Capital Thinking Update - December 12, 2011

    View Authors 12 December 2011

    General Legislative

    On Monday, December 12, the House will meet at 12:00 p.m. for morning hour and 2:00 p.m. for legislative business. The following legislation will be considered under suspension of the rules: S. 384, a bill to amend title 39, United States Code, to extend the authority of the U.S. Postal Service to issue a semipostal to raise funds for breast cancer research; H.R. 2845, the “Pipeline Safety, Regulatory Certainty, and Job Creation Act of 2011;” and several bills naming post offices or federal lands.   The Senate will convene at 2:00 p.m. on Monday for a period of morning business. Thereafter, the Senate will begin consideration of the nominations of Norman L. Eisen, of the District of Columbia, to be Ambassador to the Czech Republic, and Mari Carmen Aponte, of the District of Columbia, to be Ambassador to the Republic of El Salvador.  


    Budget, Appropriations

    LEGISLATIVE ACTIVITY

    • FY2012 Appropriations. As previously reported, the first FY2012 appropriations package, which included the Agriculture, Commerce-Justice-Science, and Transportation-Housing bills, was enacted into law on November 18 (H.R. 2112 / P.L. 112-55). The measure also included a short-term Continuing Resolution (CR) that funds all other federal operations through December 16.

      The nine remaining FY2012 appropriations bills –- Defense; Energy & Water; Financial Services; Homeland Security; Interior-Environment; Labor-HHS-Education; Legislative Branch; Military Construction-Veterans Affairs; and State-Foreign Operations – will be packaged into an omnibus (also being referred to as a megabus) measure and likely approved by Congress prior to the expiration of the current CR, thereby completing the FY2012 federal budget process.

      While most of these individual bills have reportedly been reconciled by House and Senate Appropriations Subcommittee leaders, significant funding and policy issues remain unresolved which impact three of the bills – Labor-HHS-Education (provisions related to health care reform); Financial Services (provisions related to the Dodd-Frank financial regulatory overhaul and social policy impacting the District of Columbia); and Interior-Environment (provisions related to Environmental Protection Agency (EPA) regulations).

      Reports have circulated that in an effort to avoid another CR for all nine bills, year-long CRs would be attached to the omnibus for any of the three contentious bills that could not be resolved. While Labor-HHS-Education is the most likely of the three to face this action, conferees are working diligently to negotiate the differences and produce a package that includes full text for all nine bills. We anticipate the release of a conference report on December 12 or 13, with a House vote likely on December 15 and a Senate vote on December 15 or 16 (if the bill passes in the House).

      Conferees for the omnibus include Senators: Tim Johnson (D-SD); Daniel Inouye (D-HI); Mary Landrieu (D-LA); Patty Murray (D-WA); Jack Reed (D-RI); Ben Nelson (D-NE); Mark Pryor (D-AR); Jon Tester (D-MT); Patrick Leahy (D-VT); Mark Kirk (R-IL); Kay Bailey Hutchison (R-TX); Lisa Murkowski (R-AK); Roy Blunt (R-MO); John Hoeven (R-ND); Dan Coats (R-IN); Thad Cochran (R-MS); and Minority Leader Mitch McConnell (R-KY). House conferees include Representatives: Hal Rogers (R-KY); C.W. Bill Young (R-FL); Jerry Lewis (R-CA); Rodney Frelinghuysen (R-NJ); Robert Aderholt (R-AL); Jo Ann Emerson (R-MO); Kay Granger (R-TX); Mike Simpson (R-ID); John Culberson (R-TX); Ander Crenshaw (R-FL); Denny Rehberg (R-MT); John Carter (R-TX); Norm Dicks (D-WA); Peter Visclosky (D-IN); Nita Lowey (D-NY); Jose Serrano (D-NY); Rosa DeLauro (D-CT); James Moran (D-VA); David Price (D-NC); and Sanford Bishop (D-GA).
    • House Republican Budget Reform Legislation. On December 7, members of the House Budget Committee, led by Chairman Paul Ryan (R-WI), introduced a package of 10 budget reform bills aimed to control federal spending, enhance oversight and provide full transparency of the budget process. The package includes:

      The Legally Binding Budget Act (H.R. 3575) (sponsored by Representative Diane Black (R-TN)): Currently, House and Senate budget resolutions are not binding and are not presented to the President, but provide an internal framework for budget negotiations in each chamber. This bill would provide for a joint budget resolution which would require the President’s signature (or a two-thirds majority of both chambers to override a veto), thus making it law. The bill also would formalize the deadline for a new President’s first budget request to the first Monday in April (the annual deadline for the President’s Budget Proposal is the first Monday in February; however, this does not provide adequate time for incoming Presidents to accommodate the deadline).

      The Spending Control Act (H.R. 3576) (sponsored by Representative John Campbell (R-CA)): This bill would set statutory spending caps for mandatory spending at the level of the House-passed FY2012 Budget Resolution (H.Con.Res. 34). In the event these caps are exceeded, automatic across-the-board reductions would occur. The bill would further cap total spending as a percentage of the total U.S. Gross Domestic Product (GDP) and shortens the list of direct spending programs exempt from sequestration.

      The Expedited Line-Item Veto and Rescissions Act (ELIVRA) (H.R. 3521) (sponsored by Chairman Paul Ryan (R-WI) and Ranking Member Chris Van Hollen (D-MD)): As reported in the most recent edition of Capital Thinking, this bill would provide the President with the authority to request the rescission of earmarks, duplicative programs and other non-entitlement spending from appropriations bills. This is the only bill of the 10 that is expected to move this year; a markup in the House Budget Committee is scheduled for December 15.

      The Biennial Budgeting and Enhanced Oversight Act (H.R. 2577) (sponsored by Representative Reid Ribble (R-WI)): This bill would establish a biennial federal budget cycle. In the first Congressional session, Congress would adopt a two-year budget resolution and correlating appropriations. During the second session Congress would focus on authorizing legislation.

      The Baseline Reform Act (H.R. 3578) (sponsored by Representative Rob Woodall (R-GA)): This bill would lower discretionary spending by removing annual automatic inflation increases. It also requires the Congressional Budget Office (CBO) to report an alternative projection of the baseline assuming the extension of current tax policies.

      The Government Shutdown Prevention Act (sponsored by Representative James Lankford (R-OK)): This bill would provide for continuation of funding in the event Congress does not enact appropriations bills by the beginning of the fiscal year (October 1), with a one percent across-the-board reduction for each 90-day time period that enactment is delayed.

      The Review Every Dollar (RED) Act (H.R. 3579) (sponsored by Representative Jason Chaffetz (R-UT)): This bill would mandate additional oversight of direct spending programs. It would (1) require periodic sunset reviews and reauthorization of all federal programs; (2) establish deficit reduction accounts mandating that funding reductions achieved through amendments are not transferred to another program, but are permanent reductions which count as deficit reduction; (3) score transfers from the general fund to the highway trust fund as spending (current transfers are not scored under the Congressional budget rules); (4) shift all Pell Grant funding to discretionary funding (currently, some portions are mandatory), while maintaining the maximum award of $5,550; and (5) require Congressional action for certain administrative agency actions that increase costs of mandatory programs.

      The Balancing our Obligations for the Long Term (BOLT) Act (H.R. 3580) (sponsored by Representative Mick Mulvaney (R-SC)): The bill would establish statutory spending caps on direct and total government spending for 30 years and require consideration of long-term fiscal impact of policy proposals, rather than only a 10-year outlook.

      The Budget and Accounting Transparency Act (H.R. 3581) (sponsored by Representative Scott Garrett (R-NJ)): In calculating costs of federal credit programs, the bill would require the use of “fair value” methodologies which take into account risk as well as borrowing costs. The bill also mandates a CBO and OMB study of utilizing these methodologies in federal insurance programs. The bill would also require spending and debt issuances for Fannie Mae, Freddie Mac and the Postal Services to be included in the calculation of the federal debt.
      The Pro-Growth Budgeting Act (H.R. 3582) (sponsored by Representative Tom Price (R-GA)): This bill would require a CBO analysis of the U.S. economic impact for all major legislation.

