Capital Thinking Update - December 5, 2011

    View Author 5 December 2011

    General Legislative

    On Monday, December 5, the House will meet at 12:00 p.m for morning hour and 2:00 p.m. for legislative business. The House will consider the following legislation: H.R. 2351, the “North Cascades National Park Service Complex Fish Stocking Act;” H.R. 944, a bill to eliminate an unused lighthouse reservation along the coast of Orange County, CA; H.R. 2360, the “POWER Act;” H.R. 643, the “Sugar Loaf Fire Protection District Land Exchange Act;” H.R. 1560, a bill to amend the “Ysleta del Sur Pueblo and Alabama and Coushatta Indian Tribes of Texas Restoration Act” to allow the Ysleta del Sur Pueblo Tribe to determine blood quantum requirements for membership; S. 683, the “Box Elder Utah Land Conveyance Act;” S. 535, the “Fort Pulaski National Monument Lease Authorization Act;” and S.Con.Res. 32, a concurrent resolution to authorize the Clerk of the House to make technical corrections in the enrollment of H.R. 470, an Act to further allocate and expand the availability of hydroelectric power generated at Hoover Dam.  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 Edgardo Ramos, of Connecticut, to be United States District Judge for the Southern District of New York, Andrew L. Carter, Jr., of New York, to be United States District Judge for the Southern District of New York, James Rodney Gilstrap, of Texas, to be United States District Judge for the Eastern District of Texas, and Dana L. Christensen, of Montana, to be United States District Judge for the District of Montana, with votes on confirmation of the nominations at 5:30 p.m.

    Budget, Appropriations


    • FY2012 Appropriations. Nine of the twelve appropriations bills for Fiscal Year (FY) 2012 have yet to be passed. As covered in the most recent edition of Capital Thinking, the President signed a minibus appropriations bill on November 18, which included the Agriculture, Commerce-Justice-Science, and Transportation-Housing appropriations bills and a short-term Continuing Resolution (CR) that funds all other federal operations through December 16. Simultaneously, a second minibus, slated to combine the Energy and Water (H.R. 2354), Financial Services (S. 1573), and State-Foreign Operations (S. 1601) spending bills, was abandoned. This inaction shifted the future of the remaining appropriations bills to one of several likely scenarios, including: (1) one or multiple short-term CRs (possibly through December 23 and/or into February) followed by the passage of an omnibus package; or (2) a long-term CR through the remainder of FY 2012. However, House Leadership opposes the use of a long-term CR to finalize the process.
    • Proposal to Ban Earmarks. Senators Claire McCaskill (D-MO) and Pat Toomey (R-PA) are introducing legislation to make a permanent ban on earmarks. Meanwhile, Senator Daniel Inouye (D-HI) recently stated that he is “going to do everything to reinstate earmarks.” Neither McCaskill nor Toomey have claimed to have the support of their party’s leadership but they remain determined to push for the legislation’s consideration next year.
    • Balanced-Budget Amendments. The Budget Control Act of 2011 (PL 112-25) mandated that the House and Senate vote on a constitutional balanced-budget amendment before the end of the year. As previously reported, the House rejected a balanced-budget amendment (261-165) before Thanksgiving. The Senate now plans to vote on a version of the amendment proposed by Senator Mark Udall (D-CO), as well as a version put forth by Senate Minority Leader Mitch McConnell (R-KY). However, it appears that the measure is unlikely to get the two-thirds majority needed. The version offered by Senate Republicans would set up a two-thirds threshold in both chambers for tax increases and establish a cap for federal spending at 18 percent of the economy’s annual output. Alternatively, Senator Udall’s version lacks a constitutional spending cap and a higher tax increase threshold. Udall’s amendment also excludes Social Security receipts and outlays from any balanced-budget requirement.
    • Line-Item Veto Legislation. Rep. Chris Van Hollen (D-MD) and House Budget Committee Chairman Paul Ryan (R-WI) proposed bipartisan legislation on November 30 that would provide the President with the authority to request the rescission of earmarks, duplicative programs, and other non-entitlement spending from appropriations bills. Similar bills have been introduced in the past including one version that passed and was found unconstitutional by the Supreme Court in the 1990s. In an attempt to address the Supreme Court’s decision, the Ryan - Van Hollen bill provides the President’s requests with expedited treatment in both chambers of Congress, meaning it has to come up for a vote.
    • Super Committee. On November 21, the Joint Select Committee on Deficit Reduction, otherwise referred to as the “Super Committee,” concluded its deliberations without agreeing on a plan to reduce future budget deficits by at least $1.2 trillion. The Committee’s failure to reach an agreement will trigger automatic cuts to security and non-security spending unless Congress comes up with a plan to avoid sequestration before it takes effect in January of 2013. Senators John McCain (R-AZ) and Lindsay Graham (R-SC) have begun to consider possible approaches to minimize the impact on the Department of Defense. However, President Obama made a statement last week threatening to veto any effort to get around the sequestration process. For additional detail, please see the section on the Super Committee.



