The House begins a district work period (recess) on Monday, June 27, 2011. The Senate will convene at 2 p.m. on Monday for a period of morning business. At 4 p.m., Senator Sanders (I-VT) will be recognized for up to 90 minutes to discuss the budget. There will be no roll call votes in the Senate on Monday. The next roll call vote will occur at approximately 12 p.m. on Tuesday, June 28, on the confirmation of James Cole to be Deputy Attorney General.
- House Appropriations Activity. The House took up the FY2012 Defense Appropriations bill on Thursday, June 23 and will consider amendments beginning July 6 (the House is in recess the week of June 27). The White House issued a statement expressing concern over a number of provisions in the bill, including “strong opposition” to several Guantanamo Bay detention provisions. Also on Thursday, the House Appropriations Committee approved the FY2012 Financial Services bill as well as a correction to the FY2012 Energy and Water bill related to the $1 billion in emergency funds for the Army Corps of Engineers to address recent flooding in the Midwest.
- Senate Begins its Appropriations Work. Although the Senate still has not passed its FY2012 budget resolution, the Appropriations Committee will begin its work with a subcommittee markup of the FY2012 Military Construction-Veterans Affairs bill scheduled for Tuesday, June 28. The Senate version of the bill is expected to be very similar to the House-passed bill and meet easy approval in the subcommittee.
OTHER BUDGET, APPROPRIATIONS NEWS
- Deficit Reduction Efforts Collapse. Despite a number of recent meetings and statements from both parties that the Biden Group was making progress, deficit reduction talks came to a halt Thursday with the withdrawal of two Republican negotiators – House Majority Leader Eric Cantor (R-VA) and Senate Minority Whip Jon Kyl (R-AZ). The two cited the need for the President’s involvement and the impasse over spending cuts versus revenue increases. Republicans continue to push for spending cuts that at least equal the increase in the debt limit, while Democrats want what they call a more “balanced approach” that includes revenue through the cessation of some tax expenditures and relaxation of tax exemptions for the wealthy. White House negotiators are also reluctant to support cuts in non-entitlement spending with some tax hikes. Disagreement over proposed changes to entitlement programs such as Medicare also continues to impede progress. President Barack Obama and Vice President Joe Biden will meet separately with Senate Majority Leader Harry Reid (D-NV) and Minority Leader Mitch McConnell (R-KY) on Monday. It is expected that the President will also hold discussions with House Speaker John Boehner (R-OH). If an agreement cannot be reached in time for a deal to be passed by the August 2 deadline determined by Treasury Secretary Timothy Geithner, a short-term debt limit increase could buy negotiators some time. Short-term increases are not favored by either party.
- ESEA Reauthorization. On Thursday, June 23, in response to Education Secretary Arne Duncan’s plans to implement regulatory relief measures without Congressional action on ESEA by fall, House Education and the Workforce Committee Chairman John Kline (R-MN) and Early Childhood, Elementary and Secondary Education Subcommittee Chairman Duncan Hunter (R-CA) sent a letter to Secretary Duncan questioning the Department’s authority to do so, and requesting specific details on the plan by July 1. Chairman Kline also announced this week that the Committee would pass five education reform bills by the fall to fix the current No Child Left Behind Law, and on Wednesday, June 22, the Committee passed the second of those bills on a bipartisan basis (34-5). H.R. 2218 would amend the federal charter school program under ESEA to allow state educational agencies, state charter school boards and governors to sub-grant federal funding awards for development and expansion of high-quality charter schools. The bill would also authorize $300 million annually for the program.
- Government Transparency. Despite opposition from the higher education community, the House Oversight and Government Reform Committee approved two bills on Wednesday, June 22 to boost transparency for federal spending (H.R. 2146, the Digital Accountability and Transparency (DATA) Act of 2011) and access to government documents (H.R. 1974, Access to Congressionally Mandated Reports Act). Specifically, the DATA Act – approved unanimously by the panel – would require recipients of federal funds to report information regarding all of the money they receive, including federal grants, contracts and other spending, into a single database.
