Capital Thinking Update - May 7, 2012

    View Authors 7 May 2012

    General Legislative

    On Monday, May 7, the House will meet at 2:00 p.m. for legislative business.  The following bills will be considered under suspension of the rules: 1) H.R. 4097 - John F. Kennedy Center Reauthorization Act of 2012 (Sponsored by Rep. John Mica / Transportation and Infrastructure Committee); 2) H.Con.Res. 106 - Concurrent resolution authorizing the use of the Capitol Grounds for the Greater Washington Soap Box Derby (Sponsored by Rep. Steny Hoyer / Transportation and Infrastructure Committee); 3) H.Con.Res. 117 - Concurrent resolution authorizing the use of the Capitol Grounds for the National Peace Officers’ Memorial Service (Sponsored by Rep. Jeff Denham / Transportation and Infrastructure Committee); 4) H.Con.Res. 105 - Authorizing the use of Emancipation Hall in the Capitol Visitor Center for an event to celebrate the birthday of King Kamehameha (Sponsored by Rep. Colleen Hanabusa / House Administration Committee); 5) H.Con.Res. 118 - Concurrent resolution authorizing the use of the Capitol Grounds for the District of Columbia Special Olympics Law Enforcement Torch Run (Sponsored by Del. Eleanor Holmes Norton / Transportation and Infrastructure Committee); 6) Concur in the Senate Amendment to H.R. 2297 - To promote the development of the Southwest waterfront in the District of Columbia, and for other purposes (Sponsored by Del. Eleanor Holmes Norton / Oversight and Government Reform Committee); and 7) S. 1302 - A bill to authorize the Administrator of General Services to convey a parcel of real property in Tracy, California, to the City of Tracy (Sponsored by Sen. Barbara Boxer / Oversight and Government Reform Committee). 

    The Senate convenes at 2:00 p.m. on Monday and will resume consideration of the motion to proceed to S. 2343, the Stop Student Loan Interest Rate Hike Act.


    Agriculture

    LEGISLATIVE ACTIVITY

    • Senate Farm Bill Markup. On Thursday, April 26, the Senate Agriculture Committee passed “The Agriculture Reform, Food and Jobs Act of 2012” (2012 Farm Bill) with a vote of 16 to 5 after delaying the markup for a full day. Senators John Boozman (R-AR), Saxby Chambliss (R-GA), and Thad Cochran (R-MS) voted against the bill based on their concerns with the commodity title. Senate Minority Leader Mitch McConnell (R-KY) voted against the bill by proxy. Senator Gillibrand (D-NY) also voted against the bill due to her objections to cutting funding for the Supplemental Assistance Nutrition Program (SNAP), formerly known as the food stamps program. The bill would save $26.7 billion over 10 years.

      At a news conference following the markup, both Chairwoman Debbie Stabenow (D-MI) and Ranking Member Pat Roberts (R-KS) indicated that they plan to work with the southern Senators to address their concerns related to the commodity title, as southern Senators will likely not support the bill during floor votes. Under the title, the bill would create a new program, the “Agriculture Risk Coverage Program,” which would provide “shallow” loss coverage for famers who experience price and crop yield losses. The bill would also expand access to crop insurance and eliminate target prices. The bill would also replace dairy product and income support programs with a program that would make payments to participating farmers when the margin between milk and feed prices shrinks to less than a specified level.

      The Senate bill would also provide $800 million in mandatory funding to continue supporting energy programs, including loan guarantees, to biofuel producers and subsidies for biofuel feedstock production.

      Although not confirmed, Senate Majority Leader Harry Reid (D-NV) may schedule floor time for the bill before the Memorial Day recess.
    • House Agriculture Dairy Hearing. On Thursday, April 26, the House Agriculture Committee Subcommittee on Livestock, Dairy, and Poultry held a hearing on reforming dairy programs. This was the third of eight hearings in the formulation of the House Agriculture Committee’s 2012 Farm Bill. During the hearing, the Committee discussed the economic impact of policy options under the Farm Bill. More specifically, the Committee received testimony on the economic impact of repealing the dairy product price support program, milk income loss contract program, and dairy export incentives program. The Committee also heard testimony on the economic impact of establishing a margin protection program and establishing a supply management program that would be linked to voluntary participation in the margin protection program. The dairy industry has strongly opposed the proposed establishment of a supply management program.
    • Upcoming Hearings. The House Agriculture Committee will continue its series of hearings in the formulation of the 2012 Farm Bill. On Tuesday, May 8, the Subcommittee on Nutrition and Horticulture will hold a hearing on specialty crops and nutrition programs. On Thursday, May 10, the Subcommittee on Department Operations, Oversight, and Credit will hold a hearing on credit programs.

    REGULATORY ACTIVITY

    • Department of Labor Proposed Rule on Child Labor on Farms. On Thursday, April 26, the Department of Labor withdrew its proposed rule on youth labor on farms. This announcement followed criticism by Members of Congress who believe the rule would interfere with the normal practices that occur in rural areas and would further limit growth in the agricultural workforce. In March, Senators John Thune (R-SD) and Jerry Moran (R-KS) introduced a bill titled “Preserving America’s Family Farm Act.” If enacted, the bill would have prevented the Department from enacting the proposed rule. In September 2011, the Department proposed revising the rule on child labor on farms to reduce the rate of deaths and injuries on farms, as it had not been rewritten in 40 years.
    • Policy Guidance Regarding Grain Requirements. On Thursday, April 26, the Department of Agriculture released its policy guidance regarding the grain requirements for the National School Lunch Program (NSLP) and School Breakfast Program (SBP). The guidance specifically addresses implementation of the ounce equivalencies and definition of whole grain-rich products. The guidance also sets forth the criteria to be used by school food authorities (SFAs) and program operators to determine grains that meet the regulatory standards and equivalent minimum serving sizes. The Department is currently in the process of updating resources to assist SFAs and program operators with identifying whole grain-rich foods for availability by summer 2012.
    • Department of Agriculture Food Safety Measures. On Wednesday, May 2, the Department of Agriculture’s Food Safety Inspection Service (FSIS) announced new safeguards to protect consumers from foodborne illnesses from contaminated meat. FSIS will now begin to trace back suppliers and processors prior to confirmation of test results for the E. coli 0157:H7 strain, if initial sample tests signal the strain’s presence. The Department believes this expedited process will give FSIS additional time, up to 48-hours, to investigate potentially contaminated meat products.

