On Monday, June 13, at 2:00 p.m. the House returns from a District Work Period to consider the Military Construction, Veterans Affairs, and Related Agencies Appropriations Act, 2012 (H.R. 2055). The Senate also comes back in session on Monday at 2:00 for a period of morning business. On Tuesday, June 14 at 11 a.m., the Senate will begin consideration of the nominations of Claire C. Cecchi of New Jersey, to be United States District Judge for the District of New Jersey, and Esther Salas, of New Jersey, to be United States District Judge for the District of New Jersey, with a vote on confirmation of the nominations, at approximately 12 noon. Following which, at 2:15 p.m., the Senate will resume consideration of the Economic Development Revitalization Act of 2011 (S. 782).
- Possible Senate Vote on Increased Debt Limit. The Senate may follow the House in holding a symbolic vote on raising the debt limit by $2.4 trillion. Senator Rand Paul (R-KY) offered such an amendment to the Economic Development Administration Reauthorization which is currently being debated on the Senate floor. Unless Senate Majority Leader Harry Reid (D-NV) pulls the bill from the floor, or Democrats are able to block cloture (which requires 60 votes), the amendment is expected to come up for a vote next week.
- House Appropriations Activity. Following a week-long recess, the House resumes its appropriations work on Monday when debate of the FY2012 Military Construction-VA bill begins on the House floor. Republican leaders are expected to propose an amendment to separate the military construction and veterans programs as a test for splitting larger bills later in the process (prior to the elections in November, House Speaker John Boehner (R-OH) proposed dividing the appropriations bills by agencies so that members could vote on smaller, more focused spending bills). The House Appropriations Committee is scheduled to markup the FY2012 Defense bill on Tuesday and is expected to also approve the FY2012 Energy and Water and legislative branch bills later in the week. The Financial Services Subcommittee is expected to markup its FY2012 bill next week as well.
- Senate Appropriations Activity. The Senate Appropriations Subcommittees continue to hold budget hearings, and Budget Committee Chairman Kent Conrad (D-ND) suggested progress this week in his efforts to draft an FY2012 budget resolution that will gain the necessary support of Senator Bernard Sanders (I-VT), who rejected an earlier version proposed by the Chairman. However, release of the budget resolution and spending bill markups remain on hold as the Senate waits to see if the deficit reduction negotiations produce results, possibly indicating another contentious appropriations process. Senator Mary Landrieu (D-LA), Chairwoman of the Senate Homeland Security Appropriations Subcommittee has been very vocal in her opposition to the FY2012 Homeland Security Appropriations bill passed out of the House last week and anticipates a “showdown” over policy and funding.
OTHER BUDGET, APPROPRIATIONS NEWS
- Deficit Reduction Efforts. Various debt negotiations are expected to continue over the next few weeks. The bi-partisan “Biden Group” has three meetings scheduled next week in an effort to meet the President’s and House Speaker John Boehner’s (R-OH) call for an agreement by July 4. It remains unclear how the group will resolve the Democratic push to include revenue increases as part of the package and Republican opposition to any tax increases. Meanwhile, the five remaining members of the “Gang of Six” briefed 20 Democratic and Republican Senators this week on their long-term debt reduction plan. According to Senators Saxby Chambliss (R-GA) and Mark Warner (D-VA), both members of the “Gang of Six,” the plan would reduce deficits by at least $4.7 billion over 10 years and include spending cuts, revenue increases and entitlement changes.
- Early Learning. On June 9, Senator Patty Murray (D-WA) introduced the Ready to Learn Act (S. 1170), a bill that would create a federal fund offering competitive matching grants for high-quality state pre-kindergarten programs. Senator Bob Casey (D-PA) also introduced two bills related to early childhood learning: the Starting Early, Starting Right Act (S.1155), to increase federal child care subsidies; and the Prepare All Kids Act (S.1156), to provide federal funds for state pre-kindergarten.
- ESEA Reauthorization. As a key player in the bipartisan, bicameral ESEA reauthorization discussions, on June 9 Senator Jeff Bingaman (D-NM) introduced a series of education bills (S. 1177, S. 1178 and S. 1179) that reflect his legislative priorities in K-12 education policy and the reauthorization of the Elementary and Secondary Education Act. The bills attempt to address high school drop out rates, support education technology, and ensure rigorous standards and curriculum.