     

    Education

    REGULATORY ACTIVITY

    • College Affordability. On Monday, December 5, President Obama held a roundtable discussion with Secretary of Education Arne Duncan, White House senior officials, 12 college presidents from public and private institutions, and higher education policy leaders to discuss the rising cost of higher education.  Attendees shared best practices and discussed efforts to promote innovative and effective ways of containing the cost of college during a time of reduced state funding for higher education.
    • Entrepreneurship Education. On Thursday, December 8, the White House announced $2 billion in public and private resources to help entrepreneurs start and develop their businesses, including increased access to capital, as part of the Startup America. This initiative includes commitments to advance entrepreneurship education through programs such as the Network for Teaching Entrepreneurship (NFTE), Junior Achievement Program’s entrepreneurship education, and community colleges’ commitment to teaching entrepreneurship.

      To fund this initiative, $1 billion will come from the Early Stage Innovation Fund launched by the U.S. Small Business Administration (SBA). This week, board members of the Startup America Partnership committed to delivering an additional $1 billion in value — ranging from free software to free consulting and legal services — to 100,000 startups over the next three years. The Startup America Partnership is a nonprofit alliance of entrepreneurs, major corporations and service providers committing private-sector resources to growing new companies.

      In addition to other federal agencies, the Department of Education and Department of Labor intend to advance a youth entrepreneurship agenda that incorporates existing entrepreneurship education programs involving K-12 education, career and technical education, community colleges, universities and low-income youth.

     

    Environment

    LEGISLATIVE ACTIVITY

    • Restore Act. On Wednesday, December 7, the House Committee on Transportation and Infrastructure held a hearing on the RESTORE the Gulf Coast States Act, which would allocate fines from the 2010 Deepwater Horizon oil spill to ecological and economic restoration of the five-state Gulf of Mexico region. The bill enjoys broad bipartisan support. A Senate companion measure has already been reported from committee.
    • Water Infrastructure. On Tuesday, December 13, the Senate Committee on Environment and Public Works, Subcommittee on Water and Wildlife will hold a hearing titled “Our Nation’s Water Infrastructure: Challenges and Opportunities.”
    • Nuclear Safety. On Thursday, December 15, the Senate Committee on Environment and Public Works will hold a joint hearing with its Subcommittee on Clean Air and Nuclear Safety titled, “Review of the Nuclear Regulatory Commission Near-Term Task Force Recommendations for Enhancing Reactor Safety in the 21st Century.”
    • Fish. On Thursday, December 15, the Senate Committee on Commerce, Science, and Transportation, Subcommittee on Oceans, Atmosphere, Fisheries and Coast Guard will hold a hearing to examine environmental risks of genetically engineered fish. 

    REGULATORY ACTIVITY

    • Urban Waters Program. The EPA announced it will provide up to $1.8 million for projects across the country to protect Americans’ health and help restore urban waters by improving water quality and supporting community revitalization. The funding is part of the EPA’s Urban Waters program, which supports communities in their efforts to access, improve and benefit from their urban waters and the surrounding land. Urban waters are canals, rivers, lakes, wetlands, aquifers, estuaries, bays and oceans. Funding proposals must be received by the EPA by January 23, 2012. The EPA will hold two web-based seminars on this funding opportunity on Wednesday, December 14, 2011 and January 5, 2012. EPA expects to award the grants in the 2012 summer.
    • Environmental Justice Grants. EPA also announced it awarded more than $1 million in grants to 46 non-profit organizations working to address environmental justice issues nationwide. EPA also announced it is seeking applicants for $1 million in environmental justice small grants expected to be awarded in 2012. The grants enable nonprofit organizations to conduct research, provide education and develop solutions to local health and environmental issues in communities overburdened by pollution. The 2012 grant solicitation is now open and will close on February 29, 2012.
    • Gulf Coast Ecosystem Restoration Task Force. The Gulf Coast Ecosystem Restoration Task Force has released its final strategy for long term ecosystem restoration for the Gulf Coast. The key priorities of the strategy are:

      Stopping the Loss of Critical Wetlands, Sand Barriers and Beaches: The strategy recommends placing ecosystem restoration on equal footing with historic uses such as navigation and flood damage reduction by approaching water resource management decisions in a far more comprehensive manner which will bypass harm to wetlands, barrier islands and beaches. The strategy also recommends implementation of several Congressionally authorized projects in the Gulf that are intended to reverse the trend of wetlands loss.

