Capital Thinking Update - July 18, 2011

    View Authors 18 July 2011

    General Legislative

    On Monday, July 18, the House will convene at 12 p.m. for morning hour.  Thereafter, at 2 p.m., the House will proceed to consideration of H.R. 33, a bill to amend the Securities Act of 1933 to specify when certain securities issued in connection with church plans are treated as exempted securities for purposes of the Act. The Senate will convene at 2 p.m. on Monday for a period of morning business. Thereafter, the Senate will resume consideration of H.R. 2055, the Military Construction and Veterans Affairs and Related Agencies Appropriations bill.


    Budget, Appropriations

    LEGISLATIVE ACTIVITY

    • House Plans Vote on Bill to Reduce Spending. Instead of holding a vote on a balanced budget amendment (S.J. Res 1), on July 20, Republican House leaders will bring up the Cut, Cap and Balance Act, pushed by the Republican Study Committee and introduced by Representative Jason Chaffetz (R-UT). Reportedly, the bill would authorize a $2.4 trillion increase in the debt ceiling, after Congress passes a balanced-budget amendment, and would cut $111 billion in FY2012. The bill would additionally cap spending at 18 percent of Gross Domestic Product (GDP) by 2021.
    • Senate Non-Binding Deficit Reduction Motion. The non-binding “Sense of the Senate” measure, expressing that “any agreement to reduce the budget deficit should require that those earning $1 million or more per year make a more meaningful contribution to the deficit reduction effort,” was under Senate consideration after a July 11 vote to proceed to the measure. Senate Majority Leader Harry Reid (N-NV) proceeded to ‘fill the amendment tree,’ and a subsequent cloture vote on the measure failed on July 13 by a vote of 51-49.
    • Senate Budget Resolution. In a July 11 floor speech, Senate Budget Committee Chairman Kent Conrad (D-ND) outlined his FY2012 budget proposal framework. As previously reported, the proposal would reduce the deficit by $4 trillion over 10 years, stabilize the debt by 2014 cut the deficit to 2½ percent of Gross Domestic Product (GDP) by 2015 and 1.3 percent by 2021. In addition to spending cuts, the Chairman proposes to lower the corporate tax rate from 35 to 29 percent; maintain current tax cuts for individuals earning up to $500,000 and couples earning up to $1 million (rates for those earning more would increase from 35 to 39.6 percent); recede estate tax to 2009 levels ($3.5 million for an individual; $7 million for a couple); generate $2 billion in revenue by closing specific tax loopholes; freeze Congressional pay for three years; freeze the legislative and White House budgets for three years; and freeze civilian pay for two years. Overall, Chairman Conrad noted the plan will account for $2 trillion in spending cuts and $2 trillion in revenue.
      Chairman Conrad continues to hold off on a public release or committee markup of the bill pending progress of the ongoing deficit reduction negotiations so that the resolution can be modified to serve as a vehicle for a budget / deficit reduction deal.
    • House Appropriations Activity. The House Appropriations Committee approved the FY2012 Commerce-Justice-Science, Interior-Environment, and the Legislative Branch spending bills on July 12 and 13, while the Transportation-Housing and Urban Development subcommittee markup scheduled for July 14 was postponed. After a full week of debate and amendments, the FY2012 Energy and Water appropriations bill passed the full House on July 15 by a vote of 219-196, with ten Democrats supporting the measure, and 21 Republicans voting against it. There are currently no subcommittee or committee meetings scheduled for this week as the House was scheduled for a District Work Period (the recess was cancelled due to the deficit reduction talks).
    • Senate Appropriations Activity. On July 14, the Senate voted to consider the FY2012 Military Construction-Veterans Affairs bill. Floor action on the bill will continue this week.