    • College Affordability. On Wednesday, November 30, the House Education and the Workforce Subcommittee on Higher Education and Workforce Training held a hearing titled, “Keeping College within Reach: Discussing Ways Institutions can Streamline Costs and Reduce Tuition.”  Testimony primarily focused on factors contributing to increased tuitions, cost shifting, and identified costs-saving measures. Health care costs were identified as the primary driver of tuition increases, and the role of endowments was raised to determine whether institutions actually use such funds to lower costs for students. Discussion also focused on increasing transparency of the process colleges and universities use to raise tuition, as well as financial aid programs, and the need to evaluate the “one size fits all” criteria model.


    • Student Privacy. On Thursday, December 1, the Department of Education announced new regulations under the Family Educational Rights and Privacy Act (FERPA), which seeks to safeguard student privacy while giving states the flexibility to share school data that would inform future decisions on effective educational programs. The Department believes the regulations will increase student information protections, place accountability measures on individuals or entities that misuse student data, and ensure that taxpayer funds are invested properly. Under the regulations, schools are allowed to pursue routine uses of information without obtaining prior consent and deny access to information by individuals or entities likely to engage in abusive practices. 



    • Clean Energy Standard. Senate Energy and Natural Resources Committee Chairman Jeff Bingaman (D-NM) is now expected to release proposed “Clean Energy Standard” legislation early next year. Last week, at the request of Chairman Bingaman, the independent Energy Information Administration provided a 33-page analysis of the impacts of a CES, which would reach an overall clean-energy goal of 80% by 2035 and 95% by 2050 under the Chairman’s base proposal. EIA found that the Bingaman CES would change the nation’s electric generation mix by reducing the role of coal while increasing the role of natural gas, non-hydropower renewables, and nuclear technologies.
    • Keystone XL Pipeline. Senate Foreign Relations Committee Ranking Member Richard Lugar (R-IN) is expected to press for expedited consideration of his newly introduced North American Energy Security Act (S. 1932, with 37 Republican co-sponsors) to require that the State Department act on the pending permit for TransCanada’s pipeline. (The Administration recently decided to hold off on making a final “national interest” determination until 2013.)  Favorable legislation is also expected in the House, which may instead act to provide the Federal Energy Regulatory Commission with the power to approve the permit.
    • House Energy and Commerce Committee Year-End Agenda. Chairman Fred Upton (R-MI) has highlighted the need to move legislation pending House floor consideration, including the Pipeline Infrastructure and Community Protection Act (H.R. 2937) to strengthen and modernize oil and gas pipeline safety requirements. Additional Committee and Subcommittee hearings are also expected regarding the Keystone XL pipeline and the ongoing Solyndra investigation.