      Reducing the Flow of Excess Nutrients into the Gulf: The strategy calls for working in the Gulf and upstream in the Mississippi watershed to reduce the flow of excess nutrients into the Gulf by supporting state nutrient reduction frameworks, new nutrient reduction approaches and targeted watershed work to reduce agricultural and urban sources of excess nutrients.

      Enhancing Resiliency Among Coastal Communities: The strategy calls for enhancing the quality of life of Gulf residents by working in partnership with Gulf coastal communities. The strategy specifically recommends working with each of the states to build the integrated capacity needed through effective coastal improvement plans to better secure the future of their coastal communities and to implement existing efforts underway.

      With the release of the final strategy, the Task Force marks the beginning of the implementation phase of the strategy by announcing new initiatives, including $50 million in assistance from the U.S. Department of Agriculture’s Natural Resources Conservation Service to help agricultural producers in seven Gulf Coast river basins improve water quality, increase water conservation and enhance wildlife habitat. Additionally, the Task Force will also open a local office, headed by Task Force Executive Director John Hankinson, in the Gulf Coast in mid-December.

     

    Financial Services

    LEGISLATIVE ACTIVITY

    • Senate Republicans Block Consumer Financial Protection Bureau Nomination. On Thursday, December 8, the Senate blocked the nomination of Richard Cordray to serve as Director of the Consumer Financial Protection Bureau (CFPB), an agency created by the Dodd-Frank Wall Street Reform and Consumer Protection Act.  The vote was 53 – 40, with 60 votes needed to move the nomination forward. Republicans have indicated they will block any nominee until the CFPB’s structure is changed to a five-person Commission.
    • Senate Committee to Review MF Global. On Tuesday, December 13, the Senate Agriculture Committee will hold a hearing to discuss the MF Global collapse. The three-panel hearing will include market participants impacted by the company’s failure in panel 1; MF Global executives including Jon Corzine, former Chairman and Chief Executive, in panel 2;  and Terry Duffy, Executive Chairman of CME Group; James Giddens, the Trustee for the Securities Investment Protection Act liquidation of MF Global, and CFTC Commissioner Jill Sommers, in panel 3.
    • Senate Banking Committee to Review Federal Housing Finance Agency. On Tuesday, December 13, the Senate Banking Committee will hold a hearing titled “Oversight of FHFA Part II.” The witnesses will include Steve Linick, Inspector General for the Federal Housing Finance Agency.
    • Senate Banking Subcommittee to Discuss Investor Risks in Capital Raising. On Wednesday, December 14, the Senate Banking Subcommittee on Securities, Insurance, and Investment will hold a hearing titled “Examining Investor Risks in Capital Raising.” The witnesses will include Steve Luparello, Vice Chairman of the Financial Industry Regulatory Authority (FINRA); and Harvard Law School Professor John Coates.
    • House Subcommittee to Explore MF Global Collapse. On Thursday, December 15, the House Financial Services Subcommittee on Oversight and Investigations will hold a hearing titled “The Collapse of MF Global.”  On Wednesday, December 7, the Subcommittee voted unanimously to subpoena Jon Corzine, the former executive of MF Global. Mr. Corzine appeared before the House Agriculture Committee on Thursday, December 8. Other invited witnesses include Gary Gensler, Chairman of the Commodity Futures Trading Commission (CFTC); Richard Ketchum, Chairman of FINRA; William Dudley, President of the Federal Reserve Bank of New York; Robert Cook, Director of the Securities and Exchange Commission’s (SEC) Division of Trading and Markets; and Terry Duffy, Executive Chairman of the CME Group.