- For-profit Colleges. The Senate Health, Education, Labor & Pensions (HELP) Committee held a June 7 hearing regarding student debt related to for-profit colleges, the fifth in a series of hearings Chairman Harkin (D-IA) has called to investigate the industry. As expected, Republican HELP Committee members boycotted the hearing, and no representatives from the for-profit industry participated. Chairman Harkin promised to consult with other stakeholders and committee members to develop legislation even stronger than the Department of Education’s “gainful employment” rule to better protect students and taxpayers from underperforming programs. However, during the Senate’s consideration of a bill to reauthorize the Economic Development Administration the same day, Senator Jim DeMint (R-SC) filed an amendment that would nullify the newly published Administration regulations. In a speech June 8 to the Association of Private Sector Colleges and Universities, Former Secretary of State and Chairman of the Joint Chiefs of Staff Colin Powell encouraged for-profit college leaders to continue to fight for their issues in Congress and better educate members and the public about the value of the industry.
- Patent Reform. In a June 6 letter sent to House Judiciary Chairman Lamar Smith (R-TX), Budget Chairman Paul Ryan (R-WI) and Appropriations Chairman Harold Rogers (R-KY) expressed opposition to language included in Smith’s patent overhaul bill (H.R. 1249), which would allow the U.S. Patent and Trademark Office to keep all of the fees it collects. Similar language was included in the Senate-passed bill, but Ryan and Rogers asked Smith to remove it from the House measure before bringing it to the floor.
- Accreditation. At its semiannual meeting, the National Advisory Committee on Institutional Quality and Integrity expressed strong criticism for the Accrediting Council for Independent Colleges and Schools, which accredits more than 850 for-profit colleges. The Committee reviews accrediting agencies and recommends their recognition to the Education Secretary for federal financial aid eligibility. All others reviewed by the Committee were either granted five-year recognition or made to understand that they could come into compliance within a year.
- Community Colleges. While at an Alexandria, VA community college on June 8, President Obama announced a new credentialing system for manufacturing skills to help better prepare students for jobs in the manufacturing sector.
- Transportation Research. The Research and Innovation Technology Administration within the U.S. Department of Transportation recently notified its 59 current University Transportation Centers that the Secretary of Education determined those programs have been sufficiently funded. The Department will hold a competition to administer FY2011 funding for the program, which will focus on a consortia of universities for each award. The request for proposals is not yet complete but is expected to be released in the coming weeks.
- Alaska’s National Petroleum Reserve. House Natural Resources Committee Chairman Doc Hastings (R-WA) will soon introduce the National Petroleum Reserve Alaska Access Act, to “cut through bureaucratic red tape and unlock the full potential of energy resources in the National Petroleum Reserve-Alaska (NPR-A).” On May 14, to help combat high gas prices, President Obama directed the Interior Department to conduct annual NPR-A lease sales as part of a multi-part strategy to expand responsible and safe domestic oil production. Chairman Hastings does not believe that action went far enough.
- Congressional Hearings. On Thursday, a House Natural Resources Subcommittee will hold a hearing on Chairman Hastings’ NPR-A discussion draft bill. The House Energy and Commerce Committee will hold a series of energy hearings next week. On Monday, the Energy and Power Subcommittee will hold a legislative hearing on the Energy and Revenue Enrichment Act of 2011 (H.R. 2054); on Tuesday, the Environment and the Economy Subcommittee will hold an oversight hearing on the Nuclear Regulatory Commission Chairman’s “Unilateral Decision to Terminate NRC’s Review of the DOE Yucca Mountain Repository License Application”; and on Thursday, the Energy and Power Subcommittee will hold a hearing regarding pipeline safety oversight. Also on Thursday, the Senate Energy and Natural Resources Committee will hold an oversight hearing on federal land management agencies’ wildfire management programs, an issue that has particularly affected electric transmission lines in the western U.S.
- Offshore Lease Extensions. Approximately 1,450 non-producing deepwater leases set to expire before 2016 were adversely affected by the 2010 offshore drilling moratorium. To implement the President’s May 14 announcement with respect to extending those leases for an additional year, the Interior Department is expected to soon offer guidance to operators who wish to extend their leases.