    OTHER BUDGET, APPROPRIATIONS NEWS

    • High Level Deficit Reduction Efforts at an Impasse. After a week of intense discussions, White House and Congressional leaders seem no closer to an agreement to raise the $14.3 trillion debt ceiling by the August 2 deadline set by the Department of the Treasury. On July 15, President Barack Obama, still pushing for a long-term, $4 trillion package, called on Congressional leaders to come up with a framework for a plan in 24 – 36 hours. Adding to the pressure, Moody’s Investors Service placed the nation’s top credit rating on review for possible downgrade and Standard and Poor’s warned it may do the same.
    • Contingency Plan. A “Plan B” proposal put forth by Senate Minority Leader Mitch McConnell (R-KY) last week is gaining bipartisan support in the Senate. As proposed, the measure would enable President Obama to authorize an overall $2.5 trillion debt increase over the next year-and-a-half through three steps – the first request for $700 billion; the second for $900 billion; and the third for $900 billion. Each request would have to include a plan for corresponding budget cuts. The requests would be subject to a Congressional resolution of disapproval; however, the President can veto such a resolution. While Congress could move to override the veto, such a move likely would not be successful as it requires a two-thirds majority.

      Senate Democrats are working with Minority Leader McConnell to expand the measure to include spending reductions and language to establish a bi-partisan Congressional committee that would recommend budget cuts and create an expedited procedure for votes on them. The Committee would consist of Democratic and Republican Senators and Representatives only.
      It is unclear how House Republicans will receive the plan, and while the President has not spoken in direct opposition to the plan, he remains focused on a multi-trillion, long-term deficit reduction package.
    • Gang of Six Back in Action. Senate Budget Committee Chairman Kent Conrad (D-ND) announced that the Senate “Gang of Six” is nearing a release of its plan to cut the deficit by approximately $3.6 trillion over ten years. The measure is said to include tax reform, including an end to the alternative minimum tax, revenue and entitlement reform, as well as significant security and non-security domestic spending cuts. The Gang has been working without Senator Tom Coburn (R-OK), who left the group earlier this year, and with limited input from Senate Majority Whip Dick Durbin (D-IL), who has been participating in the daily deficit reduction talks with the White House and other Congressional leaders.

     

    Education

    LEGISLATIVE ACTIVITY

    • ESEA Reauthorization. On July 13, the House Committee on Education and the Workforce approved on a party-line vote (23-17) the State and Local Funding Flexibility Act (H.R. 2445), which seeks to provide states and local school districts flexibility in the use of federal education funds. Citing a Congressional Research Service finding, Democrats on the Committee opposed the measure for fear it would allow Title I-A funding, which provides assistance for local educational agencies and schools with high numbers of poor children, to be allocated to non-Title I-A schools. The bill marks the third in a series of measures designed by the Majority to reform the current No Child Left Behind law. However, Ranking Member George Miller (D-CA) expressed doubt that a bipartisan agreement would eventually be reached. Additionally, Education Secretary Arne Duncan released a statement after the Committee’s approval noting his disappointment “that the House legislation … doesn’t fix the real problems with NCLB, could shortchange the neediest students, and doesn’t give states the kind of flexibility and reform they’re asking for.”

      On July 14, companion bills were introduced in both chambers to amend the Elementary and Secondary Education Act to provide support for environmental education, including professional development initiatives for teachers and an environmental literacy plan for K-12 students.
    • HELP Committee Hearing. The Senate Committee on Health Education Labor & Pensions has scheduled a hearing for Thursday, July 21, 2011, at 2:00 p.m. titled, "Improving For-Profit Higher Education: A Roundtable Discussion of Policy Solutions."  The Committee has yet to publicly identify witnesses.
    • Patent Reform. While the Senate has not yet considered the House-passed patent overhaul bill (H.R. 1249), on July 13, House Appropriators approved the FY2012 Commerce-Science-Justice spending bill, which provides $2.7 billion to the U.S. Patent and Trademark Office (PTO) — the full amount the office has estimated it will collect in fees in 2012. The bill also specifies that amounts collected over and above that figure would be deposited into a new Patent and Trademark Fee Reserve Fund. An amendment sponsored by Representative Jeff Flake (R-AZ) was adopted during committee markup and would reiterate Congressional intent through report language that fees collected by the PTO are to be used only by that office.
    • Events. On July 19, the Cato Institute will hold a policy forum titled, “Helping Students or Ballooning College Profits: What's Federal Money Doing?” Representatives from the higher education community and think tank policy experts will discuss the effect of federal funding in higher education.

    REGULATORY ACTIVITY

    • State Authorization Rules. On July 12, the U.S. District Court for the District of Columbia struck down a controversial Department of Education “state authorization” regulation requiring colleges offering online programs to students in other states to seek approval from each of those states. The Association of Private Sector Colleges and Universities sued the Department in January over that rule, and two other “program integrity” rules included as part of the Department’s recent regulatory package, but the judge upheld the other program integrity rules.

