2. General Legislative
Today, January 21, 2013, the House will meet at 10:00 am for the Inauguration of Barack Obama as
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the 44 President of the United States. No votes are expected in the House. On Tuesday, January
22, the House will meet at 10:00 am for morning hour and 12:00 pm for legislative business, to
consider H.R. 307 – Pandemic and All-Hazards Preparedness Reauthorization Act of 2013. On
Wednesday, the House will meet at 9:00 am to consider Legislation Conditioning an Increase in
the Nation’s Debt Limit Upon Congress Passing a Budget. No votes are expected on Thursday or
Friday.
The Senate will meet today at 11:30 am for a Joint Session for the Inaugural Ceremonies.
Agriculture & Food
LEGISLATIVE ACTIVITY
Energy Drinks. On Thursday, January 17, Representative Edward Markey (D-MA) and Senators
Richard Durbin (D-IL) and Richard Blumenthal (D-CT) sent letters to 14 companies that
manufacture energy drinks requesting studies, data, and/or information on advertising claims for
each company’s products, how each company markets its products, specific labeling information
(such as milligrams of caffeine, stimulant ingredients), and whether each company considers its
energy drink products to be supplements.
Last November, the Food and Drug Administration (FDA) announced that it would likely seek
advice from outside experts to examine the health effects and risks of energy drinks, especially
when consumed by teenagers and people with other health conditions. Last month, Senators
Durbin and Blumenthal met with FDA Commissioner Margaret Hamburg to discuss the possible
health effects of energy drinks and to gain a clearer understanding of the dangers of certain
levels of caffeine to specific populations, including young people and pregnant women.
Upcoming Hearings. On Wednesday, January 23, the House Agriculture Committee will hold a
full committee business meeting to consider organizational matters for the 113th Congress.
REGULATORY ACTIVITY
Supplemental Nutrition Assistance Program (SNAP). On Thursday, January 17, the Institute
of Medicine (IOM) released “Supplemental Nutrition Assistance Program: Examining the
Evidence to Define Benefit Adequacy.” The Department of Agriculture (USDA) asked IOM and
the National Research Council to assess the definition of an adequate SNAP benefit that
supports participants’ efforts to meet the program’s goals of food security and access to a healthy
diet. The USDA requested such a review because of the growing number of SNAP participants--
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3. the program has increased from less than 20 million to 46 million over the last ten years-- and the
Department wanted to ensure that it can properly serve all of its SNAP participants.
The IOM Committee found that USDA’s formula to calculate food costs assumes that participants
purchase basic, inexpensive unprocessed ingredients that require significant time to prepare,
especially for single parents. The Committee also found that food prices vary widely by
geographic region and access to food outlets is a significant contributing factor to achieving
healthy diets in SNAP participants
FIRM EVENT
Congressional Outlook 2013 Event. On Tuesday, February 5, Patton Boggs will host
“Congressional Outlook 2013: Agriculture, Food Safety and Trade,” to discuss topics including the
new food safety rules, the future of the Farm Bill, impact of the U.S. Commodities Futures Trading
Commission (CFTC), the Trans-Pacific Partnership, the United States-European Union Free
Trade Negotiations, and the trade preference program. The event will take place from 9:30 to
11:00 am. To RSVP, please contact Katie Iobst at kiobst@pattonboggs.com or 202.457.5681.
Contact Information
For additional insights about likely policy developments, please feel free to contact the author of this
section: Dana Weekes at 202-457-6307 or dweekes@pattonboggs.com.
Budget, Appropriations
LEGISLATIVE ACTIVITY
Supplemental Appropriations for Disaster Aid. When the Senate convenes on Tuesday, it will
take up the $50.6 billion emergency disaster appropriations package (H.R. 152) approved by the
House on January 15. Combined with the measure enacted earlier this month, which provided
$9.7 billion for the National Flood Insurance Program (H.R. 41), the total amount of supplemental
disaster funding is nearly equal to that requested by the President and approved by the Senate
late last year. It is possible the Senate will approve the measure passed by the House, but with
notable line item differences between the House bill and the bill approved by the Senate in
December 2012, it is unlikely the Senate will accept the House measure without amendments. If
this occurs, appropriators are optimistic that the differences could easily be reconciled in an
expedited conference.
Temporary Debt Ceiling Solution Proposed by House Republican Leadership. It appears
House Republicans are choosing to delay a spending showdown with the President and
Congressional Democrats until the scheduled implementation of the $85 billion sequestration and
the expiration of the current FY 2013 Continuing Resolution on March 1 and March 27,
respectively. As early as Wednesday, the House is expected to vote on a three-month extension
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4. of the nation’s borrowing authority on the condition that the Senate agrees to pass an FY 2014
budget resolution before April 15. Renewing the “no budget, no pay” principle favored by House
Republicans, the lack of a budget resolution would result in the withholding of Congressional
Member paychecks. The short-term debt ceiling increase received the backing of conservative
House Republicans after their leaders agreed to move forward in the fiscal debate pushing for a
topline discretionary spending cap at the sequestration amount – meaning that sequestration can
only be avoided through an equal amount of spending cuts – and work towards a balanced
federal budget within ten years. If Congress fails to extend the borrowing authority, Treasury
Secretary Timothy Geithner warned the government will default on its loans as early as mid-
February.