- Onshore Natural Gas Projects. The Interior Department and the Environmental Protection Agency (EPA) are developing a formal memorandum of understanding to better coordinate reviews and resolve air quality issues for oil and gas development projects on public lands. The announcement follows the formal release last week of the Bureau of Land Management’s Supplement to the Draft Environmental Impact Statement for the Greater Natural Buttes Project in Utah – in which enhanced air pollution controls will be used, likely providing a template for other natural gas development projects on federal lands.
- Mid-Atlantic OCS Study. Ocean scientists from the Bureau of Ocean Energy Management, U.S. Geological Survey and the National Oceanic an Atmospheric Administration will conclude a research expedition on Friday. It will provide information necessary to predict, assess, and manage impacts from oil and gas development and renewable energy exploration on the Outer Continental Shelf for the mid-Atlantic region. Scientists will map deepwater canyons and identify sensitive biological habits and historically significant sites.
- Clean Air Act. On Wednesday, June 15, the Senate Committee on Environment and Public Works will hold a full committee hearing titled, "The Clean Air Act and Public Health.”
- Wildfire Management. On Tuesday, June 14, the Senate Committee on Energy and Natural Resources will hold a full committee hearing to consider wildfire management programs of the federal land management agencies. Witnesses will include Chief Tom Tidwell of the U.S. Department of Agriculture’s Forest Service and Kim Thorsen, Deputy Assistant Secretary for Law Enforcement and Security at the U.S. Department of the Interior.
- Salmon Protection. On Tuesday, June 14, the House Committee on Natural Resources, Subcommittee on Fisheries, Wildlife, Oceans and Insular Affairs Legislative will hold a hearing on H.R. 946, the Endangered Salmon Predation Prevention Act.
- Critical Materials. On Tuesday, June 14, the House Committee on Science, Space and Technology, Subcommittee on Investigations and Oversight will hold a hearing titled, “Critical Materials Strategy.” Testifying at the hearing will be John Holdren, Director, Office of Science & Technology Policy; David Sandalow, Assistant Secretary for Policy and International Affairs, U.S. Department of Energy and Jeff Doebrich, Program Coordinator (Acting), Mineral Resources Program, U.S. Geological Survey.
- Fuel Labels. In July, the EPA plans to finalize the first-ever national fuel economy and greenhouse gas emission standards for commercial trucks, vans and buses built from 2014 to 2018. The EPA expects standards will save hundreds of millions of barrels of oil over the life of these vehicles and promote the development and deployment of alternative fuels, including natural gas. The EPA is also developing the next generation of joint fuel economy/greenhouse gas emission standards for model year 2017-2025 passenger vehicles and expects to announce the proposal in September 2011.
- Chemical Identities. The EPA is making public the identities of more than 150 chemicals contained in 104 health and safety studies that had previously been claimed confidential by the industry. The EPA has determined that “a health and safety study with the chemical name kept secret is completely useless to the public.” For the 104 studies, the chemical identity will no longer be redacted. This step is intended to provide the public with access to information about chemical exposure to children and families. The chemicals involved are used in dispersant formulations and consumer products such as air fresheners, non-stick and stain resistant materials, fire resistant materials, nonylphenol compounds, perfluorinated compounds, and lead.
- Gulf of Mexico and Great Lakes. EPA is hosting a series of 12 public listening sessions across the country in the Gulf of Mexico and Great Lakes regions. Following the executive order issued by President Obama last July that established the National Ocean Policy and the National Ocean Council, these public engagement sessions are part of the implementation of the National Ocean Policy. In addition, the National Ocean Council has launched a month-long public comment period for strategic action plan outlines. The outlines for the strategic action plans were drafted by federal interagency teams as a first step in implementing the President’s National Ocean Policy. After the public comment period, the outlines will be used to develop strategic action plans that will propose goals and actions the federal government can implement to address challenges facing oceans, coasts, and the Great Lakes.
- Apps for Environment. The EPA is announcing its “Apps for the Environment” challenge which invites the information technology community to create applications to help individuals make informed decisions about environmental issues that can affect their health. The EPA is engaging students, colleges and universities and developers across the U.S. to develop and submit apps. Applications for the challenge must use EPA’s data and be accessible via the web or a mobile device. Submissions are due by September 16, 2011.