     

    Energy

    LEGISLATIVE ACTIVITY

    • Green Bank. With the Senate Energy and Natural Resources Committee having amended and reported legislation to create a “Clean Energy Development Administration” last week – without authorizing spending since an offset was not identified – the Senate Finance Committee will likely need to determine how to fund it.
    • Offshore Drilling. The Senate Energy and Natural Resources Committee is scheduled to “mark up” both the Outer Continental Shelf Reform Act of 2011 (S. 917) and the Oil and Gas Facilitation Act of 2011 (S. 916).
    • Congressional Hearings. On Tuesday, the Senate Energy and Natural Resources Committee will receive testimony on the MIT Energy Initiative natural gas report. On Wednesday, the Senate Environment and Public Works Committee will hold an oversight hearing on the recent oil spill in Montana’s Yellowstone River.

    REGULATORY ACTIVITY

    • Offshore Drilling. Bureau of Ocean Energy Management Director Michael Bromwich is considering whether to undertake regulatory activities for “bad actors,” in addition to a forthcoming Advance Notice of Proposed Rulemaking, to strengthen rules for enhanced safety devices and systems, such as blowout preventers, well design and cement casings.

     

    Environment

    LEGISLATIVE ACTIVITY

    • Clean Water Act. The Administration has signaled it will recommend the President veto H.R. 2018, the Clean Water Cooperative Federalism Act, because Administration officials believe the act would significantly undermine the Clean Water Act (CWA) and could adversely affect public health, the economy, and the environment. The Office of Management and Budget (OMB) argues that since the enactment of the CWA in 1972, the federal government has protected the waterways citizens depend on by using its checks and balances authority to review and adjust key state water pollution control decisions, where necessary, to assure that they reflect up to date science, comply with the law and protect downstream water users in other states. OMB notes that H.R. 2018 would roll back these key provisions of the CWA that have been the underpinning of 40 years of progress in making the nation’s waters fishable, swimmable, and drinkable.

      In addition, OMB notes that H.R. 2018 would restrict EPA’s authority to take action when it finds that a state’s CWA permit or permit program is inadequate and would truncate EPA’s review and collaboration with the Army Corps of Engineers on permits for dredged or fill material. Finally, OMB points out that H.R. 2018 could increase the number of lawsuits challenging state permits.
    • EPA and Interior Nominations. On Tuesday, July 19, the Senate Committee on Environment and Public works will hold a Full Committee hearing to consider the nominations of Ken Kopocis to be Assistant Administrator for the Office of Water for the EPA and Rebecca Wodder to be Assistant Secretary for Fish, Wildlife and Parks for the Department of the Interior.
    • Gulf Oil Spill. On Wednesday, July 20, the Senate Committee on Environment and Public Works, Subcommittee on Oceans, Atmosphere, Fisheries and Coast Guard will hold a hearing on lessons in prevention, response, and restoration from the Gulf oil spill.
    • Natural Disasters on Native American Lands. On Thursday, July 21, the Senate Committee on Indian Affairs will hold an oversight hearing concerning floods, fires, and emergency preparedness for natural disasters in native communities.
    • Forestry Audit. On Wednesday, July 20, the House Committee on Agriculture, Subcommittee on Conservation, Energy, and Forestry will hold an Agricultural Program Audit hearing regarding the Department of Agriculture’s Energy and Forestry Programs.

    REGULATORY ACTIVITY

    • Wind Technologies Report. The U.S. Department of Energy (DOE) Lawrence Berkeley National Laboratory is releasing its Wind Technologies Market Report, which analyzes trends in wind power capacity, manufacturing, performance, and costs. The results indicate that wind energy installations comprised 25 percent of new U.S. electricity capacity additions in 2010, representing $11 billion in new investments and enough new capacity to power roughly 1.3 million homes. The report also notes that U.S. manufacturing of wind turbine components continues to increase, with domestically produced goods used in U.S. wind power projects reaching approximately 68 percent in 2009-2010, up from 52 percent in 2005-2006. Another key finding from the report is a 33 percent decline in wind turbine prices since 2008. The report predicts that current turbine prices and improved turbine performance will drive the cost of wind energy down further in the coming years.
    • Most Efficient Designation. EPA and DOE are announcing a new program to publicly identify products that are the most energy efficient in their categories among those that have earned the Energy Star label. EPA notes that Americans, with the help of Energy Star, saved nearly $18 billion on their utility bills in 2010 alone and enough energy to avoid greenhouse gas emissions equivalent to those from 33 million cars.

