Capital Thinking Update - June 6, 2011

    View Author 6 June 2011

    General Legislative

    On Monday, June 6, the House will begin observing a one week District Work Period. The Senate will return from its Memorial Day recess at 4:30 p.m. on Monday, when it will proceed to consideration of the nomination of Donald B. Verrilli, Jr. to be Solicitor General of the United States.

    Budget, Appropriations


    • House Vote on Increased Debt Limit. In a largely symbolic measure, the House overwhelmingly rejected a proposal to raise the debt limit without also cutting federal spending on Tuesday. This gesture was shortly followed by the Republican leadership’s meeting with President Obama regarding the debt ceiling which appeared to yield little to no results. Just hours after the White House meeting on Wednesday, Speaker John Boehner (R-OH) called for President Obama to launch direct talks with congressional leaders in order to strike a deal over the debt ceiling by the end of June. House Democratic leaders were invited to the White House Thursday to discuss negotiations where they pushed for new revenue to be included in any deal to reduce the deficit and raise the debt limit. The House will be on recess until the evening of June 13, but budget and debt limit negotiations are expected to continue over the next several weeks.
    • House Balanced Budget Proposal. On Thursday, the House Judiciary Committee began consideration of the joint resolution that would require a three-fifths vote of each chamber to run a deficit, increase revenue or raise the debt limit. This measure is sponsored by Representative Robert Goodlatte (R-VA) and is expected to gain the endorsement of the Committee before the House recesses on Friday.
    • House Appropriations Activity. The House passed the FY2012 Homeland Security appropriations bill on Thursday by a 231-188 vote. This marks the House’s first passage of an appropriations measure for fiscal year 2012. Passage of the House’s second spending bill, the FY2012 Military Construction-VA bill, has been postponed until after next week’s recess. The House Appropriations Committee continued their work on the other spending bills which included the full committee markup and agreement to the FY2012 Agriculture bill, the advancement of the FY2012 Energy and Water bill to a full committee markup and a closed subcommittee markup of the FY2012 Defense appropriations bill.
    • Senate Appropriations Activity. The Senate returns from recess on Monday and intends to work on fiscal year 2012 appropriations bills. The Senate Appropriations Subcommittee on Labor, Health and Human Services, Education and Related Agencies has scheduled a June 8 hearing on the proposed FY2012 appropriations for programs under its jurisdiction. Secretary of Education Arne Duncan is expected to testify on the Department of Education’s proposed budget for the next fiscal year. This hearing had been originally scheduled for early April but was pushed back along with other Senate appropriations subcommittee hearings due to required action on FY2011 and the Senate’s choice to delay work on FY2012. 




    • ESEA Reauthorization. On June 1, the House Subcommittee on Early Childhood, Elementary, and Secondary Education held a hearing on the role of charter schools in education reform, with witnesses appearing primarily from charter schools. Republican members of the Subcommittee expressed support for charter schools as an empowerment tool for parents, and Education and Workforce Committee Chairman John Kline (R-MN) committed to include expanding access to high-quality charter schools as part of the Committee’s ESEA reform efforts. Additionally, Chairman Kline is expected to release a proposal in the coming weeks which seeks to provide funding flexibility to states and school districts.
    • Hearings. The Senate Health, Education, Labor & Pensions (HELP) Committee scheduled a hearing titled, “Drowning in Debt: Financial Outcomes of Students at For-Profit Colleges,” for Tuesday, June 7, as part of a series of hearings Chairman Harkin (D-IA) has called to investigate for-profit institutions of higher education. Education Secretary Arne Duncan is among the scheduled witnesses. In a letter to Chairman Harkin on May 31, Ranking Member Enzi (R-WY) stated that Republican HELP Committee members would boycott this and future hearings due to the Majority’s handling of the issue and intent to embarrass institutions that have been uncooperative. A separate hearing will be held by the Subcommittee on Children and Families on Thursday, June 9, focusing on quality early education and care. Witnesses have not yet been announced.