- Patent Reform. The House passed (304-117) patent overhaul legislation (H.R. 1249) on Thursday, June 23, after tweaking language related to funding for the U.S. Patent and Trademark Office (PTO). The new language would allow Congressional appropriators to maintain control of the Patent Office’s funding instead of allowing the Office to keep and spend the fees it collects. The House bill will now have to be reconciled with the Senate-passed version. While Senator Tom Coburn (R-OK) strongly opposes the new fee language in the House bill, the U.S. Chamber of Commerce, the White House and Senate Judiciary Chairman Patrick Leahy (D-VT) have all expressed support for the revised bill.
- Advanced Manufacturing Partnership. The White House announced a new effort on Friday, June 24 to bring together industry, university and federal government leaders in the manufacturing arena to “invest in the emerging technologies that will create high quality manufacturing jobs and enhance our global competitiveness.” At Carnegie Mellon University in Pittsburgh, PA, the President committed to investing more than $500 million in universities and companies to develop manufacturing innovations and expand employment opportunities. The new partnership will be co-led by the President and CEO of Dow Chemical, Andrew Liveris, as well as President of the Massachusetts Institute of Technology, Susan Hockfield.
- Pipeline Safety. The House Energy and Commerce Committee and the Oversight and Government Reform Committee will be fast-tracking consideration of new pipeline safety legislation in July. Energy Committee Chairman Fred Upton (R-MI) intends to hold a subcommittee markup on legislation after the House returns from recess next month. (Both committees share jurisdiction of the issue).
- Senate Energy and Natural Resources Committee Hearings. No hearings have been announced.
- Offshore Regulations. The Bureau of Ocean Energy Management (BOEM) will soon launch an online tracking system enabling drilling permit applicants to track the status of applications, and will also be issuing anticipated new safety and environmental management systems and blowout preventer rules. In remarks before the World National Oil Companies Congress, Director Michael Bromwich also said that BOEM would not develop special new rules for drilling contractors, for now, since he believes existing rules and regulations allow the Bureau to breach the activities of contractors and service companies that have acted egregiously.
- SPR. The Department of Energy will auction off the 30 million barrels of oil being made available from the nation’s Strategic Petroleum Reserve. A notice of sale is expected as oil is released over the next 30 days to help alleviate high gas prices and offset Middle Eastern oil supply disruptions.
- House Appropriators Rejects Increased SEC Funding. On Thursday, June 23, the House Appropriations Committee voted to maintain the Securities and Exchange Commission’s (SEC) budget at the same level in the next fiscal year, beginning October 1. The SEC requested an additional $222.5 million to provide resources necessary for new responsibilities enumerated in the Dodd-Frank Act. In rejecting the increased funding, committee members, however, highlighted the funding allocated for the SEC’s office of the inspector general, which has been active. The proposal would also limit mandatory funding for the new Consumer Financial Protection Bureau to $200 million, $129 million below the level in the President’s 2012 budget request for the consumer watchdog.
- House Financial Services Committee Approves Covered Bond Legislation. On Wednesday, June 22, the House Financial Services Committee voted 44-7 to approve the United States Covered Bond Act of 2011 (H.R. 940), a legislative proposal to establish a viable U.S. covered bond market. The bill provides a regulatory framework for covered bonds by giving the Treasury Department oversight of the market and creating a separate resolution process in order to bolster investor interest.
- House Financial Services Committee to Debate Housing Finance. On Tuesday, June 28, the House Financial Services Committee will hold a hearing titled, “Housing Finance Reform: Access to the Secondary Market for Small Financial Institutions.” Witnesses will include Edward Pinto of the American Enterprise Institute, Peter Skillern of the Community Reinvestment Association of North Carolina and representatives from the Independent Community Bankers of America and the American Bankers Association.
- House Subcommittee Hearing on “Swap Execution Facilities.” On Wednesday, June 29, the House Subcommittee on Securities, Insurance, and Investment will hold a hearing titled, “Emergence of Swap Execution Facilities: A Progress Report.” Witnesses will include Kevin McPartland, Tabb Group; Neal Brady, Eris Exchange; Ben Macdonald, Bloomberg, L.P.; James Cawley, Javelin Capital Markets; and Chris Bury, Jefferies & Company, Inc.