Contact Information
For additional insights about likely policy developments, please feel free to contact the author of this
section: Pam Welsh at 202-457-6493 or pwelsh@pattonboggs.com.
Cybersecurity
EXECUTIVE BRANCH ACTIVITY
Secretary Napolitano. Department of Homeland Security (DHS) Secretary Janet Napolitano
announced this week that she plans to continue in her role as DHS Secretary for President
Obama’s second term. House Homeland Security Committee Chairman Michael McCaul (R-TX)
released a statement shortly after her announcement saying that he looks forward to working with
Secretary Napolitano to reform DHS in order to make it more efficient and effective. He noted in
his statement that cybersecurity will be one of the top issues that DHS will face in the coming
years.
Executive Order. Many Members of Congress have stated their intent to reintroduce
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cybersecurity legislation in the 113 Congress but are still waiting for the Obama Administration
to release its much anticipated Executive Order (EO), given that it will likely have an effect on
cybersecurity legislation in the Congress. Drafts of the EO have been circulating for many months
and we expect the Administration to release its final version in the coming weeks.
Homeland Security Presidential Directive (HSPD) 7. It is anticipated that the Administration
will also be releasing a revised version of HSPD-7 in the same general timeframe as the cyber
EO. The Presidential Directive will integrate the oversight of cyber and physical security issues for
critical infrastructure.
DHS Cybersecurity Staff. Effective January 18, Michael Locatis, Assistant Secretary for the
Office of Cybersecurity and Communications in the Department of Homeland Security, resigned
from his position, just nine months after he took the job. Deputy Assistant Secretary Bobbie
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5. Stepfley will be acting in the position, a key job in DHS with daily oversight of cybersecurity
issues.
Contact Information
For additional insights about likely policy developments, please feel free to contact the author of this
section: Amy Davenport at 202-457-6528 or adavenport@pattonboggs.com.
Education
LEGISLATIVE ACTIVITY
Gun Violence Prevention and Schools. In response to the Newtown, Connecticut shooting on
December 14, 2012, last week the President announced a sweeping set of recommendations and
actions to curb gun violence, many of which impact schools, colleges, and universities. The 23
separate executive actions he took the same day of his announcement included the following
actions:
o Provide school officials with proper training for active shooter situations;
o Direct the Centers for Disease Control (CDC) to research the causes and prevention of gun
violence;
o Provide incentives for schools to hire school resource officers;
o Directive to develop model emergency response plans for schools, houses of worship and
institutions of higher education; and
o Launch a national dialogue led by Secretaries Kathleen Sebelius (HHS) and Arne Duncan
(Education) on mental health.
Additionally, the President called on Congress to pass a number of other measures related to gun
violence prevention, including the following actions:
o Provide $10 million for the CDC to conduct further research on gun violence, including
investigating the relationship between video games, media images, and violence;
o Invest an additional $20 million to expand the National Violent Death Reporting System to all
50 states to inform future research and prevention strategies;
o Provide $30 million of one-time grants to states to help school districts develop and
implement emergency management plans;
o Require states and school districts that receive school safety funding from the Department of
Education to have comprehensive, up-to-date emergency plans in place for all of their
schools; and
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6. o Provide $25 million to offer students mental health services for trauma or anxiety, conflict
resolution programs, and other school-based violence prevention strategies.
Hearings and Events. The Senate Health, Education, Labor and Pensions Committee will hold a
hearing on Thursday, January 24 at 10:00 a.m. titled "Assessing the State of America's Mental
Health System," which will include a review of issues related to mental health and gun violence.
The Senate Judiciary Committee also plans to hold a hearing on gun violence issues on
Wednesday, January 30. Chairman of the House Education and the Workforce Committee John
Kline (R-MN) also announced he would convene a hearing related to recommendations stemming
from the President’s Task Force to curb gun violence, focused on school safety efforts.
On Tuesday, January 22, the House Education and Workforce Committee will host a full
committee organizational meeting to adopt the Committee rules, oversight plan, and announce
subcommittee assignments.
Contact Information
For additional insights about likely policy developments, please feel free to contact the authors of this
section: Amy Budner Smith at 202-457-6154 or abudner@pattonboggs.com; Dana Weekes at 202-457-
6307 or dweekes@pattonboggs.com; and Amy Davenport at 202-457-6528 or
adavenport@pattonboggs.com.
