 MHz and 450 to 470 MHz within the next 10 years for commercial use. The frequencies between 450 and 451 MHz and 455 and 456 MHz are used by radio broadcasters, but the bill does not offer replacement spectrum for those displaced.

      In other public safety news, Senate Commerce Committee Ranking Member Kay Bailey Hutchison (R-TX) released a discussion draft last week of a bill that would directly allocate the D Block to public safety and allocate at least $20 billion in federal funds to build the nationwide, interoperable public safety broadband network. Of that amount, $4 billion would be grants for network deployment in rural or high cost areas; $16 billion to $28 billion would provide interest-free loans for network deployment nationwide; and $2 billion of appropriated funds would be leveraged to guarantee the loans, similar to the Department of Agriculture’s Rural Utility Service loan program. The proposal is part of a comprehensive plan on spectrum that also would direct the FCC to auction 90 MHz of spectrum within two years. The spectrum would include 25 MHz between 1675-1710 MHz; the 1755-1780 MHz band; 10 MHz in the AWS-2 H Block; 10 MHz in the AWS-2 J Block; and 25 MHz in the AWS-3 band. In addition, the proposal would reallocate and auction for commercial use the 3550-3650 MHz band identified by NTIA or similar spectrum identified by the President. Although the draft would provide the FCC with incentive auction authority, it would ensure that such auctions are voluntary and that broadcasters would not be forced to involuntarily share channels during the repacking process. In addition, an unspecified portion of incentive auction proceeds would be directed to assist broadcasters that move to a different channel during the repacking process.

      Another Commerce Committee member, Senator Mark Warner (D-VA), introduced S. 415, the Spectrum Optimization Act, on February 18 that would authorize the FCC to hold incentive auctions, freeing the frequencies for wireless uses. The Warner bill would direct the FCC to identify the initial spectrum bands eligible for incentive auctions (to take place within two years of the bill’s enactment) and establish a maximum revenue sharing threshold for all licensees within any auction.
    • Hearings. The following hearings are scheduled for next week:

      Tuesday, March 1 – House Judiciary Committee hearing on “Oversight of the U.S. Intellectual Property Enforcement Coordinator.”  Among the issues that will be discussed is the patent reform debate. We also expect attention to turn to the President’s February 8 Executive Order establishing the Senior Intellectual Property Enforcement Advisory Committee and the Intellectual Property Enforcement Advisory Committee – under the management of U.S. Intellectual Property Enforcement Coordinator Victoria Espinel – as required under the 2008 Prioritizing Resources and Organization for Intellectual Property Act (PRO-IP ACT).  

      Thursday, March 3 – House Homeland Security Committee hearing on “The President’s FY2012 Budget Request for the Department of Homeland Security.” Attention will be given to the Broadband for First Responders Act, sponsored by Chairman Peter King (R-NY) and Ranking Member Bennie Thompson (D-MS). 
    • Committee Assignments. Senate Commerce Committee Chairman Jay Rockefeller (D-WV) and Ranking Member Kay Bailey Hutchsion (R-TX) announced on February 25 the assignments on the Communications, Technology and the Internet Subcommittee. Senator John Kerry (D-MA) will serve as chairman and John Ensign (R-NV) will serve as ranking member.

    REGULATORY ACTIVITY

    • Public Safety Network Interoperability Rulemaking. The window for filing comments in the FCC's Fourth Further Notice of Proposed Rulemaking (FNPRM) that proposes an initial technical framework for public safety broadband network interoperability has opened.  Comments are due April 11. Reply comments are due May 10. The FNPRM seeks comment on, among other things: the effectiveness of open standards; the architecture of the network; interconnectivity between networks; network resiliency; security and encryption; coverage reliability requirements; roaming and priority access between public safety broadband networks; and interference coordination and protection.
    • Automated Calls. Leading members of the House Energy and Commerce Committee urged the FCC not to ban robocalls to cell phones. Committee Chairman Fred Upton (R-MI) and Representatives Lee Terry (R-NE), John Shimkus (R-IL), Marsha Blackburn (R-TN), Cliff Stearns (R-FL), Jim Matheson (D-UT) and Sue Myrick (D-NC) wrote to the FCC on December 3 to oppose the ban. The FCC recently released the letter and its response. Members expressed concern that changes contemplated by the FCC in the Notice of Proposed Rulemaking on rules implementing the Telephone Consumer Protection Act (TCPA) would ban calls using autodialers and prerecorded messages to cell phones — even when the caller is not a telemarketer. The members said the requirements may be harmful to consumers without landline phones, making it “more difficult for consumers to receive critical information in a timely manner.” Members also expressed concern surrounding the definition of predictive dialers and the possible elimination of the “established business relationship” exemption to TCPA restrictions.
    • 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: a Notice of Proposed Rulemaking seeking comment on changes to rules governing or affecting retransmission consent negotiations between broadcasters and multichannel video programming distributors; a Notice of Proposed Rulemaking seeking comment on rules implementing provisions of the Twenty-First Century Communications and Video Accessibility Act of 2010; and rules requiring providers of advanced communications services and manufacturers of equipment used for those services to make their products accessible to people with disabilities. The Commission will also act on three matters pertaining to tribal communications: a Notice of Proposed Rulemaking to explore a range of recommendations to help close the wireless gap on Tribal Lands; orders revising rules or establishing waiver standards that will make it easier for Native Nations to provide radio service to areas that are the functional equivalent of Tribal Lands and to Tribal Lands that are small or irregularly shaped; and a Notice of Inquiry that explores ways to overcome the barriers to deployment of communications services to Native Nations communities.

    OTHER NEWS

    • Nonprofit Launch. A new technology nonprofit aimed at combining top minds in technology, government and academia to solve social problems announced its formation last week. ConvergeUs, whose members include Comcast, TechNet, Deloitte and Cisco, will hold annual summits to address social problems, act as an online “innovation marketplace” and implement model social innovation projects that are “effective and scalable.”