- House Financial Services to Hear from FDIC Chairman Bair. On Thursday, June 30, the House Financial Services Committee will hold a hearing titled, “State of the FDIC: Deposit Insurance, Consumer Protection, and Financial Stability.” The witness will be departing FDIC Chairman Sheila Bair, whose term expires on July 8.
- SEC, CFTC Address Dodd-Frank July 16, 2011 Effective Date for OTC Derivatives. Last week, the Commodity Futures Trading Commission (CFTC) published a proposed order granting temporary relief with respect to various Commodity Exchange Act (CEA) requirements originating in the Dodd-Frank Act, including the temporary exemption of persons or entities in connection with CEA provisions that reference terms such as "swap," "swap dealer," "major swap participant" or "eligible contract participant." The proposed relief for certain provisions of the CEA extends until the earlier of December 31, 2011 or the date that final rules are implemented. Under the proposal, other requirements of the CEA which require specific CFTC rulemaking are delayed until those rules are completed. The SEC similarly published its order granting temporary exemptions and other temporary relief, delaying effectiveness of certain provisions from the Dodd-Frank Act until they are implemented, and providing temporary relief from certain provisions otherwise due to become effective on Saturday, July 16, 2011. The SEC also published an order exempting reporting parties from reporting any pre-enactment security-based swaps until six months after the date on which a security-based swap data repository, capable of accepting the asset of such security-based swap, is registered by the SEC.
- SEC to Hold Open Meeting. On Wednesday, June 29, the SEC will hold an open meeting to consider proposed rules related to external business conduct standards for security-based swap dealers and major security-based swap participants.
- Federal Reserve to Discuss Interchange Fees. On Wednesday, June 29, the Federal Reserve will hold an open meeting to discuss the proposal governing debit card interchange fees and the fraud prevention adjustment, routing and exclusivity restrictions.
- Senate HELP Session. The Senate Committee on Health, Education, Labor and Pensions will meet in an Executive Session on Wednesday June 29, 2011, at 10 a.m. to consider S. 958, the Children’s Hospital GME Support Reauthorization Act of 2011, S. 1094, the Combating Autism Reauthorization Act and S.__, the Workforce Investment Act Reauthorization of 2011.
- Senate Finance Hearing. The Senate Committee on Finance has scheduled a hearing on Thursday, June 30, 2011, at 10 a.m. titled, “Perspectives on Deficit Reduction: A Review of Key Issues.”
- Energy and Commerce Hearing. The House Committee on Energy and Commerce’s Health Subcommittee hearing originally scheduled for Tuesday June 14, 2011, at 10:30 a.m. has been rescheduled for Wednesday, July 13, 2011, at 9 a.m. The hearing is titled, “IPAB: The Controversial Consequences for Medicare and Seniors.”
- Partnerships for Patients Funding. The U.S. Department of Health and Human Services (HHS) announced that up to $500 million in Partnership for Patients funding will be available to help hospitals, health care provider organizations and others to improve care and stop millions of preventable injuries and complications related to health care acquired conditions and unnecessary readmissions. The funding builds on the first $500 million available through the Community-Based Care Transitions Program to ease patients’ transition of care from the hospital to post-acute care. This funding will be awarded by the Center for Medicare and Medicaid Innovations at the Centers for Medicare & Medicaid Services (CMS) to help reduce hospital acquired conditions and reduce readmissions.
- Regulations. HHS issued a final rule for Group Health Plans and Health Insurance Issuers: Rules Relating to Internal Claims and Appeals and External Review Processes. The rule contains amendments to interim final regulations implementing the requirements regarding internal claims and appeals and external review processes for group health plans and health insurance coverage in the group and individual markets under provisions of the Affordable Care Act.