      FSIS is also implementing three provisions included in the Food, Conservation and Energy Act of 2008 (the 2008 Farm Bill). The new regulations, published as a final rule, require establishments to prepare and maintain recall procedures, to notify FSIS within 24 hours that a meat or poultry product that could harm consumers has been shipped into commerce, and to document each reassessment of their hazard analysis and critical control point (HACCP) system food safety plans.

     

    Budget, Appropriations

    LEGISLATIVE ACTIVITY

    • FY 2013 Appropriations. After rejecting a Democratic proposal to utilize the $1.047 trillion discretionary spending cap established in the Budget Control Act of 2011 (P.L. 112-25), and a proposal by Representative Jeff Flake (R-AZ) to use the Republican Study Committee recommendation of a $931 billion discretionary spending cap, on April 25, the House Appropriations Committee approved its FY 2013 302(b) allocations which follow the $1.028 trillion discretionary funding level designated in the House Budget Resolution (H. Con. Res. 112). As previously reported, the Senate Appropriations Committee approved its FY 2013 302(b) allocations in April which follow the $1.047 trillion discretionary cap established in the Budget Control Act.

      Before the recess last week, the Senate Appropriations Committee advanced four FY 2013 spending bills – Agriculture, Commerce-Justice-Science, Energy and Water, and Transportation-Housing. Their House counterparts advanced two measures – Commerce-Justice-Science and Energy and Water. The Commerce-Justice-Science bill is expected on the House floor this week and it is likely both chambers will consider one or more of these bills this month.

      With both the House and the Senate on track to soon pass the Commerce-Justice-Science and Energy and Water bills – and with only $1 billion separating the Senate and House marks for Energy and Water (the Senate allocation is $33.1 billion; the House allocation is $32.1 billion) and $800 million separating the marks for Commerce-Justice-Science (the Senate allocation is $51.9 billion; the House allocation is $51.1 billion) – it is possible one or both of these bills could be reconciled and enacted prior to the end of the 2012 fiscal year on September 30. Of the two, the Energy and Water bill appears the most likely candidate, despite differences on research and environmental cleanup funding. The two versions of the Commerce-Justice-Science bill, while similar in overall funding, vary significantly on programmatic funding allocations for law enforcement and the Senate proposal to shift funding for weather satellite procurement from the National Oceanic and Atmospheric Administration (NOAA) to NASA.

      House and Senate Appropriations Committees will continue to hold subcommittee and full committee markups this week. The following markups are scheduled as of the writing of this report: May 8 - House Defense Subcommittee CLOSED markup and House Military-Construction Subcommittee markup, and a potential House State-Foreign Operations Subcommittee markup on May 9.

      Despite these efforts, it is inevitable that Congress will need to act on a short-term Continuing Resolution before the start of FY 2013 on October 1. The bigger question is at what level? Conservative House Republicans will continue to push for a low spending cap; however, the President has threatened to veto any FY 2013 spending bills that do not adhere to the $1.047 trillion discretionary spending level established in the Budget Control Act and Senate Minority Leader Mitch McConnell (R-KY) voted in the Appropriations Committee to support the higher level. As such, some House Republican appropriators have expressed that they feel the higher level of $1.047 trillion will likely prevail in the long run.
    • House Reconciliation Efforts. As previously reported, the House FY 2013 Budget Resolution (H. Con. Res. 112) instructed six authorizing committees to produce legislation that would achieve the necessary spending cuts ($261 billion over 10 years) to avoid the sequestration process mandated by the Budget Control Act of 2011 (P.L. 112-25) that is scheduled to go into effect in January 2013.

      As directed in the Resolution, the committees approved and reported their recommendations to the House Budget Committee on Friday, April 27, and the Committee plans to mark up the reconciliation measures on Monday, May 7.

      The six committees and the level of spending cuts they are directed to recommend include: Agriculture - $33.2 billion for FY 2012 – FY 2022 ($8.2 billion for FY 2012 and FY 2013); Energy and Commerce - $96.76 billion for FY 2012 – FY 2022 ($3.75 billion for FY 2012 and FY 2013); Financial Services - $29.8 billion for FY 2012 – FY 2022 ($3 billion for FY 2012 and FY 2013); Judiciary - $39.7 billion for FY 2012 – FY 2022 ($100 million for FY 2012 and FY 2013); Oversight and Government Reform - $78.9 billion for FY 2012 – FY 2022 ($2.2 billion for FY 2012 and FY 2013); and Ways and Means - $53 billion for FY 2012 – FY 2022 ($1.2 billion for FY 2012 and FY 2013).

      For a budget reconciliation to take effect, both chambers would have to approve the process and use the same budget resolution. Senate Majority Leader Harry Reid (D-NV) has repeatedly stated that an FY2013 budget resolution is unnecessary because the spending limit was established in the Budget Control Act. Moreover, Democrats in both chambers are already speaking out against the recommendations put forth by the committees.

      In anticipation of the vote this week, House Republican leadership circulated a memo to the Republican Caucus on Wednesday, April 25 that outlined the necessity of using reconciliation cuts to replace the sequestration process. However, as the Senate is very unlikely to take up the package in any form, House Budget Committee Chairman Paul Ryan (R-WI) conceded that the reconciliation efforts of the House are mainly for political positioning leading up to the November elections and into expected budget / sequestration negotiations in the lame duck session.