- Senate Rejects Proposal to Delay Durbin Amendment. On Wednesday, June 8, the Senate rejected (54-45) a proposal by Senators Jon Tester (D-MT) and Bob Corker (R-TN) to delay the scheduled July 21 imposition of new Federal Reserve Board rules capping interchange fees for issuers with assets over $10 billion at an initial rate of 12 cents per transaction. The delay would have permitted further study of the proposed rules and their impact on consumers and small banks.
- House Judiciary Committee to Review NYSE-DB Merger. On Monday, June 13, the House Judiciary Subcommittee on Intellectual Property, Competition, and the Internet will hold a hearing titled, “Competition and Consolidation in Financial Markets: The NYSE-Deutsche Boerse Merger.”
- House Financial Services Subcommittee to Consider “Too Big to Fail.” On Tuesday, June 14, the House Financial Services Subcommittee on Financial Institutions and Consumer Credit will hold a hearing titled, “Does the Dodd Frank Act End 'Too Big to Fail'?”
- Senate Banking Committee to Review SEC, SIPC Nominations. On Tuesday, June 14, the Senate Banking Committee will hold a nomination hearing for Luis Aguilar and Daniel Gallagher to be commissioners of the Securities and Exchange Commission (SEC), and Anthony D’Agostino and Gregory Karawan, to be Directors of the Securities Investor Protection Corporation.
- Senate Agriculture Committee to Hear from CFTC, Federal Reserve. On Wednesday, June 15, the Senate Agriculture Committee will hold a hearing titled, “One Year Later - The Wall Street Reform and Consumer Protection Act - Implementation of Title VII.” Witnesses will include Commodity Futures Trading Commission (CFTC) Chairman Gary Gensler and Michael Gibson, Senior Associate Director of the Federal Reserve’s Division of Research and Statistics.
- Secretary Geithner to Appear before House Financial Services Committee. On Wednesday, June 15, Treasury Secretary Timothy Geithner will testify before the House Financial Services Committee in a hearing titled, “The Annual Testimony of the Secretary of the Treasury on the State of the International Financial System.” The Committee will follow this hearing with one on Thursday, June 16 titled, “Financial Regulatory Reform: The International Context.”
- House Small Business Subcommittee to Consider Dodd-Frank’s Impact. On Thursday, June 16, the House Small Business Subcommittee on Economic Growth, Capital Access, and Tax will hold a hearing titled, “The Dodd-Frank Act: Impact on Small Business Lending.” The witnesses in attendance will be: Vice Chairman Thomas Boyle of LaGrange, Illinois’ State Bank of Countryside, testifying on behalf of the American Bankers Association; and Beecher, Illinois’ First Community Bank and Trust President and CEO Greg Ohlendorf, testifying on behalf of the Independent Community Bankers of America.
- CFTC to Hold Open Meeting. On Tuesday, June 14, the CFTC will hold an open meeting to consider effective dates of provisions in the Dodd-Frank Wall Street Reform and Consumer Protection Act. The Commission may also consider and vote on dates and times for future meetings.
- FDIC to Hold Open Meeting. On Tuesday, June 14, the Federal Deposit Insurance Corporation (FDIC) will hold an open meeting to consider (i) the enforcement and transfer of regulations of the Office of Thrift Supervision pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, and (ii) a final rule on risk-based capital standards: advanced capital adequacy framework (Basel II) and the establishment of a risk-based capital floor.
- SEC to Hold Open Meeting. On Wednesday, June 15, the SEC will hold an open meeting to consider whether to propose amendments to Rule 17a-5 — the broker-dealer reporting rule — under the Securities Exchange Act of 1934.
- White House Payroll Tax Cut Receives Cool Reception on Hill. Amidst reports that White House officials are considering a payroll tax cut, both Republican and Democratic Senators suggested that such a proposal would not be an effective mechanism for boosting the economy, while simultaneously increasing the debt. Senate Republicans, including Senate Finance Committee Ranking Member Orrin Hatch (R-UT), indicated that the proposal would be too narrowly focused to address broader economic concerns. The Administration’s trial balloon follows on the heels of a disappointing May jobs report.
- Tax Reform Hearings Expected to Continue. Although none have been scheduled for next week, hearings on fundamental tax reform are expected to continue on both the House Ways & Means and Senate Finance Committees.