HHS and CMS are expected to release a series of regulations including the following: Changes to the ESRD Prospective Payment System for CY 2012 & Quality Incentives Program for CY 2013; Covered Outpatient Drugs (CMS-2345-P) (the rule would revise the definition of average manufacturer price); Outpatient Prospective Payment System Proposed Rule; Revisions to Payment Policies Under the Physician Fee Schedule and Part B for CY 2012; Requirements To Implement American Health Benefit Exchanges and Other Provisions of the Affordable Care Act; and State Requirements for Exchange--Reinsurance and Risk Adjustments (release expected immediately before or after the July 4th holiday).
OTHER HEALTH NEWS
- IOM Meetings. The Institutes of Medicine has scheduled several health-related meetings next week. The Committee on Primary Care and Public Health will meet on Monday, June 27, at 9:30 a.m. to hear from the Health Resources and Services Administration and the Centers for Disease Control and Prevention regarding case-study topics. The Committee on the Public Health Dimensions of the Epilepsies will hold a workshop on Health Care Quality, Access and Education of Health Care Providers, Patients and the Public on June 28 and 29.
International, Defense, Homeland Security
- Free Trade Agreement (FTA) Developments. Senate Minority Leader Mitch McConnell (R-KY) is the lynchpin for breaking the deadlock on moving a reauthorized Trade Adjustment Assistance (TAA) package and the three pending FTAs with Colombia, Panama and South Korea through Congress. On Thursday, Senator McConnell finally signaled a willingness to allow a Senate vote on a modest TAA renewal, quickly adding that the FTA votes must occur first, and the trade package must also include renewed Trade Promotion Authority (TPA). A conversation earlier in the week between White House Chief of Staff Bill Daley and Senator McConnell helped to pave the way for the modest step forward, as did continued efforts toward a deal by other senior Obama Administration officials and the offices of Speaker of the House John Boehner (R-OH) and House Ways and Means Committee Chairman Dave Camp (R-MI). In response, the Administration likely will heed Senator McConnell’s demand not to attach TAA to one or all of the FTA implementing bills, since a TAA package now appears to have the votes to pass on its own. However, the White House may well insist on a TAA vote prior to formally submitting the implementing legislation in order to help provide additional cover to some Congressional Democrats on the fence on the FTAs. The Administration will also likely agree to push for TPA renewal, which it nominally supports, however, “fast-track” almost certainly does not have the votes to pass the Senate and will slowly but surely turn up the pressure on the Minority Leader not to hold the rest of the trade package hostage.
- Libya. On Friday, the House voted down a measure to cut off funds for continued U.S. combat operations in Libya. The resolution, sponsored by Congressman Tom Rooney (R-FL), failed on a vote of 180 to 238. Earlier on Friday, the House also resoundingly rejected an alternative resolution offered by Congressman Alcee Hastings (D-FL), which would have authorized U.S. participation in the current NATO mission for a limited duration, while barring ground troops. Congressman Hastings modeled his alternative on the modified Senate resolution by Senator John Kerry (D-MA) and Senator John McCain (R-AZ), which the Senate Foreign Relations Committee may take up this week. If the Senate takes up the Kerry-McCain resolution, Secretary of State Hillary Clinton is likely to offer strong support, echoing her well-received efforts last week, which mollified some House Democrats skeptical of the Administration’s approach to military interventions generally and/or War Powers Act issues specifically.
- Senate Democrats Explore Repatriation Option. Senior Senator Chuck Schumer (D-NY) recently indicated that Senate Democrats are exploring the potential of a repatriation holiday as a means to generate short-term funding for an infrastructure bank. Meanwhile, House Way & Means Committee Chairman Dave Camp (R-MI) has expressed reluctance to pursue a one-time repatriation “holiday” outside of the scope of broader tax reform, suggesting that a piecemeal approach to tackling tax reform will improperly remove the focus from some of the broader issues with the current tax code. Still, the Chairman has not ruled out the legislative possibility of a repatriation bill this year. The Obama Administration has repeatedly suggested that a repatriation holiday should be considered, but only in the context of comprehensive tax reform.