      Committee recommendations, many of which have already been proposed or passed in the House, include: 
      • Agriculture – On April 18, the House Agriculture Committee approved its budget reconciliation measure to cut $33.2 billion over the next decade. The proposal makes several changes to the Supplemental Nutrition Assistance Program (SNAP), formerly known as food stamps. As stated by Chairman Frank Lucas (R-OK), the changes are aimed at “closing loopholes, reducing waste and abuse, and increasing the integrity of the program to ensure that SNAP serves only those households who qualify for the program.” This is the most controversial of all of the reconciliation bills.
      • Energy and Commerce – The House Energy and Commerce Committee approved three separate reconciliation measures on Wednesday, April 25 that, according to the Committee, will save an estimated $114 billion over 10 years. The first measure would eliminate the Prevention and Public Health Fund that has been a target for Republicans since the 2010 health care reform law (PL 111-148, PL 111-152) granted an advanced appropriation of $15 billion for the first 10 years of the fund. The second measure repeals the “maintenance of effort” requirements on states for keeping certain level-of-care standards for Medicaid and the Children’s Health Insurance Program (CHIP) to allow states to apply more restrictive eligibility standards for the programs. The third reconciliation bill would cap certain medical liability damages at $250,000, limit attorneys’ fees, and establish a statute of limitations on filing medical liability lawsuits.
      • Financial Services – The House Financial Services Committee approved legislation on April 18 that would save an estimated $35.1 billion over 10 years, which is more than $5 billion more than the $29.8 billion that the House Budget Resolution instructed. These savings come from eliminating the Federal Deposit Insurance Corporation’s power to seize failing banks and bringing the Consumer Financial Protection Bureau (CFPB) within the appropriations process rather than funding it through the Federal Reserve. In addition, the measure eliminates the Home Affordable Modification Program (HAMP), reauthorizes the National Flood Insurance Program to include institutional reforms, and repeals the Office of Financial Research.
      • Judiciary – The House Judiciary Committee approved its reconciliation measure which would overhaul the medical liability system to cut $39.7 billion over the next decade. This measure (H.R. 5) was passed by the House in March as part of a legislative package to repeal the Independent Payment Advisory Board (IPAB) that was created by the 2010 health care reform law and is similar to a portion of the Energy and Commerce Committee’s reconciliation measure detailed above. Although the reconciliation measure does not include language to repeal IPAB, it would cap non-economic damages at $250,000, limit attorneys’ fees, and establish a statute of limitations for filing health care lawsuits.
      • Oversight and Government Reform – On Thursday, April 26, the Oversight and Government Reform Committee approved a bill that would achieve almost $83 billion in deficit savings over 10 years. The measure includes provisions that would require federal workers, lawmakers and Congressional staff to contribute an additional five percent of their pay to their pensions. While Democrats are calling the proposal an assault on federal employees, Republicans argue that these changes are a way to align the federal workforce pensions with those of state and local governments.
      • Ways and Means – The House Ways and Means Committee approved three budget reconciliation bills on April 18 that comprise the $53 billion in spending cuts over 10 years as instructed in the House Budget Resolution. The first measure requires the capture of savings from overpayments in federally subsidized health insurance. The second bill requires taxpayers to include their Social Security number on tax returns in order to claim a refund from the child tax credit. The third measure repeals the Social Services Block Grant which provides funding for state programs to prevent, reduce, or eliminate dependency on social services. 

     

    Cybersecurity

    LEGISLATIVE ACTIVITY

    • House Cybersecurity Legislation. The week of April 23 constituted “Cybersecurity Week” in the House, bringing four cybersecurity bills to the floor for final passage along with programs hosted by the Congressional Cybersecurity Caucus. These bills included H.R. 3523, the Cyber Intelligence Sharing and Protection Act (CISPA); H.R. 4257, the House Oversight and Government Reform Committee’s bill the Federal Information Security Amendments Act of 2012 (FISMA);  H.R. 2096, the Cybersecurity Enhancement Act of 2011; and H.R. 3834,  the Advancing America's Networking and Information Technology Research and Development Act of 2012.

      The CISPA bill was the most controversial measure brought to the floor last week. CISPA focuses on increased information sharing between the private sector and the government, an issue many support. However, the bill granted direct authority to the Director of National Intelligence (DNI), not the U.S. Department of Homeland Security as supported by the White House, Senate, and many House Democrats. As a result, the Obama Administration issued a veto threat against the bill stating that it had concerns that the bill did not adequately protect private-sector-owned computer networks and the personal data of U.S. citizens. Despite the veto threat and active concerns by privacy advocates, the bill was ultimately passed by a vote of 248-168, with 42 Democrats voting in favor and 28 Republicans voting against. The House did adopt several amendments on the floor to improve the privacy and civil liberties protections in the bill, including one by Representative Robert Goodlatte (R-VA) which narrowed the definition of what information could be identified, obtained and shared, while an amendment by Representative Ben Quayle (R-AZ) restricted the way the government uses cyber threat information from the private sector.

      The House easily passed three other bills, including H.R. 4257, the FISMA reform bill which focuses on updating the federal government’s information systems to better protect against cyber attacks. The two cybersecurity bills that focused on research and development also passed: H.R. 2096, the Cybersecurity Enhancement Act of 2011, and H.R. 3834, Advancing America's Networking and Information Technology Research and Development Act of 2012.

      Notably missing during the House’s “Cybersecurity Week” was the House Homeland Security Committee’s bill, H.R. 3674, the Promoting and Enhancing Cybersecurity and Information Sharing Effectiveness Act (PRECISE Act). The bill directs the U.S. Department of Homeland Security (DHS) to work with public and private sector stakeholders to help protect federal information systems and would allow DHS to assist critical infrastructure owners and operators in protecting their systems when requested. At a contentious markup the week before, the Committee passed a revised version of the bill that greatly differed from the version that passed the Subcommittee on Cybersecurity, Infrastructure Protection, and Security Technologies in February. Both the Homeland Security Committee Chairman Peter King (R-NY) and Cybersecurity Subcommittee Chairman Dan Lungren (R-CA) made it clear that the revised bill was not their preferred approach but pressure from House leadership required them to modify the bill in order to gain broader support. In the end, the PRECISE Act was left off of the agenda for “Cybersecurity Week” and it is unclear whether this bill will be able to move to the floor given the controversy surrounding the bill.
    • Senate Cybersecurity Action. In the Senate, Homeland Security and Government Affairs Committee Chairman Joe Lieberman (I-CT), Ranking Member Susan Collins (R-ME) and a number of other Senate Democratic Chairmen released a comprehensive cybersecurity bill (S. 2105) in February that would give DHS the primary role in overseeing domestic cybersecurity efforts and set standards for owners and operators of critical infrastructure.