    REGULATORY ACTIVITY

    • CFTC Technology Advisory Committee to Meet. On Tuesday, December 13, the CFTC Technology Advisory Committee, chaired by Commissioner Scott O’Malia, will hold an open meeting to discuss: (1) what we can expect to see in the new trading environment of swap execution facilities; (2) defining, classifying and observing high frequency traders and their impact on the markets; and (3) interim recommendations from the Subcommittee on Data Standardization on universal product and legal entity identifiers, standardization of machine-readable legal contracts, semantics, and data storage and retrieval.

     

    Health Care

    LEGISLATIVE ACTIVITY

    • Doc Fix/Health Extenders. With a projected departure date of December 16, the House and Senate continue work to craft a legislative package to stave off a dramatic cut to physician payments under Medicare and extend certain health provisions. The package could carry additional miscellaneous provisions, such as proposed extensions of the payroll holiday and unemployment insurance. House Republicans have reportedly settled on a two-year physician fee fix with a one percent update and health extenders package with a score of $38.9 billion. A zero percent update has also been scored, and a shorter patch could also be considered. Potential ‘pay fors’ include increasing Medicare premiums for wealthy beneficiaries and repeal of certain provisions in the Affordable Care Act. The Senate, however, has indicated the House package will be unable to move through the Senate. If Congress fails to act, physician payments will be cut 29 percent beginning January 1.
    • HELP Hearing. The Senate Committee on Health, Education, Labor, and Pensions has scheduled a hearing for Thursday, December 15 at 10:00 a.m. on "Prescription Drug Shortages: Examining a Public Health Concern and Potential Solutions." This hearing follows similar hearings in Senate Finance and the House Energy and Commerce Committees regarding the growing problem of drug shortages.

    REGULATORY ACTIVITY

    • Regulations. The U.S. Department of Health and Human Services released the final rule implementing the Consumer Operated and Oriented Plan (CO-OP) program, which provides loans to foster the creation of consumer governed, private, nonprofit health insurance issuers to offer qualified health plans in the Affordable Insurance Exchanges created by the Affordable Care Act (ACA).

    OTHER HEALTH NEWS

    • MedPAC Meeting. The Medicare Advisory Payment Commission will hold a public meeting on Thursday and Friday, December 15 and16. Comments from stakeholders will be accepted, and an agenda will be released in advance of the meeting.
    • IOM Meetings. The Institutes of Medicine will hold a meeting on Tuesday and Wednesday, December 12 and13 on "Improving Food Safety Through One Health." The workshop aims to examine the nature and extent of food borne threats to health, prevention, and opportunities to reduce future threats to the nation's food supply through the use of a "One Health" approach to food safety.

     

    International, Defense, Homeland Security

    • Defense Developments. The four top defense appropriators joined the Chairmen of the Senate and House Armed Services Committees (SASC and HASC) in breaking ranks with the Obama Administration on detention and trial of enemy combatants held at Guantanamo Bay. Senate Appropriations Committee Chairman Daniel Inouye (D-HI) and Ranking Member Thad Cochran (R-MS), along with House Defense Appropriations Subcommittee Chairman Bill Young and Ranking Member Norm Dicks (D-WA), have agreed to include language in the final Fiscal Year 2012 (FY12) Defense Appropriations bill (and the likely ensuing “megabus” appropriations bill) to continue military tribunals for enemy combatants. That approach may well draw a veto threat, as the White House has issued for similar language in the FY12 defense authorization bill, the exact version of which remains under debate in Conference Committee.
    • Russia Policy Developments. The Obama Administration may be starting to modify its “re-set” of Russia policy. On Thursday, December 8, Russian Prime Minister Vladimir Putin issued scorching accusations against Secretary of State Hillary Clinton and the State Department, alleging they have closely cooperated with anti-Kremlin protesters in the aftermath of last Sunday’s Duma elections. Secretary Clinton had deemed those elections “neither free nor fair.” However, she also had been careful not to suggest the Administration was prepared to jettison all aspects of the recent progress in U.S.-Russian relations, including on New START, anti-terrorism cooperation, U.S. support for Russia’s WTO membership, supply lines over Russian territory for NATO troops in Afghanistan, and relative convergence on Iran policy. Now, though, especially as signs of dwindling domestic support for the Putin-Medvedev-United Russia ticket emerge in official and particularly unofficial vote counts, the White House and State Department appear to wonder how much additional cooperation they can and should reasonably desire. Missile defense policy serves as a prime example. For years, the U.S. and NATO have attempted to work with Russian officials, both at the diplomatic and programmatic levels, to demonstrate that NATO’s emerging missile defense system is designed to counter Iranian, not Russian, threats. In the lead-up to the parliamentary elections, the supposedly more pro-Western President Medvedev stressed that Russia would respond aggressively to NATO’s deployment, deeming the missile defense system inherently anti-Russian. The Obama Administration increasingly may view such reactions as examples that the “re-set” policy is reaching its limits.