- FATCA Implementation. On June 8, a Treasury official in the Office of International Tax Counsel indicated that Treasury is considering providing transition relief for entities required to comply with the Foreign Account Tax Compliance Act (FATCA). The law, which was enacted as part of the Hiring Incentives to Restore Employment (HIRE) Act, imposes broad requirements on foreign financial institutions to disclose U.S.-owned accounts to the Internal Revenue Service. Proposed regulations are expected to be issued later this year.
OTHER TAX NEWS
- No Appointment yet for Key Treasury Position. The Administration has not yet appointed a replacement for Michael Mundaca, who left his post as Treasury’s Assistant Secretary for Tax Policy last month. Emily McMahon, Deputy Assistant Secretary for Tax Policy, and Mark Mazur, Deputy Assistant Secretary for Tax Analysis, continue to fill Mundaca's role.
- Senate Spectrum Bill. Last week, in a much anticipated markup, the Senate Commerce, Science, and Transportation Committee approved S. 911, The Public Safety Spectrum and Wireless Innovation Act, by a 21-4 vote (with Senators Olympia Snowe (R-ME), Jim DeMint (R-SC), Patrick Toomey (R-PA) and Marco Rubio (R-FL) voting no). S. 911 would authorize incentive auctions to compensate broadcasters for voluntarily giving up spectrum for wireless broadband as part of a larger effort to fund a nationwide public safety broadband network. The legislation also compensates broadcasters who retain their spectrum but are repacked to make vacated spectrum available for broadband use, and compensates cable operators for any adjustments they had to make with respect to retransmissions of the reconfigured broadcast signals.
The bill was amended to make it clear that so-called white spaces of unused spectrum in the broadcast band would still be available nationally and in each market after the FCC repacks the spectrum. That amendment from Senator Maria Cantwell (D-WA) concerns broadcasters who worry about unlicensed devices causing interference to TV stations in the band. Following the vote on the Rockefeller-Hutchison substitute to the original S. 911 and several amendments like Cantwell’s that were previously accepted, Senator Roy Blunt (R-MO), addressed repacking concerns, noting the FCC should protect viewers from losing their broadcast signal, in order to avoid the experiences of the digital TV transition two years ago where some viewers had their channel one day and lost their signal the next. Senator Claire McCaskill (D-MO) also withdrew an amendment that she said would have prohibited the involuntary relinquishment of LPTV spectrum.
The bill must now pass the full Senate and move to the Republican-controlled House, where leaders in the Energy and Commerce Committee have expressed their preference to auction the 700 MHz D-block spectrum rather than allocate it to public safety. However, House Homeland Security Chairman Peter King (D-NY) and Ranking Member Bennie Thompson (D-MS), introduced their own bill, which would reallocate the D- block to public safety.
- Privacy. Representative Mary Bono Mack (D-CA) is expected this week to release a draft of her data breach notification bill in time for a June 15 hearing before her Commerce, Manufacturing and Trade Subcommittee. By holding a hearing Bono Mack signals her plans to move quickly with efforts to improve companies' data security and set a federal standard on breach notification. In other privacy news, the Electronic Privacy Information Center (EPIC) and other privacy groups were expected to file a letter with the FTC about Facebook's facial-recognition software. EPIC will most likely suggest the FTC require Facebook to suspend the service, which powers its "tag suggestion" feature, and re-introduce it in a way that would require users to opt-in. The Privacy Rights Clearinghouse and Center for Digital Democracy were expected to join EPIC on the letter, which was sent after European data-protection authorities signaled they would look into the feature.
- Illegal Streaming Bill. On June 9, the Senate Judiciary Committee marked up S. 978, the anti-streaming bill introduced by Senators Amy Klobuchar (D-MN), Chris Coons (D-DE) and John Cornyn (R-TX). The legislation would increase the punishment for illegal streaming of content over the Internet from a misdemeanor to a felony, which was a recommendation featured in White House IP Chief Victoria Espinel's white paper to Congress earlier this year.