      While the White House favors this bill, Senate Republicans, led by Senator John McCain (R-AZ), have expressed concerns about the impacts of the regulatory components of the Lieberman bill. In response, Senator McCain introduced a competing cybersecurity bill, along with a host of other Ranking Republicans in the Senate: the Strengthening and Enhancing Cybersecurity by Using Research, Education, Information, and Technology Act or SECURE IT Act (S. 2151).

      At this point, discussions between the two groups continue, and it looks like the Senate still plans to bring S. 2105 to the Senate floor within the next month or two. 

     

    Education

    LEGISLATIVE ACTIVITY

    • Student Loan Interest Rates. While Congressional education leaders initially were resistant to extending the current federally subsidized (Stafford) student loan rates – after much lobbying by President Obama and presumptive Republican presidential nominee Mitt Romney publicly announcing his support for the extension – the leaders introduced legislation (H.R. 4628) on Wednesday, April 25 to prevent the 3.4 percent interest rate from doubling on July 1, 2012. Despite a veto threat from the White House, the House passed (215-195) its bill (H.R. 4628), which pays for the extension by eliminating the Prevention and Public Health Fund created under the 2010 health care reform law. Senate Majority Leader Harry Reid (D-NV) also introduced a loan-interest rate extension bill on Tuesday, April 24, which would offset the one-year extension by ending a tax break on “S corporations” (companies that pass their income, losses, deductions and credits through to shareholders for federal tax purposes). It would raise an additional $3 billion from Social Security revenue from S corporation employee shareholders, which would be put in the Social Security Trust fund. The Senate is expected to vote on the legislation Tuesday, May 8. While the parties differ on plans to offset the cost of the extension, it is likely Congressional leaders will be able to come to agreement to keep the rate from doubling.
    • ESEA Reauthorization. A group of national educational organizations sent a letter to Congressional leaders in both chambers on Thursday, May 3 pressing them to act on “must-pass legislation” overhauling the outdated No Child Left Behind law. However, neither chamber has scheduled floor time for the measures yet and large differences between the bills will likely keep them from progressing.
    • Hearings and Events. The House Veterans Affairs Committee scheduled a hearing on May 16 to discuss President Obama’s Executive Order, “Establishing Principles of Excellence” (see further detail below). On Tuesday, May 8, the Brookings Institution will hold an event examining rising college tuition costs and policy solutions from a forthcoming report, “Beyond Need and Merit: Strengthening State Grant Programs.”

    REGULATORY ACTIVITY

    • Executive Order. On Friday, April 27, President Obama signed an Executive Order, “Establishing Principles of Excellence for Educational Institutions Serving Service Members, Veterans, Spouses, and Other Family Members,” which sets forth guiding principles for how institutions receiving military and veteran education benefits recruit students, disclose financial information, and track student outcomes. The Executive Order also directs the Departments of Defense, Veterans’ Affairs, Education, and the Consumer Financial Protection Bureau to provide students with educational and financial information to make informed decisions, mandates the creation of a centralized complaint database, and directs the government to take steps to stop deceptive marketing and recruiting practices by institutions that are eligible to receive military education benefits. The order also looks to increase the enforcement of existing rules meant to protect students, including the Department of Education’s regulations on gainful employment and incentive compensation.
    • Negotiated Rulemaking Committee. On Tuesday, May 1, the Department of Education published in the Federal Register its intent to establish a negotiated rulemaking committee to prepare proposed regulations for the Federal Student Aid Programs authorized by the Higher Education Act (HEA). More specifically, the committee will develop proposed regulations designed to prevent fraud and ensure proper use of Title IV and HEA program funds, including addressing the use of debit cards and other banking mechanisms for disbursing Federal Student Aid funds. The committee will also propose regulations to improve and streamline the campus-based Federal Student Aid programs. It committee will begin negotiating in September 2012.

      The Department will hold two public hearings to receive suggestions on additional issues that should be considered for action by the negotiated rulemaking committee. The hearings will take place on May 23 at South Mountain Community College in Phoenix, Arizona, and on May 31 in Washington, DC. The deadline to submit written comments is May 31, 2012.
    • Student Loan Interest Rates. After President Obama’s April 24 and 25 travel to North Carolina, Colorado, and Iowa, during which he called on Congress to stop Stafford student loan interest rates from doubling, the Administration continued its push for Congress to act, holding events at Washington-Lee High School on Friday, May 4 in Arlington, Virginia. Education Secretary Arne Duncan held a roundtable discussion with the school’s students and parents about the importance of college affordability, followed by a speech by President Obama on extending the current interest rate. Additionally, the Administration has scheduled the following events focused on preventing the rates from doubling July 1:
      • President Obama will hold a conference call on Monday, May 7 with elected officials and student government leaders from across the country.
      • Vice President Biden will address a group of students and representatives from higher education and youth organizations at the White House on Thursday, May 10.
      • Secretary of Labor Hilda Solis will hold an event in Chicago, Illinois on Tuesday, in Columbus, Ohio on Wednesday, and in Phoenix, Arizona on Friday (May 8, 9, and 11, respectively).
      • Small Business Administrator Karen Mills will hold an event in Denver, Colorado on Tuesday, May 8.
      • United States Trade Representative Ron Kirk will hold an event in Dallas, Texas on Thursday, May 10.

        Other senior Administration officials from the Departments of Education, Agriculture and Labor will hold events in Massachusetts, North Carolina, Colorado, Michigan, Minnesota and Texas throughout the week. 