- Tax Reform Hearings Continue. Hearings on fundamental tax reform are expected to continue on both the House Ways & Means and Senate Finance Committees. While past hearings have particularly focused on outbound U.S. investment, future hearings are expected to focus on inbound investment and tax administration. The following hearings are scheduled for next week:
- On Tuesday, June 28, the Senate Finance Committee is scheduled to hold a hearing titled, “Complexity and the Tax Gap: Making Tax Compliance Easier and Collecting What’s Due.” Scheduled to testify are: Michael Brostek, Director, Tax Policy and Administration, Strategic Issues, U.S. Government Accountability Office; Nina E. Olson, National Taxpayer Advocate, Internal Revenue Service; David Kirkham, President, Kirkham Motor Sports; Kris Carpenter, Founder/CEO, Sanctuary Spa and Salon.
- FATCA Implementation. As foreign governments and financial institutions continue to monitor Treasury’s implementation of the Foreign Account Tax Compliance Act (FATCA), a Treasury official in the Office of International Tax Counsel indicated that Treasury is involved in discussions with jurisdictions like Australia and Canada regarding certain aspects of the proposed regulatory regime. 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.
- Senate Spectrum Bill. Senate Commerce Committee Chairman Jay Rockefeller (D-WV) and Ranking Member Kay Bailey Hutchison (R-TX) continue to position their public safety and spectrum auction bill, S. 911, for a full Senate vote before the July 4 recess. As previously reported, Rockefeller’s Committee approved the Public Safety Spectrum and Wireless Innovation Act earlier this month by a 21-4 vote. S. 911 represents perhaps the most detailed legislative effort advanced thus far to reallocate the 700 MHz D-block to public safety and move voluntary incentive spectrum auctions closer to reality. Although the strong bipartisan Committee backing for the measure could create momentum for Senate passage, backers of the bill will need 60 votes to preclude any filibuster attempt. Another key will be the Congressional Budget Office (CBO) budget “score” for the bill, which is expected soon. The stronger the CBO’s analysis of projected auction revenue and deficit reduction resulting from S. 911, the better its prospects for passage.
Meanwhile, in the Republican-controlled House, leaders of the Energy and Commerce Committee continue to voice their preference to auction the 700 MHz D-block spectrum rather than reallocate it to public safety. Committee Chairman Fred Upton (R-MI) and Communications and Technology Subcommittee Chairman Greg Walden (R-OR) have yet to introduce a bill on the subject. The pace at which they undertake spectrum reform may be influenced by what happens – or does not happen – in the Senate with S. 911. Meanwhile, House Homeland Security Chairman Peter King (R-NY) and Ranking Member Bennie Thompson (D-MS), who introduced their own bill, H.R. 607, to reallocate the D-block to public safety, continue to press for their measure. H.R. 607 has been referred to Upton’s committee.
- Privacy. On Thursday, June 29, the Senate Commerce Committee will hold a hearing titled, “Privacy and Data Security: Protecting Consumers in the Modern World.” The hearing will examine how entities collect, maintain, secure and use personal information, and whether the protections currently in law have kept pace with those practices. Committee Chairman Rockefeller (D-WV) is sponsor of S. 913, the Do-Not-Track Online Act of 2011, a bill that allows consumers the right and ability to opt out of having their online activities tracked by Internet companies.
- Pornography. Looking forward to July, the House Judiciary Committee is planning a hearing on H.R. 1981, the Protecting Children from Internet Pornographers Act of 2011. The bill, introduced by Judiciary Committee Chairman Lamar Smith (R-TX) and Committee member Debbie Wasserman Schulz (D-FL) in May, creates new penalties for possessing, sharing or funding child pornography and, most critically, requires Internet providers to store all user IP addresses for 18 months.