    • Gainful Employment Rules. The Department of Education released the final rule on its proposed “gainful employment” regulations on June 2. Education Secretary Arne Duncan provided a briefing a day earlier to emphasize key changes made to the proposed rule after receiving feedback from the public. The changes made will give colleges additional time and greater flexibility to meet the rule's benchmarks and are expected to reduce the number of programs penalized by the department. Despite these changes, the final rule continued to draw criticism from several members of Congress, including House Education and Workforce Committee Chairman Kline and Subcommittee on Higher Education and Workforce Training Chairwoman Virginia Foxx (R-NC), who expressed concern with “the harmful impact the gainful employment regulation could have on students and the workforce,” claiming the regulation causes burdensome red tape and unfairly targets career colleges. Majority Leader Eric Cantor (R-VA) agreed, and a small group of House Democrats released a separate statement concerning the rule’s impact on restricting minority student access.




    • Senate Energy and Natural Resources Committee Hearings. On Tuesday, the full Committee will hold a legislative hearing on Chairman Jeff Bingaman’s (D-NM) Nuclear Power 2021 Act (S. 512), the American Alternative Fuels Act of 2011 (S. 937) and the Nuclear Energy Research Initiative Improvement Act of 2011  (S. 1067). On Thursday, the Subcommittee on Energy will hold a legislative hearing on the Critical Minerals and Materials Promotion Act of 2011 (S. 383), the Powering America's Lithium Production Act of 2011 (S. 421) and the Critical Minerals Policy Act of 2011 (S. 1113), sponsored by Ranking Member Lisa Murkowski (R-AK). Also on Thursday, the full Committee will hear testimony on bills to advance alternative fuel vehicles and promote energy efficiency measures, including the Reducing Federal Energy Dollars Act of 2011 (S. 963), the Energy Savings and Industrial Competitiveness Act of 2011 (S. 1000) and the Alternative Fuel Vehicles Competitiveness and Energy Security Act of 2011 (S. 1001). 



    • Air Quality and Children’s Health. On Wednesday, June 8, the Senate Committee on Environment and Public Works, Subcommittee on Clean Air and Nuclear Safety, in conjunction with the Subcommittee on Children’s Health and Environmental Responsibility, will hold a joint hearing titled, "Air Quality and Children’s Health." One area the hearing may focus on is how to clean up mercury and other toxic pollution from coal-fired power plants. Mercury is one example of a persistent pollutant emitted into ambient air that leads to exposure through another route: organisms metabolize mercury into methylmercury, a developmental neurotoxicant that poses a significant hazard for children. Developing fetuses and young children are thought to be disproportionately affected by methylmercury exposure because many aspects of development, particularly brain maturation, can be disturbed by the presence of methylmercury.


    • Draft National Coastal Condition Report. EPA invites the public to comment on the draft National Coastal Condition Report IV (NCCR IV) which describes the condition of the nation’s coastal waters. According to the draft, the overall condition of the Nation’s coastal waters continues to be fair, with marginal improvement from EPA’s 2008 National Coastal Condition Report III. EPA expects that this report on the condition of coastal waters will increase public awareness about the extent and seriousness of pollution in the waters and will support more informed decisions concerning protection of the resource. Comments to EPA must be received on or before August 1, 2011.
    • Safe Drinking Water Act. The 1996 Safe Drinking Water Act Amendments require the EPA to determine every five years whether to regulate at least five contaminants from the current Contaminant Candidate List (CCL) with a national primary drinking water regulation. The process of making decisions about whether to regulate any of the unregulated contaminants on the CCL is called “Regulatory Determinations.” On October 8, 2009, EPA published the third Contaminant Candidate List (CCL 3) containing 116 unregulated contaminants. The 116 unregulated contaminants list includes, among others, pesticides, disinfection byproducts, chemicals used in commerce, waterborne pathogens, pharmaceuticals and biological toxins. EPA will be hosting a public stakeholder meeting on June 16, 2011, to discuss and obtain input on EPA’s process for Regulatory Determination 3. The Agency expects to publish the preliminary regulatory determinations for at least five CCL 3 contaminants in mid-2012 and final regulatory determinations by August 2013.
    • Mountaintop Mining. EPA has publically released two final scientific reports assessing potential environmental and water quality effects of mountaintop coal mining on Appalachian streams. The reports provide scientific information for use by Federal and state agencies responsible for the review of surface coal mining operations under the Clean Water Act. The two reports are titled, “The Effects of Mountaintop Mines and Valley Fills on Aquatic Ecosystems of the Central Appalachian Coalfields” (EPA/600/R–09/138F) and “A Field-Based Aquatic Life Benchmark for Conductivity in Central Appalachian Streams” (EPA/600/R–10/023F). Excerpts of potential impacts, as set forth in the reports include the following:

      “The Effects of Mountaintop Mines and Valley Fills on Aquatic Ecosystems of the Central Appalachian Coalfields:”
      • Springs, and ephemeral, intermittent, and small perennial headwater streams are permanently lost with the removal of the mountain and from burial under mining waste;
      • Concentrations of major chemical ions (a measure of salinity) are persistently elevated downstream of mining operations;
      • Degraded water quality reaches levels that are acutely lethal to standard laboratory test organisms;
      • Selenium concentrations are elevated, reaching concentrations that have caused toxic effects in fish and birds; and
      • Aquatic communities downstream of mining operations are consistently degraded.

        “A Field-Based Aquatic Life Benchmark for Conductivity in Central Appalachian Streams:”
      • Consistent with longstanding EPA methods and using site specific stream data in West Virginia and Kentucky, EPA determined that conductivity (dissolved salts) levels below 300 μS/cm are generally associated with healthy aquatic communities; and
      • The Report demonstrates that elevated conductivity (a measure of salinity) is the factor most directly responsible for the loss of stream life in Appalachian streams.


    Financial Services


    • Commodity Futures Trading Commission to Hold Public Roundtable. On Wednesday, June 8, the Commodity Futures Trading Commission (CFTC) will hold a public roundtable to discuss issues related to the existing systems of swap product classification and identification currently available. The roundtable will look at the coordination among various industry product classification and identification work-streams for the purpose of achieving a universal method to describe and classify swap products. Additionally, the roundtable will discuss the implementation of a universal system of swap product classification and identification for the purpose of meeting various CFTC requirements.


    • CFTC Chairman Acknowledges July 16 Dodd-Frank Deadline. On Thursday, June 2, CFTC Chairman Gary Gensler recognized market concerns related to the July 16 implementation deadline and the uncertainty caused by incomplete rulemakings. He indicated that the CFTC staff had been working to provide temporary certainty to market participants so that companies would not have to apply for, or request, regulatory relief.
    • Trade Groups Request Agencies Re-Propose Derivatives Rulemakings. On May 31, 2011, the Securities Industry and Financial Markets Association (SIFMA) and several other financial services trade groups requested that the CFTC and Securities and Exchange Commission (SEC) re-propose the Dodd-Frank derivatives rules to give banks, swap dealers and asset managers more time and additional guidance on the potential impacts of the proposed rules. This move, according to the letter, would delay implementation of the rules by “months, not years, and the costs of such delay will be far outweighed by the benefits.” The letter highlighted the financial markets’ concern regarding rules they believe may currently be poorly structured with negative consequences for the industry. While the SEC and CFTC have not responded to the letter, it is clear that influential financial services groups are increasing the visibility of their concern with rulemakings that are moving too quickly or are significantly harming market activity.


    Health Care


    • Finance Hearing. The Senate Committee on Finance has scheduled a hearing on Tuesday, June 7, titled, “Perspectives on Deficit Reduction: Revenues.”
    • House Ed and Workforce Hearing. The House Committee on Education and the Workforce Subcommittee on Health, Employment, Labor, and Pensions is holding a field hearing on June 7, titled, “The Recent Health Care Law: Consequences for Indiana Families and Workers.” The hearing is scheduled for 9:00 a.m. (Central) in the Vanderburgh County Civic Center located at 1 Martin Luther King Jr. Blvd., Evansville, IA.
    • House Ways and Means Hearing. The House Ways and Means Health Subcommittee will hold a hearing on Wednesday, June 22, on the recently released 2011 Annual Report of the Boards of Trustees of the Federal Hospital Insurance and Federal Supplementary Medical Insurance Trust Funds. In what will be the first in a series of hearings on Medicare’s future, the Subcommittee will focus specifically on the Medicare program’s financial status. The Subcommittee will hear testimony from Medicare’s two public trustees.