     

    Tax

    LEGISLATIVE ACTIVITY

    • Dueling Payroll Tax Offers. Both Democratic and Republican leadership would like to extend the payroll tax reduction before it expires on December 31, but thus far there has not been bipartisan agreement as to how to do so. As they did last week, the Senate once again this week rejected dueling proposals to extend the two-percent payroll tax cut through 2012. Senate Democrats continue to focus on expanding the tax holiday while offsetting it with a surtax on annual modified adjusted gross income in excess of $1 million. That legislation was defeated on a party-line vote.  As they did last week, Senate Republicans offered their own proposal, which garnered only 22 votes. 
    • Republican Proposals to Include Spending Cuts. At the same time, momentum seems to be building among House Republicans, who on Friday released legislation that would extend the current payroll tax reduction through 2012, along with a two-year “doc fix” and an extension (with modifications) of enhanced unemployment insurance benefits. The legislation also includes an extension of full expensing for qualified business investment for 2012, as well as several policy items touted by House leadership as likely to lead to job creation (expediting construction of the Keystone Pipeline and EPA regulatory relief for boilers).   The legislation is fully paid for by a variety of spending cuts, including extending the current pay freeze for federal workers, including Members of Congress, eliminating government benefits for millionaires and billionaires, targeting fraud and abuse and reforming entitlement programs.
    • Upcoming Votes Next Week. The House is expected to take up this legislation on Tuesday of next week, but it is not yet clear whether the Senate will be able to pass it as-is, and, if not, what changes might be made to it in order to pass the Senate.
    • Collins-McCaskill Proposal. As the Senate continued debating the dueling payroll tax offers, two Senators, Republican Susan Collins (R-ME) and Democrat Claire McCaskill (D-MO) this week introduced a proposal that would extend the payroll tax cut and extend that same rate to employers on their first $10 million of payroll. This offer would be paid for by both repealing various tax incentives for certain oil and gas companies and placing a ten-year two percent surtax on annual incomes over $1 million.  The bill would also exempt active investors who own and operate businesses to ensure that owners who file their business income on their individual tax returns are not subject to the tax. 
    • Traditional Tax Extenders Unlikely. With Congress focused on the payroll tax negotiations, it is unlikely that traditional tax “extenders” are going to pass this year. However, these could be completed retroactively next year, though the timing of legislative action is still to be determined. 
    • Alternative Energy Hearing Next Week. Alternative energy tax incentives will be the topic of discussion in the Senate Finance Committee next week.

      December 14: Alternative Energy Tax Incentives: The Effect of Short-Term Extensions on Alternative Technology Investment, Domestic Manufacturing, and Jobs. The following witnesses are scheduled to appear before the Committee: Dr. Molly Sherlock, Congressional Research Service, Specialist in Energy Tax Policy, Washington, DC; Mr. Will Coleman, Partner, Mohr Davidow Ventures, Menlo Park, CA; Ms. Martha Wyrsch, President, Vestas-American Wind Technology, Portland, OR; Mr. Paul Soanes, President and CEO, Renewable Biofuels, Houston, TX; Dr. Margo Thorning, Senior Vice President and Chief Economist, American Council for Capitol Formation, Washington, DC.