      The Most Efficient recognition represents the top five percent of models on the market in the following categories: clothes washers, heating and cooling equipment, televisions, and refrigerator-freezers. The following Energy Star partners’ products are among the first to be recognized as Most Efficient: Electrolux Major Appliances, Sears’ Kenmore, LG, Samsung, Best Buy’s Insignia Brand, Panasonic, Nordyne, and Rheem. Later this year, EPA will initiate a process to consider additional product categories for potential inclusion for the Most Efficient designation in 2012. Manufacturers are being encouraged to submit products that meet the requirements to EPA for recognition.

     

    Financial Services

    LEGISLATIVE ACTIVITY

    • Senate Agriculture Committee to Consider CFTC Commissioner Nominee. On Thursday, July 21, the Senate Agriculture Committee will formally consider the nomination of Mark Wetjen to be a Commissioner of the Commodity Futures Trading Commission (CFTC). Mr. Wetjen serves as a top aide to Senate Majority Leader Harry Reid (D-NV) and worked on the Dodd-Frank Act with the Majority Leader.
    • Senate Banking Committee to Review Dodd-Frank Act on One Year Anniversary. On Thursday, July 21, one year after President Obama signed the Dodd-Frank Wall Street Reform and Consumer Protection Act into law, the Committee will hold a hearing titled, “Enhanced Oversight After the Financial Crisis: The Wall Street Reform Act at One Year.” The witnesses will include Neal Wolin, Deputy Secretary, Department of the Treasury; Ben Bernanke, Chairman, Board of Governors of the Federal Reserve System; Mary Schapiro, Chairman, Securities and Exchange Commission (SEC); Gary Gensler, Chairman, CFTC; Martin Gruenberg, Acting Chairman, Federal Deposit Insurance Corporation; and John Walsh, Acting Comptroller of the Currency, Office of the Comptroller of the Currency.
    • Senate Committee to Consider Consumer Financial Protection. On Tuesday, July 19, the Senate Banking Committee will hold a hearing titled, “Enhanced Consumer Financial Protection After the Financial Crisis.” The witnesses will include Michael Calhoun, President, Center for Responsible Lending and Andrew Pincus, on behalf of the U.S. Chamber of Commerce.
    • Senators to Discuss Private Access to Capital. On Wednesday, July 20, the Senate Banking Subcommittee on Economic Policy will hold a hearing titled, “Access to Capital: Fostering Job Creation and Innovation through High-Growth Startups.” Witnesses will include Ted Zoller, Vice President of Entrepreneurship, Ewing Marion Kaufmann Foundation; Elizabeth Marchi, Founder and Fund Coordinator, Frontier Angel Fund; and Robert Bargatze, Executive Vice President, Chief Scientific Officer, LigoCyte Pharmaceuticals, Inc.
    • House Agriculture Committee to Discuss OTC Derivatives. On Thursday, July 21, the House Agriculture Committee will hold a hearing titled, “Derivatives Reform: The View from Main Street.”
    • Whistleblower Legislation Introduced. On Tuesday, July 12, Representative Michael Grimm (R -NY) was joined by House Financial Services Capital Markets Subcommittee Chair Scott Garrett (R-NJ), Representatives John Campbell (R-CA), and Steve Stivers (R-OH) in introducing the Whistleblower Improvement Act of 2011 (H.R. 2483). The legislation would amend the Dodd-Frank Act by restoring internal reporting as a prerequisite for monetary awards and eliminate the minimum 10 percent bounty for any Securities and Exchange Commission recovery over $1 million. The legislation was referred to the House Agriculture and Financial Services Committees for further consideration.