- 4G Consumer Bill. On June Wednesday, June 22, House Energy and Commerce Communications and Technology Subcommittee Ranking Member Anna Eshoo (D-CA) introduced H.R. 2281, the Next Generation Wireless Disclosure Act. With the rise in 4G wireless services, H.R. 2281 aims to ensure that consumers have complete, accurate and clear information regarding 4G service at the point of sale and before they commit to long-term service plans. Specifically, the bill requires: 1) retailers to provide consumers information regarding guaranteed minimum data speed, network reliability, coverage maps, pricing, and technology used to provide 4G service and the network conditions that can impact application speed; 2) the Federal Communications Commission (FCC) to develop “guaranteed minimum” standards for data speeds and network reliability; and 3) the FCC to evaluate the speed and pricing of 4G networks of the top 10 wireless carriers to “provide consumers with access to a side-by-side comparison in their service area.” The bill has been supported by the Consumers Union, the New America Foundation and the Media Access Project.
- Patent Reform. After a week of behind the scenes debate, the House passed HR. 1249, the America Invents Act, by a vote of 304-117 on June 23. From the time the bill was reported by the House Judiciary Committee, the measure has been under bipartisan attack on a number of key issues, including implementation of a first-inventor-to-file standard for patent approval; establishment of a new process for review of “business method patents;” and, most controversial, allowing the U.S. Patent and Trademark Office (PTO) to keep and spend all fees it collects. Before its consideration on the House floor, House Republicans forged a compromise on PTO fees that allows appropriators to keep control of all PTO funding by moving fees in excess of approved funding into a separate account to be appropriated in future bills. This agreement allowed the bill to move to the floor where amendments to repeal or modify first-inventor-to-file, business method patent and other provisions were defeated. The House and Senate will now have to negotiate differences between the two versions of the bill before a final bill can be passed and sent to the President. The Administration has voiced support for both the Senate-passed and House-passed bills.
- FCC Open Meeting. At the regularly scheduled open meeting on Tuesday, July 12, the FCC will consider Notice of Proposed Rulemakings (NPRM) on the following items: 1) low power FM and FM translator stations; 2) E-911 location accuracy; and 3) prevention and detection of unauthorized telephone bill charges ("mystery fees" or "cramming") by improving the disclosure of third-party charges on wireline telephone bills. Senate Commerce Committee Chairman John Rockefeller (D-WV) has stated that he also plans to look closely at the “cramming” issue in coming months.
- Google Antitrust Investigation. The Federal Trade Commission (FTC), after months of informal inquiries regarding Google’s business practices, is preparing to open a formal investigation of the company and whether Google has abused its dominance on the Internet. In particular, the FTC will investigate whether Google – which accounts for around two-thirds of Internet searches in the U.S. and more abroad - unfairly directs users to its own growing network of services at the expense of rival providers. The FTC action is the latest in a string of antitrust assessments involving the company including the ongoing European Union investigation into similar issues, the recent approval of the travel information company ITA Software, Inc. acquisition in April and the current Justice Department antitrust review of Google’s proposed purchase of the Internet advertising company Admeld, Inc.
- SAFETEA-LU Reauthorization. SAFETEA-LU Reauthorization remains in a holding pattern as the House looks towards releasing a bill in early July for a potential July 12 mark-up. Legislative drafts in the Senate EPW and Banking Committees are reportedly near complete; with further progress on hold as negotiations continue in the Finance Committee as to the top-line funding levels that EPW and Banking Committee leaders want to have before proceeding to mark-up. The lack of adequate revenue to fund the program at currently authorized levels continues to be a fundamental challenge, with the House measure expected to substantially cut the program to align it with projected Highway Trust Fund revenues, and Senate Democratic leaders focusing largely on how to fund a two-year bill that requires less additional revenue, but still requires an infusion (estimated at $12 billion for two years) to avoid cuts to the program.
- FAA Reauthorization. Congress is poised to take up the 20th consecutive extension of the Federal Aviation Administrative Authorization bill as Member-level negotiations continue on outstanding issues.
- FY2011 Discretionary Funding. The Federal Transit Administration (FTA) has now rolled out approximately $1 billion in discretionary bus capital funding for FY2011, including $750 million for State of Good Repair and approximately $100 million for TIGGER energy efficiency grants and Clean Fuels grants. FTA has also released a $175 million Discretionary Livability program notice that includes $150 million for bus capital projects that advance livability objectives, and $25 million for Alternatives Analysis. U.S. Department of Transportation’s TIGER III grants are expected in late June/early July.