      The Senate Finance Committee postponed a hearing scheduled in October on Tax Reform Options: Capital Investment and Manufacturing. It is possible that this hearing will be rescheduled for early next year. The previously announced witnesses for that hearing were: Dr. Jane Gravelle, Senior Specialist in Economic Policy, Congressional Research Service, Library of Congress; Douglas Holtz-Eakin, Ph.D., President, American Action Forum; Dr. Robert D. Atkinson, President, Information Technology and Innovation Foundation; Dr. J.D. Foster, Norman B. Ture Senior Fellow, Economics of Fiscal Policy, The Heritage Foundation; Dr. Michelle Hanlon, Associate Professor of Accounting, Massachusetts Institute of Technology, Sloan School of Management.

     

    TechComm

    LEGISLATIVE ACTIVITY

    • Spectrum. The House Republican leadership released its year-end payroll tax extension package on Friday that includes spectrum reform, which House Energy and Commerce Committee Chairman Fred Upton (R-MI) said the Congressional Budget Office has estimated to deliver $16.5 billion in revenue. The House proposal, H.R. 1209, appears to mirror the Jumpstarting Opportunity Through Broadband Spectrum (JOBS) Act, which the House Subcommittee on Communications and Technology passed favorably earlier this month. H.R. 1209 would reallocate the 700 MHz D block to first responders to build out a nationwide interoperable public safety broadband network and provide funding for the buildout. However, H.R. 1209 retains a controversial provision of the JOBS Act that would require public safety to return 700 MHz narrowband spectrum to the FCC five years after the enactment of the legislation so that it can be auctioned for commercial use. This provision, which the public safety community opposes, is not found in the Senate spectrum bill, S. 911.  The House package would establish a private corporation to oversee management of the network and contracts entered into by state public safety broadband offices for network deployment. In addition, H.R. 1209 contains protections for broadcasters that choose not to participate in the incentive auctions authorized by the legislation and would reimburse other broadcasters that voluntarily relinquish their spectrum to the FCC. Meanwhile, it remains unclear how House and Senate negotiators will resolve their differences on such critical issues as funding and governance of the public safety broadband network; approaches to allocating spectrum for unlicensed use; and protections afforded to broadcasters who choose not to participate in the voluntary incentive auctions authorized by the spectrum legislation.
    • Intellectual Property Protection. Re-enforcing opposition to both the Stop Online Piracy Act (SOPA) and PROTECT IP Acts in the House and Senate respectfully, Senate Commerce Committee member Ron Wyden (D-OR) and House Oversight and Government Reform Committee Chairman Darrell Issa (R-CA) on December 8 released a draft of their counter piracy protection legislation – the Online Protection and Enforcement of Digital Trade (OPEN) Act. In the spirit of an open Internet, they have also launched an accompanying website – www.KeepTheWebOPEN.com – as a portal for those interested in offering ideas and comments as Congress works toward a final bill.

      Unlike other proposals that are moving through the House and Senate, the OPEN Act gives the International Trade Commission (ITC) – rather than the Department of Justice – authority to investigate and take action against unfair digital imports or unfair imports that are digitally-facilitated by foreign “rogue” websites.  The proposal also enables ITC to obtain new administrative law judges to handle any potential increase in caseload as a result of the bill, makes it easier for the U.S. Customs and Border Protection to share information with IP holders in an effort to identify counterfeit merchandise at the border, and requires the Register of Copyrights to submit to Congress two years after enactment a study on the enforcement and effectiveness of the law. Sponsors also note that unlike earlier bills, the OPEN Act does not interfere with the Domain Name System or go after sites or search engines that “simply link” to websites that host infringing material.