    • Offshore Renewables. On Tuesday, November 29, the Bureau of Ocean Energy Management is formally expected to solicit public comment on a proposed set of auction formats that may be used to issue commercial renewable energy leases on the Outer Continental Shelf. BOEM is expected to hold a workshop in Washington on December 16.
       New BSEE Director. On Thursday, December 1, Interior Secretary Ken Salazar officially swore in Coast Guard Rear Admiral James Watson as the permanent director of the Bureau of Safety and Environmental Enforcement. Former BOEMRE and BSEE director Michael Bromwich will stay on as a senior advisor through year-end.



    • Water Supply. On Thursday, December 8, the Senate Committee on Energy and Natural Resources, Subcommittee on Water and Power will hold a hearing concerning opportunities and challenges to address domestic and global water supply issues. 
    • Endangered Species. On Tuesday, December 6, the House Committee on Natural Resources will hold an oversight hearing on endangered species act litigation.
    • Critical Elements. On Wednesday, December 7, the House Committee on Science, Space and Technology, Subcommittee on Energy and Environment will hold a hearing titled, "Energy Critical Elements: Identifying Research Needs and Strategic Priorities." Witnesses will include: The Honorable David Sandalow, Assistant Secretary for Policy and International Affairs, Department of Energy; Dr. Derek Scissors, Research Fellow, Heritage Foundation; Dr. Robert Jaffe, Jane and Otto Morningstar Professor of Physics, Massachusetts Institute of Technology; Dr. Karl Gschneidner, Senior Materials Scientist, Ames National Laboratory; Mr. Luka Erceg, President and CEO, Simbol Materials.


    • Nominations for EPA’s Science Advisory Board. The EPA is requesting public nominations of scientific experts for appointment to EPA’s Science Advisory Board (SAB) Chemical Assessment Advisory Committee. The primary purpose of this new committee is to review chemical assessments. EPA will consult with the committee on questions regarding the Integrated Risk Information System (IRIS) Program. IRIS is a publicly available online database that provides science-based human health assessments used to inform the agency’s decisions on protecting public health and the environment. Nominations are due by January 6, 2012.
    • Draft Vessel Permits. EPA has issued two draft vessel general permits that would regulate discharges from commercial vessels, excluding military and recreational vessels. The proposed permits are intended to protect the nation’s waters from ship-borne pollutants and to reduce the risk of introduction of invasive species from ballast water discharges.
       The draft Vessel General Permit, which covers commercial vessels greater than 79 feet in length, would replace the current 2008 Vessel General Permit, when it expires in December 2013. Under the Clean Water Act, permits are issued for a five-year period after which time EPA generally issues revised permits based on updated information and requirements. The new draft Small Vessel General Permit would cover vessels smaller than 79 feet in length and would provide such vessels with the Clean Water Act permit coverage they will be required to have as of December 2013.

      Both permits will be subject to a 75-day public comment period, which will allow a broad array of stakeholders, including industry and communities, to provide feedback. EPA intends to issue the final permits in November 2012, a full year in advance, to allow vessel owners and operators time to prepare for new permit requirements.
    • Confidential Chemical Information. EPA has just made available to the public studies on chemicals that had been treated as confidential business information (CBI). The move is part of EPA's plan to make public chemicals that are not entitled to CBI status. Releasing the data is intended to expand the public’s access to health and safety information on chemicals that are manufactured and processed in the United States. Since 2009, 577 formerly confidential chemical identities are no longer confidential and more than 1,000 health and safety studies are accessible to the public that were previously unavailable or only available in limited circumstances. Newly available information can be found using EPA’s Chemical Data Access Tool online here