- Cybersecurity. On June 8, Secretary of Commerce Gary Locke released a report proposing voluntary codes of conduct to strengthen the cybersecurity of companies that increasingly rely on the Internet to do business, but are not part of the critical infrastructure sector. The report, Cybersecurity, Innovation and the Internet Economy, focuses on the “Internet and Information Innovation Sector” (I3S) businesses that range from small and medium enterprises and bricks-and-mortar firms with online services, to social networking sites and Internet-only business, to cloud computing firms that are increasingly subject to cyber attacks. The report also addresses the growing economic importance of strengthening cybersecurity protection and preserving consumer trust. In urging voluntary efforts to reduce vulnerabilities, the report recommends that businesses that are not considered “critical infrastructure” establish nationally recognized codes of conduct, develop incentives to combat cybersecurity threats, improve public understanding of cybersecurity vulnerabilities through education and research and enhance international collaboration on best practices to expand global markets for U.S. products. The business community and privacy advocates praised the report for encouraging a “flexible, non-regulatory” approach to cybersercurity.
- Public, Educational and Governmental (PEG) Channel Access. Representatives Tammy Baldwin (D-WI) and Steve LaTourette (D-OH) recently reintroduced the Community Access Preservation (CAP) Act. The bill specifically allows PEG fees to be used for any PEG-related purpose; prevents cable operators from charging for the transmission of the channels; requires the FCC to study the effect state video franchise laws have had on PEG channels; and requires operators to provide the support required under state laws, or the support historically provided for PEG, or up to 2 percent of gross revenue, whichever is greater.
- FCC Wireless Competition Report. The much anticipated wireless competition report is expected out this week. AT&T maintains that the wireless industry is competitive as it seeks FCC and DOJ approval to acquire T-Mobile USA, and industry observers are eager to see whether the Commission will support this view. If released this week, the report would be timely for parties filing reply comments with the FCC on the proposed merger, which are due June 20.
- FCC Media Report. A new report from the FCC finds that there is a shortage of in-depth local journalism, leaving little accountability for government agencies, schools, and businesses. The lack of local reporting comes despite an abundance of news outlets in today’s multimedia landscape, the report says. The June 9 report titled, “Information Needs of Communities: The Changing Media Landscape in a Broadband Age,” is the result of an 18-month effort to explore the changing media business — particularly daily newspapers. The weakening economy and a shift by advertisers to cheaper Internet alternatives has left newspapers with declining revenues. The report says staffing levels at daily newspapers have fallen by more than 25 percent since 2001.
The report’s recommendations include creating public affairs cable channels similar to C-SPAN at the state level, easing tax rules for nonprofit news organizations and directing more federal advertising spending to local news media. But the report also makes clear that the First Amendment limits the government’s role in shaping the future of the media industry.
Among other key report findings are:
- The FCC should accelerate the move from paper to online disclosure and replace the current system with a streamlined web-based disclosure system focused on providing information about local programming;
- The FCC should remove barriers to innovation and online entrepreneurship by pushing for universal broadband deployment and adoption; and
- Federal spending should target local media.
- SAFETEA-LU Reauthorization. Indications are that the House Transportation and Infrastructure Committee will not be releasing a draft surface transportation reauthorization measure the week of June 13, as previously suggested, because Chairman John Mica (R-FL) (1) continues to work to ensure that he has guaranteed floor time later this summer before releasing the bill; and (2) as work continues to shepherd the Federal Aviation Administration (FAA) Reauthorization bill to completion first. Senator Barbara Boxer (D-CA), Chair of the Senate Environment and Public Works Committee (EPW), indicates that she will release legislative language in mid-June in connection with a number of hearings the EPW Committee intends to hold around that time, with the aim of marking up a bill in Committee before the July 4 Congressional recess.
- Senate Action. The Senate bill is expected to maintain current funding levels for the highway program, increased for inflation. The distribution of those funds via apportionment formulas is not expected to be finalized in the EPW draft, with the expectation that those issues will ultimately be resolved outside of Committee in the necessary effort to secure 60 votes for passage. The EPW title will not address revenue either, which is in the purview of the Senate Finance Committee. To fund the bill at current levels plus inflation, it is estimated that a two-year bill would require approximately $6 billion in additional revenue per year and that a six-year bill would require double that amount, or $12 billion in additional annual revenue. Of course, the transit and rail title of the bill will also have to be developed and reported by the Senate Banking Committee and Senate Commerce Committee, respectively.