      Meanwhile, House Judiciary Committee Chairman Lamar Smith (R-TX) is working on a manager's amendment to SOPA ahead of next week’s markup. Rep. Zoe Lofgren (D-CA), a critic of SOPA, said that once she sees the manager's amendment she will address any concerns "and do my best to try and fix them." The California Democrat said it "would make a lot of sense" to offer the counter draft bill during the SOPA markup. More than 200 high-tech entrepreneurs sent a letter to Congress yesterday to oppose SOPA and the PROTECT IP Act.
    • AT-T/T-Mobile. Federal Judge Ellen Huvelle was scheduled to convene a status conference on Friday, December 9, in the Justice Department’s challenge to the merger of AT&T and T-Mobile that may shed further light on the impending trial scheduled to begin on February 13, 2012. In the wake of the companies’ withdrawal of their FCC merger application, there have been questions about whether the DOJ trial will begin as scheduled. Also set for last Friday was the scheduling conference for the private lawsuits against the proposed acquisition, to be brought by Sprint and C Spire (formerly Cellular South).
    • Nominations. The Senate Commerce Committee approved Jessica Rosenworcel and Ajit Pai as new FCC Commissioners by a December 8 voice vote.  The Committee also approved Jon Leibowitz for a second term as FTC Chairman and Maureen Ohlhausen as a new FTC Members.  The nominations head to the full Senate for confirmation.  As we have reported, Senate Judiciary Committee Ranking Member Charles Grassley (R-IA), who is not a member of the Commerce Committee, continues to vow to block Senate floor action on the FCC nominees, sighting a lack of response by the FCC to his request for information regarding the Commission’s review of the new national broadband network proposed by LightSquared. In response to yesterday’s vote, Commerce Committee Chairman Rockefeller expressed his confidence that “any concerns about the nominees” will be addressed quickly so “we can clear the way for full Senate confirmation.”
    • Hearings. On Wednesday, December 14, the House Energy and Commerce Subcommittee on Communications and Technology will hold a hearing to review the Internet Corporation for Assigned Names and Numbers (ICANN) Top-Level Domain Name program.  ICANN, the organization created in 1998 to manage the Internet’s domain name assignment system, will beginning January 12, 2012, allow organizations to apply for new addresses ending in almost any word or phrase.  The hearing will no doubt repeat much of the testimony and concerns aired at a December 8 hearing before the Senate Committee on Commerce, Science, and Transportation that examined ICANN’s gTLD rollout. The panelists, appearing on behalf of major national and international companies, advertisers, and non-profit organizations, questioned the wisdom of the ICANN program and its plans to open the gTLD application window on January 12, 2012.  Witnesses stressed that the ICANN proposal would impose an immediate cost on businesses through a $185,000 application fee to file “defensive registrations” to protect legitimate trademark or intellectual property rights from fraud or misuse. 

    REGULATORY ACTIVITY

    • FCC Open Meeting. The FCC will hold its monthly open meeting on Tuesday, December 13.  The Commission is expected to consider: 1) a Report and Order implementing the Commercial Advertisement Loudness Mitigation (CALM) Act, which prevents digital television commercial advertisements from being transmitted at louder volumes than the program material they accompany; and 2) the Third Report to Congress on the status of competition in domestic and international satellite communications services covering calendar years 2008, 2009 and 2010.

     

    Transportation

    LEGISLATIVE ACTIVITY

    • SAFETEA-LU Reauthorization. The Senate Banking Committee has been targeting Wednesday, December 14 as the date for marking up the transit title of SAFETEA-LU reauthorization, but the odds are diminishing that the mark-up will indeed occur before the holiday recess.  As reported in last week’s edition of Capital Thinking, the House has announced that it will not release and mark up its SAFETEA-LU reauthorization bill until 2012.  Most observers expect a late January timeframe for release and mark-up in the House, to be quickly followed by 2-3 days of floor action. If the Senate Banking Committee is unable to mark-up before the recess, a similar timeframe can be expected for release and mark-up, although the Senate will not be able to bring a bill to the floor until the Finance Committee addresses the $12+ billion in additional revenue needed for a two-year reauthorization at current funding levels.