    • ACO Rule Comment Deadline. Monday, June 6, marks the deadline for public comment on the proposed rule regarding the Medicare Shared Savings Program established by the Affordable Care Act (ACA). The rule offered proposed guidance to stakeholders on the creation of accountable care organizations, which are intended to enhance care coordination and efficiency. Several stakeholders have already submitted and released comment letters, including the American Hospital Association (AHA) and the American Medical Association (AMA).
    • Exchange Regulation. The Center for Consumer Information and Insurance Oversight at Health and Human Services (HHS) has indicated that the proposed regulation regarding the State-based health insurance exchanges required by the ACA will not be released until this summer instead of spring, as was expected.
    • Medicaid HAC Regulations. CMS released a final rule to implement section 2702 of the ACA, which directs the HHS Secretary to issue Medicaid regulations prohibiting federal payments to states under section 1903 of the Social Security Act for any amounts expended for providing medical assistance for health care-acquired conditions specified in the regulation. It will also authorize states to identify other provider-preventable conditions for which Medicaid payments will be prohibited. The regulation takes effect on July 1, 2011.
    • Retrospective Review Regulations. HHS released a rule seeking public comment from interested parties on its Preliminary Plan for Retrospective Review of Existing Regulations. The purpose of the Preliminary Plan is to identify a preliminary list of regulations that are appropriate candidates for review over the next two years and establish an ongoing process of retrospective review of existing regulations by which HHS can determine whether any should be modified, streamlined, expanded or repealed. HHS anticipates that such reviews will make its regulatory program more effective and flexible and reduce unnecessary burdens on the regulated communities. Comments are due by June 30, 2011.


    • New AMA Chief. The AMA has announced that James Madara will assume the role of CEO on July 1. Dr. Madara previously served as Dean of the University of Chicago’s Pritzker School of Medicine, as well as CEO of the University of Chicago Medical Center.


    International, Defense, Homeland Security

    • Free Trade Agreement Endgame. The Obama Administration and congressional Republicans continue to talk around the edges of a negotiated compromise that would expand the U.S. Trade Adjustment Assistance (TAA) program beyond its current scope and funding levels. A deal on TAA would enable the Administration to submit to Congress the implementing legislation for the three pending Free Trade Agreements (FTAs) with Panama, South Korea and Colombia. The Administration, congressional Democrats and key Republicans, such as Speaker of the House John Boehner (R-OH) and House Ways and Means Committee Chairman Dave Camp (R-MI), will likely be willing to negotiate a deal on TAA. Such a compromise would likely extend TAA benefits to service workers, who were covered under the expired TAA package enacted in 2009 but not under the operative TAA benefits originally established in 2002, while funding health care and other TAA program benefits at a rate between 2002 and 2009 levels. Two key hurdles remain: first, no Senate Republican has yet emerged to cut a deal in the face of opposition to an expanded TAA from Senate Minority Leader Mitch McConnell (R-KY) and Senate Finance Committee Ranking Member Orrin Hatch (R-UT). Second, it may be unclear for some time whether any TAA deal has the requisite 60 Senate votes and 218 House votes, thereby tempting the Administration to wait to submit the FTA legislation until such votes actually occur.
    • Libya. On Friday afternoon, the House voted on two resolutions voicing varying degrees of disapproval with President Obama’s handling of the Libya operation. A resolution offered by Congressman Dennis Kucinich (D-OH) failed by a count of 148-265. Representative Kucinich gathered a coalition of liberals and conservatives in support of a resolution citing the War Powers Act in calling for the withdrawal of U.S. forces from the Libya conflict within 15 days. Speaker Boehner decided to offer a less strident alternative, which asks the Administration to report within 14 days on goals, costs, and rationale for not seeking Congressional approval for the mission. Speaker Boehner’s resolution pass by a margin of 268-145, siphoning off previous support for Congressman Kucinich’s option from Republicans disgruntled with the Administration’s relatively few consultations with Congress on Libya policy. Minority Leader Nancy Pelosi (D-CA) voted against both resolutions, stating her opposition to sending the wrong signal to NATO allies regarding U.S. resolve. Many other House Democrats followed her lead on the Speaker’s resolution, disagreeing with its criticism of the President for failing “to provide Congress with a compelling rationale based upon United States national security interests for current United States military activities regarding Libya.