     

    Energy

    LEGISLATIVE ACTIVITY

    • CES. With new Energy Information Administration analysis for Senate Energy and Natural Resources Committee Chairman Jeff Bingaman’s (D-NM) proposed “Clean Energy Standard” (S. 2146) in hand, the Committee will receive testimony on the legislation at a May 17 hearing.
    • Nuclear Waste Storage. Chairman Jeff Bingaman is expected to introduce legislation in the coming weeks to address permanent nuclear waste storage needs. The Chairman is working with Ranking Member Lisa Murkowski (R-AK), and Senators Lamar Alexander (R-TN) and Dianne Feinstein (D-CA), who chairs the Senate Energy Appropriations Subcommittee, which favorably reported a spending bill allowing the Department of Energy to build temporary nuclear waste storage sites in communities willing to host them.
    • Congressional Hearings. On Wednesday, Bureau of Ocean Energy Management Director Tommy Beaudreau will testify before a House Natural Resources Subcommittee on offshore drilling; and a House Energy and Commerce Subcommittee will hold a legislative hearing on the Resolving Environmental Grid Reliability Conflicts Act of 2012 (H.R. 4273) and the Hydropower Regulatory Efficiency Act of 2012 discussion draft. On Thursday, a House Science Subcommittee will hold a hearing on “Supporting American Jobs and the Economy through Expanded Energy Production: Challenges and Opportunities of Unconventional Resources Technology.”

    REGULATORY ACTIVITY

    • Utility Carbon Standards. Comments on the EPA’s proposed New Source Performance Standards for carbon emissions from new fossil fuel-fired power plants has been extended to June 25 (from June 12); EPA will also host two public hearings on May 24 in Washington, DC and Chicago, IL.
    • Offshore Drilling. The Bureau of Safety and Environmental Enforcement has submitted a final “safety rule” to the White House for regulatory review. The rule would fully implement Interior Secretary Salazar’s May 2010 recommendations to President Obama following the Deepwater Horizon incident. Although there is no legal deadline to formalize tougher OCS safety rules than those issued in 2010 on an emergency basis, the Interior Department anticipates taking final action in June. BSEE Director James Watson also intends to hold a public forum on May 22 to gather additional input on improving blowout preventers. Additional regulations will likely include mandating third-party SEMS audits, requiring additional self-shearing rams for BOPs and additional blade tracking sensors, and additional BOP manufacturing and repair requirements.
    • Interior Revenue Collections. New Office of Natural Resources Revenue regulations that govern the collection of delinquent royalties, rentals, and bonuses due under lease agreements for the production of oil, natural gas, coal, geothermal energy, other minerals, and renewable energy from Federal onshore lands, Tribal lands, and the Outer Continental Shelf, will become effective June 1.
    • DOE Loan Guarantees. The Department of Energy has submitted to the White House a final rule on “Loan Guarantees for Projects that Employ Innovative Technologies” for regulatory review. There is no timeline posted for public release.
      U.S. Extractive Industries Transparency Initiative. On May 18, the Interior Department is expected to publish an independent facilitator’s report on findings regarding options for forming a U.S. multi-stakeholder group that would be responsible for determining how USEITI will be implemented. The Department will accept public comments between May 18 and June 29 on the report’s assessment and findings regarding the nation’s oil, gas, and mining assets. 

     

    Environment

    LEGISLATIVE ACTIVITY

    • Forest Management. On Monday, May 14, the House Committee on Natural Resources Subcommittee on Water and Power and Subcommittee on National Parks, Forests and Public Lands will hold a joint field hearing concerning active forest management and the pine beetle epidemic. The hearing will take place in Montrose, Colorado.
    • Green Buildings. On Tuesday, May 8, the House Science, Space and Technology, Subcommittee on Investigations and Oversight will hold a hearing on the science involved in green building rating systems.

    REGULATORY ACTIVITY

    • Drinking Water. The U.S. Environmental Protection Agency (EPA) has published a list of 28 chemicals and two viruses that approximately 6,000 public water systems will monitor from 2013 to 2015 as part of the agency’s unregulated contaminant monitoring program, which collects data for contaminants suspected to be present in drinking water, but that do not have health-based standards set under the Safe Drinking Water Act.

      The EPA will spend more than $20 million to support the monitoring, the majority of which will be devoted to assisting small drinking water systems to conduct the monitoring. The data collected under the Unregulated Contaminant Monitoring Rule 3 (UCMR 3) is intended to inform EPA about the frequency and levels at which these contaminants are found in drinking water systems across the United States to help determine whether additional protections are needed to ensure safe drinking water for Americans. State participation in the monitoring is voluntary.

      The list of contaminants to be studied includes total chromium and hexavalent chromium, also known as chromium-6. The EPA has standards for 91 contaminants in drinking water and the Safe Drinking Water Act requires that the EPA identify up to 30 additional unregulated contaminants for monitoring every five years.
    • Toxic Chemicals. The EPA has issued a final rule under the Toxic Substances Control Act (TSCA) for 23 chemical substances. This action requires persons who intend to manufacture, import, or process any of the 23 chemical substances for an activity that is designated as a significant new use by this rule to notify the EPA at least 90 days before commencing that activity. The 23 chemicals, along with the tests recommended by the EPA to evaluate the chemical substances are provided in 40 CFR part 721, subpart E. The rule becomes effective on June 25.
    • Ozone. The EPA has determined that 45 areas across the U.S. are not meeting the 2008 air quality standards for ground-level ozone, known as smog, based on the most recent certified air quality data. In 2008, the EPA set new smog standards at 75 parts per billion. Breathing air containing high levels of smog can reduce lung function and increase respiratory symptoms, aggravating asthma or other respiratory conditions. Ozone exposure may also contribute to premature death, especially in people with heart and lung disease.

      Almost all of the identified areas already have programs in place to improve air quality because they did not meet the 1997 smog standards. Only three areas will be identified for the first time as not meeting smog standards. The EPA expects that most areas would be able to meet the 2008 standards as a result of recent and pending rules.