    Financial Services


    • House Financial Services Committee Approves Dodd-Frank Legislation. On Wednesday, November 30, the House Financial Services Committee approved several legislative proposals related to the Dodd-Frank Act’s implementation. They include the Swap Execution Facility Clarification Act (H.R. 2586), a bipartisan proposal related to how the Commodity Futures Trading Commission (CFTC) and Securities and Exchange Commission (SEC) craft rules governing new over-the-counter derivatives platforms; the Business Risk Mitigation and Price Stabilization Act of 2011 (H.R. 2682), a bill that would exempt non-financial companies that use derivatives to hedge their risk from having to meet the margin requirements in the Dodd-Frank Act; and a bill that would exclude swaps between affiliated entities controlled by the same parent company from clearing, margin and collateral requirements (H.R. 2779).
    • House Agriculture Committee Votes to Subpoena Jon Corzine. On Friday, December 2, the House Agriculture Committee approved, by voice vote, to issue Jon Corzine a subpoena to appear at its December 8 hearing on the bankruptcy of MF Global, the firm he previously led.
    • House Financial Services Committee to Discuss Regulatory Reform in Chicago. On Monday, December 5, the House Financial Services Committee will hold a field hearing in Chicago, Illinois titled, “Regulatory Reform: Examining How New Regulations are Impacting Financial Institutions, Small Businesses and Consumers in Illinois.”
    • House Financial Services Committee to Discuss Insider Trading Legislation. On Tuesday, December 6, the House Financial Services Committee will hold a hearing to discuss the STOCK Act (H.R. 1148), a proposal to prohibit commodities and securities trading based on non-public information relating to Congress and to require additional reporting by Members and employees of Congress of securities transactions.
    • Senate Banking Committee to Hear from Regulators on Dodd-Frank Implementation. On Tuesday, December 6, the Senate Banking Committee will hold a hearing titled “Continued Oversight of the Implementation of the Wall Street Reform Act”. Witnesses will include Neal Wolin, Deputy Secretary, U.S. Department of the Treasury; Daniel Tarullo, Member, Federal Reserve System; Mary Schapiro, Chairman, 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.
    • Former FDIC Chairwoman to Testify on Financial Institution Supervision. On Wednesday, December 7, the Senate Banking Subcommittee on Financial Institutions and Consumer Protection will hold a hearing titled “Enhanced Supervision: A New Regime for Regulating Large, Complex Financial Institutions.” Witnesses will include Sheila Bair, Former Chairwoman of the FDIC and currently a Senior Advisor to Pew Charitable Trusts.


    • CFTC to Hold Dodd-Frank Open Meeting. On Monday, December 2, the CFTC will hold a public meeting to consider 1) a final rule on investment of customer funds and funds held in an account for foreign futures and options transactions; 2) a final rule on registration of foreign boards of trade; 3) a proposed rule on the process for making a swap “available to trade;” and 4) a proposed interpretation for retail commodity transactions.

    Health Care


    • Senate Judiciary Hearing. The Senate Committee on the Judiciary has scheduled a hearing on Tuesday, December 6 at 2:30 p.m. titled “The Express Scripts/Medco Merger: Cost Savings for Consumers or More Profits for the Middlemen?”  Witnesses include George Paz with Express Scripts, Inc.; David Snow with Medco Health Solutions, Inc.; Scott Streator with the Ohio State University Medical Center; Susan Sutter with Marshfield Pharmacies; Mike Bettiga with Shopko, Inc.; and David Balto of the Law Offices of David Balto.
    • House Oversight Hearing. The House Committee on Oversight and Government Reform has scheduled a hearing on Wednesday, December 7 at 10:00 a.m. titled “A Medicaid Fraud Victim Speaks Out: What’s Going Wrong and Why?”
    • Senate Finance Hearing. The Senate Finance Committee will hold a hearing on Wednesday, December 7 at 10:00 a.m. on “Drug Shortages: Why They Happen and What They Mean.”
    • Physician Fee Fix Legislation. According to a new Congressional Budget Office (CBO) score requested by the Senate Finance Committee and circulating on the Hill, the cost of fixing the Medicare physician pay formula for two years is estimated to be $38.6 billion. Lawmakers may now perceive that a more expensive permanent pay fix is off the table this year given the Super Committee’s inability to reach agreement, despite strong advocacy efforts from the physician community. The House Committees on Ways and Means, Energy and Commerce and the Senate Finance Committee are currently working on a physician fee fix package that would include additional Medicare extenders provisions, as well. The Ways and Means Committee proposes a one-year patch with a one percent update scored at $20.6 billion over ten years. The Energy and Commerce proposal, however, would freeze payments for two years with a cost of $38.6 billion.