    • Senate Spectrum Bill. The Senate Commerce, Science, and Transportation Committee will mark up the Public Safety Spectrum and Wireless Innovation Act (S. 911) on the morning of Wednesday, June 8. Late last week Chairman Jay Rockefeller’s (D-WV) office released a draft bill he has been working on with Ranking Member Kay Bailey Hutchison (R-TX). In addition to reallocating the 700 MHz D block, the bill would authorize $12 billion for deployment of a nationwide public safety broadband network and would allow the Federal Communications Commission (FCC) to hold incentive auctions and include other spectrum-management provisions.

      Under the draft, the Public Safety Broadband Corporation (PSBC) would oversee the construction and maintenance of a nationwide public safety broadband network and hold the license for the public safety spectrum. After the 15-year term ends, the PSBC would have to apply to the FCC for a renewal. Also, the Commerce Secretary would have to appoint at least one member each with expertise in technical, network and financial matters to the board of directors of the corporation. In addition, the bill directs the FCC to auction the 1755-1850 megahertz band by January 31, 2014. Under the draft, the National Telecommunications and Information Administration (NTIA) also has to make available within one year of enactment 15 MHz of contiguous spectrum between 1675-1710 MHz, although the new draft adds language that the reallocation would not include exclusion zones. The bill also requires the reallocation and auction of the 3550-3650 MHz band or other spectrum of similar value. NTIA has identified the 1695-1710 MHz and 3550-3650 MHz bands for reallocation and is studying the feasibility of reallocating the 1755-1850 MHz band. The latter band is coveted by wireless providers, particularly the 1755-1780 MHz band, which carriers and trade groups want paired with the AWS-3 band. The draft allows the FCC to pair for auction the 1755-1780 MHz band with the 2155-2180 MHz AWS-3 band.
      The legislation allows the President to withhold reallocation of the 3550-3650 MHz band if he determines that it would hurt incumbent federal systems or if other spectrum "better serves the public interest" and is expected to produce comparable auction revenues. In that instance, he must identify alternative spectrum primarily used by federal agencies of between 21 MHz and 100 MHz for auction.

      S. 911 also adds language to ease wireless companies’ ability to site antennas. The bill prohibits state or local governments from denying requests to modify existing towers as long as the modification "does not substantially change the physical dimensions of such tower." Such modifications would include collocation of new equipment, removal of equipment and replacement of equipment. Federal agencies would also be able to grant easements or rights of way to install or maintain wireless equipment.
    • House GOP Technology Agenda. Led by House Speaker John Boehner (R-OH), on June 2, House Republican leadership announced a renewed focus on technology issues, citing technology’s importance “on the front lines” of the nation’s economic recovery. Joined by members of the House Republican Technology working group, Speaker Boehner announced the House leadership’s plan to focus on seven technology priorities: promoting spectrum availability, cybersecurity, intellectual property protection, free trade promotion, updating the tax code, training/attracting the best workers, and reducing unnecessary regulations. Working Group Chairman Bob Goodlatte (R-VA) said, “In working to advance technology policies, we will ensure that the U.S. continues to lead the world in innovation and that the technology sector in America remains a driving force and job-creating engine in our economy.” Goodlatte also predicted that the House version of the America Invents Act (H.R. 1249) will pass the House with “wide support” later this month. Goodlatte, speaking on behalf of Representative Greg Walden (R-OR), who could not attend, said that spectrum policy remains a priority and that House and Senate leaders have had high-level communications on moving legislation on this subject. Meanwhile, Representative Michael McCaul (R-TX), co-chair of the Congressional Cybersecurity Caucus, also added that the GOP plans to pass cybersecurity legislation this Congress, although it will likely be in the form of specific, targeted legislation, rather than a comprehensive bill.
    • Cell Phone Safety. On the heels of the World Health Organization International Agency for Research on Cancer’s announcement on May 31 that they now believe that cellphones may “possibly” be a factor in causing a certain type of cancer, Representatives Ed Markey (D-MA), Henry Waxman (D-CA) and Anna Eshoo (D-CA) sent a letter asking the Government  Accountability Office (GAO) to conduct a thorough review of the status of existing research on the health risks of long-term mobile phone use, adequacy of the Federal Communications Commission’s (FCC) safety standards for mobile phone radiation, and what actions are being taken to inform the public of potential risks. The request also asks GAO to examine the basis for safety recommendations included in user manuals of the iPhone and other major mobile companies, which instruct users to hold the phone away from the body when making calls. In making the request, Markey noted “it’s been a decade since GAO completed its last report at my request. With the significant increase in mobile phone usage over these years and this most recent study from the WHO, now is the time for further research.” According to the letter, “[t]he announcement by the World Health Organization makes clear that additional research is needed to fully understand the long-term impact of mobile phone use on the human body, particularly in children whose brains and nervous systems are still developing.”  A copy of the letter is available on Representative Markey’s website. 
    • AT&T/T-Mobile Merger. May 31 marked the final day in which opponents to AT&T’s proposed acquisition of T-Mobile USA could file formal petitions in opposition to the merger. Among the most prominent opponents, Sprint filed a 350+ page petition challenging the FCC with a “stark choice,” saying that the Commission could “reject AT&T’s bid to take over T-Mobile and extend the last two decades of robust competition in the wireless industry – competition that has promoted economic growth and advanced U.S. global leadership in mobile communications, or the Commission can approve the takeover and let the wireless industry regress inexorably toward a 1980s-style duopoly.” Merger supporters, on the other hand, are pointing to a recent study by the Economic Policy Institute that finds that AT&T’s promised investment in developing broadband networks could create as many as 96,000 jobs, and the new spectrum would allow the merged company to expand buildout in rural and underserved communities. AT&T and T-Mobile have until June 10 to respond to the petitions; opponents will then have until June 20 to reply to the responses.
    • FCC June 9 Open Meeting. The FCC’s tentative agenda for its June 9 meeting includes the following items: Electronic Tariff Filing System Report and Order; Wider Channel Bandwidths for Broadband Radio Service (BRS) FNPRM; Space Path Interference (between the 17/24 GHz BSS space stations and DBS) Report and Order; and Maritime Automatic Identification Systems Order. A formal agenda will be released a week before the meeting.