      The Clean Air Act requires the EPA to review and revise air quality standards every five years to ensure that they protect public health with an adequate margin of safety. The EPA works with states and tribes to identify areas that do not meet the standards and to establish plans to improve air quality. The EPA is currently reviewing the science needed to inform the next five-year review of the smog standards and expects to propose action in 2013. 

     

    Financial Services

    LEGISLATIVE ACTIVITY

    • House Financial Services Subcommittee to Examine the Federal Reserve System. On Tuesday, May 8, the House Financial Services Subcommittee on Domestic Monetary Policy and Technology will hold a hearing titled “Improving the Federal Reserve System: Examining Legislation to Reform the Fed and Other Alternatives.” The witnesses in attendance during the two-panel hearing will include: Representative Kevin Brady (R-TX); Representative Barney Frank (D-MA); Representative Marcy Kaptur (D-OH) (invited); Dr. Jeffrey M. Herbener, Chairman of the Economics Department at Grove City College; Dr. Peter G. Klein, Associate Professor of Applied Social Sciences and Director of the McQuinn Center for Entrepreneurial Leadership at the University of Missouri; Dr. John B. Taylor, Mary and Robert Raymond Professor of Economics at Stanford University and George P. Schultz Senior Fellow in Economics at Hoover Institution; Dr. James K. Galbraith, Lloyd M. Bentsen, Jr. Chair in Government/Business Relations at the LBJ School of Public Affairs in the University of Texas at Austin; and Dr. Alice Rivlin, Senior Fellow of Economic Studies at the Brookings Institution, and former Vice Chair of the Federal Reserve Board of Governors.
    • Senate Banking Committee and House Financial Services Subcommittee to Explore Housing Issues. On Tuesday, May 8, the Senate Banking, Housing, and Urban Affairs Committee will conduct a hearing on “Expanding Refinancing Opportunities to Improve the Housing Market.” The only witness testifying at the hearing will be Secretary Shaun Donovan from the U.S. Department of Housing and Urban Development. On Wednesday, May 9, the House Financial Services Subcommittee on Insurance, Housing and Community Opportunity will hold a hearing titled, “Oversight of the Federal Housing Administration’s Reverse Mortgage Program for Seniors.”
    • House Financial Services Subcommittee to Discuss Regulatory Burdens on Small Financial Institutions. On Wednesday, May 9, the House Financial Services Subcommittee on Financial Institutions and Consumer Credit will hold a hearing titled, “Rising Regulatory Compliance Costs and Their Impact on the Health of Small Financial Institutions.”
    • Senate Banking Committee to Inspect National Flood Insurance Program. On Wednesday, May 9, the Senate Banking Committee will conduct a hearing titled, “The National Flood Insurance Program: The Need for Long-Term Reauthorization and Reform.” The witnesses on this two-panel hearing will include: Mr. Todd Klietz, Missoula County Floodplain Administrator in Missoula, Montana; Mr. Dwayne Bourgeois from North Lafourche Conservation Levee and Drainage District in Raceland, Louisiana; Dr. David A. Sampson, President and Chief Executive Officer of the Property and Casualty Insurers Association of America (PCIAA); Mr. Jon A. Jensen, Government Affairs Committee Chairman of the Independent Insurance Agents and Brokers of America (IIABA) and President of the Correll Insurance Group; Mr. Maurice Veissi, 2012 President of the National Association of Realtors; and Ms. Sarah Murdock, Senior Policy Advisor of the Nature Conservancy.
    • Senate Banking Committee to Discuss Federal Support for Financial Institutions. On Wednesday, May 9, the Senate Banking Committee will hold a hearing titled, “Is Simpler Better? Limiting Federal Support for Financial Institutions.” The witnesses in this two-panel hearing will include: Mr. Paul A. Volcker, former Chairman of the Board of Governors of the Federal Reserve System; Mr. Thomas M. Hoenig, Member of the Federal Deposit Insurance Corporation; Mr. Tom Frost, Chairman Emeritus at Frost National Bank in San Antonio, Texas; and Mr. Wallace C. Turbeville, Senior Fellow at Demos.
    • House Financial Services Subcommittee to Examine SEC Conflict Minerals Rulemaking. The House Financial Services Subcommittee on International Monetary Policy and Trade will hold a hearing titled, “The Costs and Consequences of Dodd-Frank Section 1502: Impacts on America and the Congo.” The hearing will examine the Securities and Exchange Commission’s (SEC) proposed rulemaking regarding the conflict minerals provision included in the Dodd-Frank Wall Street Reform and Consumer Protection Act.

    REGULATORY ACTIVITY

    • SEC, CFTC Release Swap Dealer, Major Swap Participant Definitions. On Friday, April 27, the SEC and the Commodity Futures Trading Commission (CFTC) jointly released the final rules and interpretive guidance further defining “swap dealer,” “security-based swap dealer,” “major swap participant,” “major security-based swap dealer,” and “eligible contract participant.” These so-called entity definitions are one of the two primary rulemakings to be jointly completed by the two agencies. The remaining rulemaking relates to the definition of “swap” and “security-based swap.” The final rule is notable for a significant increase in the de minimis exception for dealer categorization, which was raised drastically from the proposed rulemaking issued in December 2010.
    • CFTC to Hold Meeting on Requirements for Designated Contract Markets. On Thursday, May 10, the CFTC will hold a public meeting to consider a final rule on core principles and other requirements for designated contract markets. The meeting will also include a discussion regarding the proposed order amending the effective date for swap regulation.

     

    International, Defense, Homeland Security

    • Homeland Security Hearings and Markups. On Wednesday, the House Homeland Security Appropriations Subcommittee will mark up the Fiscal Year 2013 (FY13) homeland security appropriations bill. Subcommittee Republicans likely will stress the need for targeted cuts, especially in light of spending backlogs at the Department of Homeland Security (DHS), and state and local grantee levels. Subcommittee Democrats are likely to lament proposed reductions in first responder and transportation security grant funding.