    REGULATORY ACTIVITY

    • FSOC to Hold Meeting. On Monday, July 18, the Financial Stability Oversight Council (FSOC) will hold a meeting with a closed and an open session. The open session will be focused on the one-year anniversary of the Dodd-Frank Act. Recent media reports indicate that the FSOC, chaired by Treasury Secretary Tim Geithner, will not issue guidance detailing how it will determine which large firms could pose a risk to the financial system, as originally planned.
    • CFTC to Hold Open Meeting. On Tuesday, July 19, the CFTC will hold an open meeting to consider four final rules under the Dodd-Frank Act related to (i) Process for Review of Swaps for Mandatory Clearing; (ii) Provisions Common to Registered Entities; (iii) Whistleblower Provisions of the Commodity Exchange Act (as amended by the Dodd-Frank Act); and (iv) Removing any Reference to or Reliance on Credit Ratings in Commission Regulations and Alternatives to the Use of Credit Ratings. The CFTC will also consider for publication a proposed rule on Customer Clearing Documentation, Timing of Acceptance for Clearing, and Clearing Member Risk Management.

     

    Health Care

    LEGISLATIVE ACTIVITY

    • Energy and Commerce Hearing. The House Energy and Commerce Subcommittee on Oversight and Investigations has scheduled a hearing on Wednesday, July 20, 2011 at 10:30 a.m. titled, “Regulatory Reform Series #5 - FDA Medical Device Regulation: Impact on American Patients, Innovation and Jobs.”
    • Energy and Commerce Legislative Hearing. The House Energy and Commerce Subcommittee on Health has scheduled a hearing on Thursday, July 21 at 10 a.m. titled, “Legislative Hearing to Address Bioterrorism, Controlled Substances and Public Health Issues.” Legislation to be considered includes H.R. 1254, the Synthetic Drug Control Act of 2011; H.R. 2405, a bill to reauthorize certain provisions of the Public Health Services Act and the Federal Food, Drug, and Cosmetic Act relating to public health preparedness and countermeasure development, and for other purposes, and H.R. ___, the Enhancing Disease Coordination Activities Act.
    • Senate HELP Session. The Senate Committee on Health, Education, Labor and Pensions will meet in Executive Session on Wednesday, August 3 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. This session has been postponed multiple times as Senators resolve outstanding issues with the CHGME bill.
    • OTC Repeal. Momentum continues to build for repeal of an ACA provision that makes over the counter medications ineligible expenses for flexible spending accounts and health savings accounts. Senators Ben Nelson (D-NE) and Pat Roberts (R-KS), and Represaentatives Shelley Berkley (D-NV) and Lynn Jenkins (R-KS) have introduced legislation to repeal the measure, which was expected to raise $5 billion over 10 years. Stakeholder groups continue to push for support and have been well-received by both Republicans and Democrats who view this issue much like the bipartisan repeal of the 1099 reporting requirement.

    OTHER HEALTH NEWS

    • Debt Reduction Negotiations. Negotiations continue to address deficit reduction and the looming debt limit deadline of August 2. Health care cuts remain on the table, with specific details emerging this week with the release of the House Majority Leader Eric Cantor’s (R-VA) proposal. Health proposals include copayments for home health and skilled nursing facilities ($50 billion), reduction of Medicare bad debt payments ($14-26 billion), Medicaid FMAP reform ($100 billion) and cuts to Direct and Indirect Graduate Medical Education payments ($14 billion), among others. Stakeholder groups are fiercely opposing cuts and engaging members of Congress on their behalf. Their efforts include a letter written to the Administration led by Representatives Allyson Schwartz (D-PA) and Kathy Castor (D-FL) and 64 House Members to prevent GME/IME cuts.
    • School Health Clinics Funding Released. The Health Resources and Services Administration (HRSA) released $95 million in funding for school-based health clinics this week, as allocated by the Affordable Care Act. 278 clinics received funding, despite strong objections from conservative House Members who voted earlier this year to block grants to school based health clinics.