    • SAFETEA-LU Reauthorization. House Transportation and Infrastructure Committee Chairman John Mica (R-FL) announced that he would be releasing a draft surface transportation reauthorization measure the week of June 13. Senator Barbara Boxer (D-CA), Chair of the Senate Environment and Public Works Committee (EPW), said that she hopes to 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 Outline: In what Senator Boxer described as “great progress,” she along with Senator James Inhofe (R-OK), Ranking Member of the EPW Committee; Senator Max Baucus (D-MT), Chairman of the Senate Finance Committee and EPW Transportation and Infrastructure Subcommittee; and Senator David Vitter (R-LA), Ranking Member of the Subcommittee; issued a joint statement outlining the following “highlights” from Senate draft legislation in the works:
      • Funds programs at current levels to maintain and modernize our critical transportation infrastructure;
      • Eliminates earmarks;
      • Consolidates numerous programs to focus resources on key national goals and reduce duplicative and wasteful programs;
      • Consolidates numerous programs into a more focused freight program that will improve the movement of goods;
      • Creates a new section called America Fast Forward, which strengthens the TIFIA program to stretch federal dollars further than they have been stretched before; and
      • Expedites project delivery without sacrificing the environment or the rights of people to be heard. 
    • Reauthorization Period. Critically, the joint statement also emphasized that the “goal is to attain the optimum achievable authorization length depending on the resources available." This language has been widely interpreted as indicating a short-term bill, likely extending two years, which can be funded at or near current levels from projected Highway Trust Fund revenues. Without additional revenue, a longer-term bill would have to involve substantial reductions from currently authorized levels. Following this release, Senator Inhofe was quoted in the press as saying that, “It is going to end up a two-year bill…The money is just not there." Senator Baucus, who chairs the Finance Committee that controls the revenue title, has made similar statements in the past. Chairman Mica will be releasing a six-year bill. Senator Shelby, the Ranking Member of the Senate Banking Committee with jurisdiction over the transit title, has also been critical of a short term bill, stating that it “kicks the can down the road.” The resolution of this issue, which ultimately determines the funds available for all programs, will be of fundamental importance in Congress moving forward with reauthorization legislation.