    • Regulations. This week, the U.S. Department of Health and Human Services announced new steps to encourage the use of health information technology to lower costs, improve quality and create jobs. Their report finds that the number of physicians who use electronic medical records has doubled from 17 to 34 percent between 2008 and 2011. The Department announced that it will offer a one-year extension of the deadline for providers to meet Stage 2 meaningful use requirements.


    • NGA Survey. The National Governors Association and the National Association of State Budget Officers released the Fall 2011 Fiscal Survey of the States this week. Among their findings, they report that Medicaid spending will represent the largest portion of total state spending in FY 2011 at 23.6 percent.
    • IOM Meetings. The Institute of Medicine will hold the third meeting of the Committee on Valuing Community Based, Non-Clinical Prevention Policies and Wellness Strategies on Monday, December 5. 
    • MedPAC Meeting. The Medicare Payment Advisory Commission (MedPAC) will hold a public meeting on December 15 and 16. The agenda is expected to be released next week. 

    International, Defense, Homeland Security

    • Defense Developments. On Thursday, December 1, the Senate passed its version of the Fiscal Year 2012 (FY12) defense authorization bill (S. 1867) by a count of 93-7. S. 1867 authorizes $662 billion in defense spending, which is commensurate with the proposed FY12 defense appropriations bill (H.R. 2219) and the national security spending limits set in place in August as part of the debt limit compromise. Leading up to the final vote on the defense bill, Senate Armed Services Committee Chairman Carl Levin (D-MI) and Senate Intelligence Committee Chairwoman Dianne Feinstein (D-CA) brokered a partial compromise on the bill’s most controversial provision, continuing to authorize the U.S. armed forces’ detention and adjudication of “enemy combatants” who are U.S. citizens or lawful resident aliens. The new Senate language states that it will not overturn existing law on such detentions, effectively continuing the status quo but reiterating that the Supreme Court has the authority to review and strike down the provision, if it so chooses. Up next is a Conference Committee with the House, whose bill (H.R. 1540) authorizes $670 billion in spending and flatly mandates military tribunals for all alleged enemy combatants. The compromise did not satisfy the Obama Administration, which has threatened to veto either the Senate or the House’s approach. However, the President ultimately may find the Senate’s version sufficiently palatable to sign legislation containing such compromise language, if it survives the upcoming Conference. Other notable provisions in the Senate bill include  1) making the head of the National Guard a member of the Joint Chiefs of Staff, 2) adding an opt-out clause for military chaplains not wishing to perform gay marriages (as opposed to the House’s categorical bar on the Department of Defense recognizing such unions).
    • Iran Developments. Another provision in the defense bill would bar any foreign company from using the U.S. financial system if it engages in certain energy-related transactions with the Central Bank of Iran. Senator Mark Kirk (R-IL) and Senator Bob Menendez (D-NJ) added the measure as a floor amendment, which passed 100-0. House conferees are likely to support the Kirk-Menendez measure. The White House opposed the amendment on the grounds that it endangers the Administration’s coordinated, multilateral approach, including by potentially fostering an oil price rise and by not allowing enough time for certain allied nations to find energy sources not funded by Iran’s Central Bank. Still, the amendment does contain provisions for waiving the sanctions, if the Administration were to find they would cause disruptions in the global oil market or if the President were to certify that a waiver is in the interest of U.S. national security. Meanwhile, the European Union (EU) took a more measured, but still substantial, approach on Thursday. The EU placed 180 additional Iranian individuals and companies on its sanctions list, thereby freezing their assets and barring travel to Europe. The move from Brussels follows the storming of the British Embassy in Tehran by Iranian militants earlier this week, a development which EU officials believe Iranian government officials had pre-approved. The EU is scheduled to consider additional sanctions measures in January.
    • Burma Developments. On Thursday, December 1, Secretary of State Clinton followed through on her pledge to visit Burma. In so doing, the Secretary helped fulfill President Obama’s broader pledge, made at the outset of his Administration, to engage with anti-U.S. regimes that take initial steps to improve human rights and bilateral relations with Washington. The Burmese regime has released some political prisoners and has initiated a dialogue with the democratic opposition. So far, the Obama Administration is moving cautiously in response, no doubt keeping in mind the general resistance to its engagement policy from the likes of North Korea, Iran, and Syria. To that end, Secretary Clinton offered Prime Minister Thein Sein no promise of the near-term removal of sanctions or the restoration of full diplomatic relations, instead only offering support for multilateral and bilateral humanitarian and development aid. The Administration’s balanced approach has the steadfast support of Burmese opposition leader Aung San Suu Kyi, who has decided to personally participate in upcoming by-elections, despite her doubts about the commitment to reform among some members of Burma’s ruling elite. Without Suu Kyi’s blessing, it is far to say the Administration would not have moved down the path of engagement. It is also fair to say that both Suu Kyi and the Administration reserve the right to change their approach quickly, if future actions of the Burmese leadership dictate such a response.