    Tax

    LEGISLATIVE ACTIVITY

    • Tax Revenues in Debt Ceiling Discussions. Given the fluidity and uncertainty surrounding the debt ceiling discussions at the time of publication, this week’s edition of Capital Thinking will not address the treatment of tax measures as part of a proposed package. A full report will be provided when the details of an agreement are better solidified.
    • Levin Introduces Tax Shelter Bill. On July 12, Senator Carl Levin (D-MI) introduced the Stop Tax Haven Abuse Act (S. 1346) to combat offshore and tax shelter abuses. Senator Levin has introduced similar measures in prior Congresses. Notably, however, the current bill does not include the controversial notion of a Treasury “black list” of jurisdictions considered tax havens, which has been included in prior iterations of the legislation.
    • Tax Reform Hearings Continue. Hearings on fundamental tax reform continue on both the House Ways & Means and Senate Finance Committees, focusing on outbound U.S. investment, inbound investment and tax administration. However, no hearings have been scheduled for next week.

    REGULATORY ACTIVITY

    • Treasury / IRS Phase-In FATCA Implementation. Earlier this week, in response to implementation concerns raised by affected financial institutions, Treasury and the Internal Revenue Service (IRS) issued guidance outlining the phased implementation of 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 IRS.

     

    TechComm

    LEGISLATIVE ACTIVITY

    • Spectrum Bill. On July 13, Representative Greg Walden (R-OR), Chairman of the House Energy and Commerce Subcommittee on Communications and Technology, released draft spectrum legislation. A day later, Energy and Commerce Committee Ranking Member Henry Waxman (D-CA) and Subcommittee Ranking Member Anna Eshoo (D-CA) countered with their own draft bill in an effort to “clarify” their approach. Both drafts were released in advance of the Subcommittee’s July 15 hearing on spectrum and public safety issues. While the Walden draft bill would require the auction of the 700 MHz – or D block – spectrum for commercial use, the Waxman-Eshoo draft reallocates that spectrum for a national wireless broadband network for first responders. To address the public safety network, the Republican bill would provide an unspecified amount of funding to states to build and operate the public safety broadband network. The Walden draft also authorizes the FCC to conduct incentive auctions, but offer broadcasters protections against losing their signal contour and funds to cover relocation costs in the event their channels are repacked. The Walden draft bill also would auction unused spectrum between the broadcast channels – known as “white spaces” – a use praised by small and new technology companies using wi-fi and consumer groups alike.

      Much of the testimony at the July 15 hearing focused on the differing approaches to the D block spectrum.

      In addition to the Waxman-Eshoo draft bill, another bill was recently introduced by former Energy and Commerce Committee Chairman John Dingell (D-MI) and Representative Gene Green (D-TX). That bill, H.R. 2482, in large part tracks S. 911, the bill approved by the Senate Commerce Committee, which would reallocate the 700 MHz D block for public safety purposes, authorize funds for the deployment of a nationwide public safety broadband network and allow the FCC to hold incentive auctions.
    • Privacy. On July 14, the House Energy and Commerce Subcommittee on Commerce, Manufacturing, and Trade and the Subcommittee on Communications and Technology held a joint hearing titled, “Internet Privacy: The Views of the FTC, the FCC, and the NTIA.” While acknowledging a “lingering problem” for consumers regarding transparency of and basic understanding about how companies use collected and aggregated information, Republican members generally took the position that “it is unproven whether more stringent laws and regulations on the collection and use” of consumer data will alleviate the problem while continuing to promote innovation in online commerce. In showing the slow pace at which comprehensive privacy legislation could move, House Energy and Commerce Committee Chairman Fred Upton (R-MI) stated, “I want to get this issue right. We need to hear from everyone with a stake…before contemplating legislating.” Similarly, Communications and Technology Subcommittee Chairman Greg Walden (R-OR) added, “at this point, it is not clear what, if any, [legislation] is necessary.” Several Democrats argued that given the amount of information that is being collected, aggregated and monetized, it is clear that Congress needs to act to give consumers more control over the collection and use of their personal information.

      Despite the seemingly vast difference in opinion regarding the need for comprehensive legislation, one area that has bipartisan support is protecting children online. Commerce, Manufacturing and Trade Subcommittee Chair Mary Bono Mack (R-CA), while noting her uncertainty about comprehensive legislation, firmly believes that companies need to be as transparent with their privacy practices as possible and that a close review of how children are treated online and whether current law does enough to protect them should be a priority in this debate. Representative Joe Barton (R-TX) was the only Republican to support overall privacy legislation, but also noted the online privacy bill he introduced earlier this year with Representative Ed Markey (D-MA) – H.R. 1895, the Do Not Track Kids Act of 2011 – which updates rules on the collection and use of children’s personal information.