      Meanwhile, three House Homeland Security Committee (HHSC) Subcommittees are scheduled to hold hearings this week. On Tuesday, Chairwoman Candice Miller’s (R-MI) Border Security Subcommittee will examine the U.S. Border Patrol’s new strategic plan. Subcommittee Republicans are expected to deem the Obama Administration’s approach on border security as insufficient and ineffectual. Subcommittee Democrats likely will highlight recent reports of the slowing of illegal immigration into the country. Also on Tuesday, the Transportation Security Subcommittee, led by Chairman Mike Rogers (R-AL) and Ranking Member Sheila Jackson Lee (D-TX), will branch out from HHSC’s usual domestic focus to examine how Trans-Pacific security standards and practices affect travel and trade with East Asia. Representatives from the private sector, the State Department, the DHS Office of International Affairs, and the Transportation Security Administration’s Office of Global Strategies are scheduled to testify. Finally, on Wednesday, Security Technologies Subcommittee Chairman Dan Lungren (R-CA) and Emergency Response Subcommittee Chairman Gus Bilirakis (R-FL) will co-chair a joint Subcommittee hearing on research and development for first responder technologies.

      On the Senate side, the Senate Commerce Committee has not yet scheduled its tentative hearing on cybersecurity (as comprehensive cybersecurity legislation makes slow but steady behind-the-scenes progress in the Senate and House), although the Committee will examine privacy issues at a hearing on Wednesday. The Senate Homeland Security and Governmental Affairs Committee will focus on its governmental affairs portfolio this week.
    • Foreign Policy Hearings and Markups. On Wednesday, House Foreign Operations Appropriations Subcommittee Ranking Member Nita Lowey (D-NY) and fellow Subcommittee Democrats are expected to lambaste House Republicans for proposing steep cuts to foreign assistance for FY13. Subcommittee Chairwoman Kay Granger (R-TX) and her fellow Republican Subcommittee Members likely will respond by criticizing the Administration’s foreign assistance policy as too forgiving toward a post-Mubarak Egypt that has detained U.S. NGO officials and a Palestinian Authority government that intermittently enters into unity government arrangements with Hamas.

      Also on Wednesday, the House Foreign Affairs Committee’s (HFAC) Middle East Subcommittee, led by Chairman Steve Chabot (R-OH) and retiring Ranking Member Gary Ackerman (D-NY), will question the State Department and USAID on the Administration’s response to the Arab Spring, with a focus on the ongoing and potential economic dislocations that have emerged over the past year. Congressman Chabot and other Subcommittee Republicans, and some HFAC Democrats, are expected to echo House Appropriations Committee Republicans in questioning whether the Administration has been too forward-leaning with regard to U.S. foreign assistance to Egypt, the Palestinian Authority, and elsewhere. On Thursday, the House Select Intelligence Committee will conduct a classified oversight hearing on current U.S. intelligence operations.
    • Defense Hearings and Markups. The House Appropriations Committee’s Defense Subcommittee is scheduled to mark up its FY13 Appropriations bill in a closed session on Tuesday. Over the course of House and Senate consideration of the FY13 defense appropriations bill, the Democratic Leadership in both chambers (if not so much Democratic Defense Appropriations Subcommittee Members) will continue to question why the House Republican Leadership essentially exempts defense from its proposed cuts to domestic spending in its Budget Resolution and ensuing Appropriations bills. In response, House Republicans will continue to criticize the Obama Administration as having gone too far on sequestration and other defense spending decisions.

      On Wednesday, some House Armed Services Committee (HASC) members will make similar points, as the HASC marks up the FY13 National Defense Authorization Act at the full Committee level. Meanwhile, the Senate Armed Services Committee (SASC) and two SASC Subcommittees will hold hearings this week on various aspects of the NDAA, including the Defense Clandestine Service in closed full Committee session, Airland programs at the Subcommittee level on Tuesday, and readiness issues in the Readiness Subcommittee on Thursday.

     

    Tax

    LEGISLATIVE ACTIVITY

    • House and Senate Differ on Offsets for Student Loan Measure. On Tuesday, May 8, the Senate is expected to vote on whether to proceed to Senate Democrats’ version of legislation to extend federally subsidized student loan rates (S. 2343), preventing the current 3.4 percent interest rate from doubling on July 1. The House passed its bill (H.R. 4628) last month. While the House measure finances the rate extension (costing $6 billion for the one-year extension) by eliminating the Prevention and Public Health Fund created under the 2010 health care reform law, the Senate bill, introduced by Senate Majority Leader Harry Reid (D-NV), would offset the one-year extension by eliminating a payroll tax exemption for S corporations. The offset would require all S corporations that have three or fewer employees, each whose annual income is at least $200,000 ($250,000 for joint filers), to contribute payroll taxes. Senate Republicans are expected to offer substitute legislation identical to the House-passed bill. While Congressional leaders have not yet reached agreement on structuring the offset of the rate extension, it is expected that a compromise will be achieved prior to the scheduled rate increase in July.
    • Tax Hearings Next Week. The following tax hearings are scheduled next week in the House Ways and Means and Senate Finance Committees:

      Tuesday, May 8: House Ways and Means Subcommittee on Oversight and Social Security hearing on Identity Theft and Tax Fraud

      Tuesday, May 8: Senate Finance Committee hearing to consider the nominations of Mark J. Mazur for Assistant Secretary of the Treasury, Matthew S. Rutherford for Assistant Secretary of the Treasury, and Meredith M. Broadbent for the International Trade Commission

     

    Transportation

    LEGISLATIVE ACTIVITY

    • SAFETEA-LU Reauthorization. As reported in the last edition of Capital Thinking, the House passed another short-term extension of transportation law (H.R. 4348) on April 18, which is serving as a “shell” vehicle to go to conference with the Senate over reauthorization. House leadership moved to the shell bill strategy after it became clear that the House’s five-year, $260 billion reauthorization (H.R. 7) lacked enough Republican votes to pass the chamber, largely due to conservative concerns over voting for such a large “spending bill” as well as various policy provisions. Under the unanimous consent agreement governing MAP-21, the Senate will consider H.R. 4348 as the disagreeing version of their bill, allowing them to go to conference with the intent of producing a final bill that could pass both the House and Senate.