      Super Committee

      After nearly three months of deliberations, the Super Committee failed to reach a deal by its November 23 deadline. In a joint statement released on November 21, the co-chairs of the Committee, Sen. Patty Murray (D-WA) and Rep. Jeb Hensarling (R-TX), announced that the Committee was unable to come to a bipartisan agreement. Ultimately, Committee Democrats were not satisfied with the revenue raisers offered by Republicans, while Committee Republicans argued that Democrats failed to negotiate seriously on spending cuts, including cuts from entitlement programs.

      While suggestions for scaling back automatic budget cuts have already surfaced, including a proposal by House Majority Leader Eric Cantor (R-VA), the Committee’s failure is set to trigger a $1.2 trillion sequestration in 2013, absent Congressional action to reverse course.



    • Dueling Payroll Tax Proposals Fail in Senate. On Thursday, December 1, the Senate rejected dueling proposals to extend the two-percent payroll tax cut through 2012. While Democrats and Republicans have indicated that they expect to reach a compromise on extending the payroll tax, disagreements persist on how to offset the extension. The Democrats’ measure (S. 1917), which failed to proceed by a 51-49 vote, would have offset the extension with a so-called “millionaires surtax” – a 3.25 percent surtax on modified adjusted gross income in excess of $1 million for individuals and married couples filing jointly. The Republicans’ bill (S. 1913), which only secured 20 votes to proceed, proposed to pay for the measure by extending the current freeze on federal worker salaries and reducing the size of the federal workforce through attrition.      
    • Tax Reform Hearings Next Week. Hearings on fundamental tax reform continue on both the House Ways & Means and Senate Finance Committees. The following hearing is scheduled for next week:

      December 6: Joint Committee Hearing on Tax Treatment of Financial Products. The following witnesses are scheduled to appear before the Committees: Mr. Thomas A. Barthold, Chief of Staff, Joint Committee On Taxation; Mr. Alex Raskolnikov, Charles Evans Gerber Professor of Law and Co-chair of the Charles E. Gerber Transactional Studies Program, Columbia Law School; Ms. Andrea S. Kramer, Partner, McDermott Will & Emery LLP; Mr. David S. Miller, Partner, Cadwalader, Wickersham & Taft LLP.

      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 later this 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.