      We are also monitoring overseas development of the growing hacking scandal that has embroiled News Corp. As the probe – which began with allegations of the British tabloid News of the World hacking into the cellphone accounts of several high profile British public figures - including the family of a 13-year-old murder victim – snowballs to include journalists at several other News Corp. publications in England, and led to the July 15 resignation of Rebekah Brooks, chief executive officer of the News International, U.K. Bipartisan concern is being voiced by American lawmakers who urge a full investigation by law enforcement and Congress. Fueled by reports that News Corp. reporters may have attempted to hack the cellphones of American victims of the 9/11 World Trade Center attacks, House Homeland Security Chairman Peter King (R-NY) has requested an investigation saying “if these allegations are proven true, the conduct would merit felony charges for attempting to violate various federal statutes related to the corruption of public officials and prohibitions against wiretapping.” Additionally, the Chairs of three Senate committees – Commerce Committee Chairman John Rockefeller (D-WV), Environment and Public Works Chair Barbara Boxer (D-CA) and Appropriations Chairman Daniel Inouye (D-HI) – have all called on both the FBI and Securities and Exchange Commission to investigate potential violations of the Foreign Corrupt Practices Act. As the scandal grows, it is unclear how it, or any investigation, may affect Congressional debates on privacy, wiretapping laws and/or law enforcement access to electronic records.
    • Wireless Tax Fairness Act. On July 14, the House Judiciary Committee reported H.R. 1002, the Wireless Tax Fairness Act of 2011. The bill, sponsored by Representative Zoe Lofgren (D-CA) and approved by voice vote, would impose a five-year ban on new taxes and fees targeting only wireless services and not imposed on other goods and services. The bill would only apply to new taxes imposed on wireless services and will not affect taxes already in place. "In many places, the taxation of wireless approaches or even exceeds the rates of sin taxes on goods like alcohol and tobacco," stated Representative Lofgren, “[T]his legislation simply freezes existing discriminatory wireless taxes to help foster wireless networks as a platform for innovation and jobs growth." In voicing concern with the bill, the National Association of Counties, U.S. Conference of Mayors and others in a letter earlier this week say the legislation is “an unwarranted federal intrusion, as it carves out one sector of the communications industry for favorable tax treatment.” In the Senate, Majority Whip Dick Durbin (D-IL) is working to introduce his Main Street Fairness Act before the August recess. That bill would allow states that adopt a national streamlined sales-tax agreement to require out-of-state retailers to collect sales taxes.
    • FCC Open Meeting. At their open meeting on July 12, the FCC approved the following Notices of Proposed Rulemakings (NPRM) to: 1) continue implementation of the Local Community Radio Act regarding low power FM and FM translator stations; 2)  strengthen E-911 location accuracy and to seek comment on improving both 911 availability and E911 location determination for Voice over Internet Protocol (VoIP) services; and 3) propose new rules to improve the prevention and detection of unauthorized telephone bill charges ("mystery fees" or "cramming") by requiring clear and conspicuous disclosure of third-party charges on wireline telephone bills and to require those third-party charges to be listed on bills separate from the telephone company bills.

      In related news, after a year-long staff investigation, on July 12, the Senate Commerce Committee released its long-awaited staff report on “cramming.” Key findings of the report include that: 1) third-party billing costs U.S. consumers upwards of $2 billion annually; 2) most third-party charges on phone bills are unauthorized; 3) telephone companies profit from cramming and have generated over $1 billion in the last 10 years from placing third-party charges on bills; 4) most third-party billers are illegitimate and created solely to take advantage of the billing system; 5) telephone companies are well aware of the problem – Qwest, Verizon and AT&T have logged over 500,000 complaints in the last five years – but their anti-cramming safeguards are largely failing. On July 13, the Senate Commerce Committee followed the report’s release by holding a hearing on the issue. At the hearing, Committee Chairman Rockefeller had strong words saying, “It’s time for us to take a new look at this problem and find a way to solve it once and for all. We’ve let the crammers get away with these abuses for far too long. Especially in these tough economic times, American consumers need to know that we are working to make sure they are only asked to pay for the charges they’ve authorized. We’re going to put a stop to this practice.” The report, hearing video and prepared testimony are available on the Committee website