      Before going on recess for the week of April 30, conferees were appointed to the conference committee. Senate Majority Leader Harry Reid (D-NV) named 14 conferees. They included Democrats Senator Barbara Boxer (D-CA), Chairwoman of the Environment and Public Works Committee; Finance Committee Chairman Max Baucus (D-MT); Commerce, Science and Transportation Committee Chairman John D. Rockefeller IV (D-WV); and Majority Whip Richard Durbin (D-IL). Republican conferees include Senator James Inhofe (R-OK), Ranking Member of  the Environment and Public Works Committee; Senator Orrin Hatch (R-UT), Ranking Member of the Finance Committee; and Senator Kay Bailey Hutchison (R-TX), Ranking Member of the Commerce, Science and Transportation Committee.

      The House appointed 33 conferees, including Transportation and Infrastructure Committee Chairman John Mica (R-FL); Energy and Commerce Committee Chairman Fred Upton (R-MI); Natural Resources Committee Chairman Doc Hastings (R-WA); and Ways and Means Committee Chairman Dave Camp (R-MI). Democrats appointed as conferees include Representative Nick Rahall (D-WV), Ranking Member of the Transportation and Infrastructure Committee; Representative Henry Waxman (D-CA), Ranking Member of the Energy and Commerce Committee; and Representative Edward Markey (D-MA), Ranking Member of the Natural Resources Committee. (A full list of conferees is included at the end of this section).

      These conferees are scheduled to begin formal discussions on Tuesday, May 8. It still remains unclear how the conference will work through substantive policy and funding issues since the House passed only a shell bill (H.R.438)  that lacks most of the policy changes that were pending in the bill they were unable to bring up for a floor vote (H.R.7). Chairman Mica has maintained that everything in H.R. 7 would be up for consideration in a conference with the Senate. Conversely, Senate Democrats are expected to adopt an initial position that the House conferees cannot press for policy changes in conference that were not part of the House-passed bill (H.R.438). Ultimately, its anticipated that the House will be limited in the number of issues from H.R. 7 that it can get into the final conference report, if only because those changes will be needed to get a final report approved on the House floor, and that the final conference report is much more likely to reflect the Senate’s overall policy priorities.

      Relevant players, including Congressional leadership, remain optimistic about the prospects of getting a final bill out of conference committee and passed through both the House and Senate before the current extension of SAFETEA-LU expires on June 30.

    Conference Committee Conferees

    Senate Conferees:

    Democrats

    • Senator Barbara Boxer (D-CA), Chairman of the Environment and Public Works (EPW) Committee
    • Senator Max Baucus (D-MT), Chairman of the Finance Committee
    • Senator Jay Rockefeller (D-WV), Chairman of the Commerce Committee
    • Senator Dick Durbin (D-IL), Democratic Whip
    • Senator Tim Johnson (D-SD), Chairman of the Banking Committee
    • Senator Chuck Schumer (D-NY), Vice Chair of the Democratic Conference and a member of both the Finance and Banking Committees
    • Senator Bill Nelson (D-FL), Member of both the Commerce and Finance Committees
    • Senator Robert Menendez (D-NJ), Chairman Banking Subcommittee on Housing, Transportation and Community Development

    Republicans

    • Senator Jim Inhofe (R-OK), Ranking Member of EPW
    • Senator David Vitter (R-LA), Ranking Member of the EPW Subcommittee on Transportation and Infrastructure
    • Senator Richard Shelby (R-AL), Ranking Member of the Banking Committee
    • Senator Orrin Hatch (R-UT), Ranking Member of the Finance Committee
    • Senator Kay Bailey Hutchinson (R-TX), Ranking Member of the Commerce Committee
    • Senator John Hoeven (R-ND)

    House Conferees:

    Transportation and Infrastructure Committee Republicans

    • Rep. John Mica (R-FL-7), Chairman
    • Rep. Don Young (R-AK-AL)
    • Rep. John Duncan (R-TN-2)
    • Rep. Bill Shuster (R-PA-9)
    • Rep. Shelley Moore Capito (R-WV-2)
    • Rep. Rick Crawford (AR-1)
    • Rep. Jaime Herrera-Beutler (R-WA-3)
    • Rep. Larry Bucshon (R-IN-8)
    • Rep. Richard Hanna (R-NY-24)
    • Rep. Steve Southerland (R-FL-2)
    • Rep. James Lankford (R-OK-5)
    • Rep. Reid Ribble (R-WI-8)

    Transportation & Infrastructure Committee Democrats

    • Rep. Nick Rahall (WV-3), Ranking Member
    • Rep. Peter DeFazio (OR-4)
    • Rep. Jerry Costello (IL-12)
    • Rep. Eleanor Holmes Norton (DC-AL)
    • Rep. Jerry Nadler (NY-8)
    • Rep. Corrine Brown (FL-3)
    • Rep. Eljah Cummings (MD-7)
    • Rep. Leonard Boswell (IA-3)
    • Rep. Tim Bishop (NY-1)

    Energy & Commerce Committee Republicans

    • Rep. Fred Upton (R-MI-6), Chairman
    • Rep. Ed Whitfield (R-KY-1)

    Energy & Commerce Committee Democrat

    • Rep. Henry Waxman (R-CA-30), Ranking Member

    Natural Resources Committee Republicans

    • Rep. Doc Hastings (R-WA-4), Chairman
    • Rep. Rob Bishop (R-UT-1)

    Natural Resources Committee Democrat

    • Rep. Ed Markey (MA-7), Ranking Member

    Science Committee Republicans

    • Rep. Ralph Hall (R-TX-4), Chairman
    • Rep. Chip Cravaak (R-MN-8)

    Science Committee Democrat

    • Rep. Eddie Bernice Johnson (R-TX-30), Ranking Member

    Ways & Means Committee Republicans

    • Rep. Dave Camp (R-MI-4), Chairman
    • Rep. Patrick Tiberi (R-OH-12)

    Ways & Means Committee Democrat

    • Rep. Earl Blumenauer (R-OR-3)