    • Spectrum. The House Communications and Technology Subcommittee voted 17-6 on Thursday, December 1 to approve a bill that would reallocate spectrum known as the D Block to public safety and provide $6.5 billion in grants for construction of a nationwide interoperable broadband network for first responders. House Republicans may seek to add spectrum reform onto a larger, year-end omnibus bill that incorporates an unemployment insurance extension, and the Alternative Minimum Tax, among other measures.
      Although the move is far from settled, it would likely avoid the need for another markup at the House Energy and Commerce Committee.

      The Jumpstarting Opportunity with Broadband Spectrum (JOBS) Act also would require public safety to the eventually return 14 MHz of 700 MHz narrowband spectrum to the Federal Communications Commission (FCC) as first responders transition to a new interoperable network.

      The JOBS Act, sponsored by Subcommittee Chairman Greg Walden (R-OR), provision on the D Block represents a narrowing of differences between Democrats, who have called for D Block’s reallocation to public safety, and Republicans, who have favored auctioning the D Block for commercial use.

      Walden said that the bill struck “a good balance,” and Subcommittee Vice Chairman Lee Terry (R-NE) called the D Block reallocation to public safety a “big move on our part,” but Representative Henry Waxman (D-CA), the Energy and Commerce Committee’s Ranking Member, said that the Republican bill was “in need of repair.”

      While praising Chairman Walden for taking a “big step” to set the D Block aside for first responders, Representative Anna Eshoo (D-CA), Ranking Member of the Subcommittee, agreed with Waxman that the bill suffered three critical deficiencies, namely: (1) the governance of the public safety broadband network by a private corporation; (2) the limitations placed on the FCC’s ability to craft auction service rules; and (3) the bill’s failure to provide unlicensed spectrum to commercial providers for free. Earlier this week, Eshoo and Waxman introduced legislation, H.R. 3605, the Wireless Innovation and Public Safety Act, which would have addressed those three issues. During the markup, Eshoo introduced her legislation with Waxman as a substitute amendment, but the Subcommittee rejected it by a 16-8 party-line vote.

      The Subcommittee approved bipartisan amendments that would ensure international coordination for broadcast repacking, and provide funding for a Next Generation 911 buildout and 911 and Next Generation 911 studies. Members also approved an amendment that would prohibit the FCC from placing unrelated regulations, such as net neutrality, on auctions, and prohibit anyone deemed a national security risk from bidding on spectrum or receiving grants for public safety buildout.
    • Cybersecurity. The House Intelligence Committee took swift action on a new cybersecurity bill introduced on November 30 by Chairman Mike Rogers (R-MI) and Ranking Member Dutch Ruppersberger (D-MD). In a closed markup on December 1, the Committee passed H.R. 3523, the Cyber Intelligence Sharing and Protection Act of 2011 by a 17-1 vote. As introduced, the bill: 1) gives the federal government new authority to share classified cyber threat information with pre-approved American companies; 2) allows participating businesses to share cyber threat information with others in the private sector and with the government on a voluntary basis; provides liability protection for companies that choose to protect their own networks or share threat information; and 4) requires a review of the sharing and use of information by the federal government to ensure the protection of privacy and civil liberties and to report annually to Congress recommendations for enhancing privacy and civil liberties.

      During the markup, two amendments were adopted by voice vote. The first amendment, offered by Rogers and Ruppersburger, would restrict the government’s use of any shared information, requiring that at least one significant purpose of the data’s usage be for cybersecurity or national security concerns. It also would specify that private sector entities may not be compelled to share information with the federal government, nor may the government condition an information exchange upon a private entity providing information back to the government. This amendment was offered by the bill’s sponsors in reaction to concerns expressed by civil liberties groups like the American Civil Liberties Union (ACLU) who worried that there was not enough guidance in the bill to protect the private information of individuals whose data may be part of any information exchange, for being too broad in defining what constitutes a cyber threat, and for not requiring businesses to make information on private individuals anonymous. The second amendment, offered by Representative Mike Thompson (D-CA), directs the intelligence community’s inspector general to issue annual reports to congressional intelligence committees, rather than to the Privacy and Civil Liberties Board, as in the original draft,  about the federal government’s use of cyber threat information for purposes other than for cybersecurity and would have to include a review of the type of cyber threat information received by the government and actions it took upon receiving the information.

      On December 6, the House Homeland Security Subcommittee on Cybersecurity, Infrastructure Protection and Security Technologies will hold a hearing on their own “draft” legislative cybersecurity proposals. We expect H.R. 3523 to be discussed in detail at the hearing.
    • FCC Process Reform. On November 29, the House Energy and Commerce Committee began consideration of H.R. 3309 and H.R. 3310 aimed at increasing “transparency, predictability, and consistency” at the FCC. The bills, sponsored by Representative Greg Walden (R-OR), Chairman of the Communications and Technology Subcommittee, are part of a larger Republican opposition to certain FCC actions, including passage of the net neutrality rules and the agency’s review of the Comcast-NBC Universal merger, which was approved with a series of conditions. Although the markup was to have concluded on November 30, the Committee was unable to finish its work. The markup is expected to continue next week.
      Together, the bills would:
      • Require the Commission to identify a market failure, consumer harm, or regulatory barriers to investment before adopting economically significant rules. After identifying the issue, the FCC would need to demonstrate that the regulation’s benefits outweigh its costs.
      • Require the Commission to establish performance measures for all program activities. 
      • Apply to the Commission the regulatory reform principles that President Obama endorsed in his January 2011 Executive Order.
    • FCC Nominations. On November 30, the Senate Commerce Committee held a hearing to consider the nominations of Jessica Rosenworcel and Ajit Pai to fill Democratic and Republican slots, respectively, on the Federal Communications Commission. Universal service, net neutrality, imposing merger conditions to achieve policy goals and telecommunications reform were among the topics raised by Committee members. However, Senator Charles Grassley’s (R-IA), who is not a member of the Commerce Committee, has promised, re-iterated in a statement issued before the hearing, to block Senate action on both nominees because what he says is a lack of response by the FCC to his request for information from the agency  regarding the Commission’s review of the prospective new national broadband network being proposed by LightSquared.


    • FCC Open Meeting. At its November 30 open meeting, the FCC approved a rule allocating spectrum in the 413-457 MHz band and adopting service and technical rules to allow the use of new types of implanted medical devices that use functional electronic stimulation to, among other things, restore sensation, mobility, and function to paralyzed limbs and organs. The Commission also received a staff report on recent broadband adoption efforts, including a “first-of-its-kind national effort to address the barriers to broadband adoption, digital literacy and the employment skills gap.”



    • SAFETEA-LU Reauthorization in the Senate. As previously reported, the Senate Environment and Public Works (EPW) Committee approved a two-year bipartisan highway bill in a unanimous vote on November 9. The Senate Banking and Commerce Committees, which have jurisdiction over the transit and highway safety portions of the bill, are planning to markup before the upcoming recess although neither has released draft legislation. The Finance Committee has yet to identify a funding mechanism to cover the gap between the bill’s cost and the projected available funding in the Highway Trust Fund. That gap had originally been projected at $12 billion, however, it now appears that more than $12 billion may be needed to ensure solvency of the Mass Transit Account through Fiscal Year 2013. SAFETEA-LU Reauthorization in the House: On November 30, Rep. John Mica (R-FL), Chairman of the Transportation and Infrastructure (T&I) Committee, said that Republican lawmakers in the House had made the decision to push back any action on SAFETEA-LU reauthorization to early next year due to a congested House floor calendar and a rapidly approaching recess. Mica had previously planned to roll out a draft of his bill on December 5, followed quickly by a markup and then floor time the following week. This delay leaves a shorter period of time for the bill to go to conference and complete the whole process before the current extension of SAFETEA-LU expires on March 31, 2012.