Energy
LEGISLATIVE ACTIVITY
Congressional Hearings. The House Energy and Commerce Committee will hold its
organizational meeting on Tuesday, January 22; the Natural Resources Committee will hold its on
Wednesday, January 23. The Senate Commerce, Science, and Transportation Committee will
hold a field hearing regarding pipeline safety on January 28 in Charleston, West Virginia.
REGULATORY ACTIVITY
Hybrid/EVs. The National Highway Traffic Safety Administration has issued a draft environmental
assessment and begun work to set minimum sound requirements for hybrid and electric vehicles.
Critical Materials Institute. The Department of Energy is establishing a new research center to
develop solutions to domestic shortages of rare earth metals and other critical materials
necessary for manufacturing wind turbines, advanced batteries, electric vehicles, and other
energy technologies. The institute will be headquartered at the Ames Laboratory in Iowa.
Wind Turbines. The International Trade Commission met on Friday to vote on final investigations
regarding utility scale wind towers from China and Vietnam. The Commission is scheduled to
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7. transmit its determinations and Commissioners’ opinions to the Commerce Secretary by January
30.
RE&EEAC. The International Trade Administration’s Renewable Energy and Energy Efficiency
Advisory Committee will hold its inaugural meeting on February 20 to begin developing
recommendations on improving the competitiveness of U.S. renewable energy and energy
efficiency exports.
Appliance Labels. The Federal Trade Commission rule to streamline data reporting
requirements for manufacturers, to clarify testing requirements and enforcement provisions, and
to improve online energy label disclosures for major household appliances will become effective
on February 15 (with few exceptions).
Hydraulic Fracturing. The Environmental Protection Agency has again extended the public
comment period for the draft research report, “Investigation of Ground Water Contamination near
Pavillion, Wyoming,” to September 30 (from January 15).
PCAST Meeting. The President’s Council of Advisors on Science and Technology will hold an
open teleconference on Wednesday, January 24 to discuss its Climate and Energy Letter Report.
Nuclear Waste. The Administration has called for the creation of a permanent repository by 2048
to store the nation’s nuclear waste, beginning with a pilot interim facility being created by 2021.
Fusion Energy. The Fusion Energy Sciences Advisory Committee will meet in Gaithersburg,
Maryland on January 31 to further assess magnetic fusion energy science program priorities.
Contact Information
For additional insights about likely policy developments, please feel free to contact the author of this
section: Tanya DeRivi at 202-457-6504 or tderivi@pattonboggs.com.
Environment
LEGISLATIVE ACTIVITY
New Environment Subcommittee Created. Chairman Lamar Smith (R-TX-21) of the House
Science, Space and Technology Committee has announced the creation of a sixth subcommittee
by splitting the former Subcommittee on Energy and Environment. The new Subcommittee on
Energy will be chaired by Congresswoman Cynthia Lummis (R-WY- At Large), and the new
Subcommittee on Environment will be chaired by Congressman Andy Harris (R-MD-1) – who
chaired the former Subcommittee on Energy and Environment.
New Subcommittee on Public Lands and Environmental Regulation Established. House
Natural Resources Committee Chairman Doc Hastings (R-WA-04) has announced the creation of
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8. a new Subcommittee on Public Lands and Environmental Regulation. The Subcommittee will
have jurisdiction over matters related to the National Environmental Policy Act (NEPA) and public
lands, including the National Park System, U.S. Forests, Bureau of Land Management lands, and
national monuments. The Natural Resources Committee has primary jurisdiction over NEPA in
the House of Representatives and oversight and legislative efforts regarding NEPA were
previously handled by the full committee. According to Chairman Hastings, the establishment of
the subcommittee is intended to allow this authority to be exercised in a more focused manner.
REGULATORY ACTIVITY
E. Coli. The U.S. Environmental Protection Agency (EPA) has updated the rule for pathogens in
drinking water, including setting a limit for the bacteria E. coli. The Revised Total Coliform Rule is
intended to ensure that all of the 155,000 public water systems in the United States, which
provide drinking water to more than 310 million people, take steps to prevent exposure to E. coli
and similar pathogens. Under the revised rule, public drinking water systems are required to
notify the public if a test exceeds the maximum contaminant level (MCL) for E. coli in drinking
water. If E. coli or other indications of drinking water contamination are detected above a certain
level, drinking water facilities must assess the system and fix potential sources and pathways of
contamination. Under the revised rule, high-risk drinking water systems with a history of non-
compliance must perform more frequent monitoring. The rule also includes incentives for small
drinking water systems that consistently meet measures of water quality and system
performance.
Public water systems and state and local agencies that oversee them must comply with the
requirements of the Revised Total Coliform Rule beginning April 1, 2016. Until then, public water
systems and primacy agencies must continue to comply with the 1989 version of the rule.
National Ambient Air Quality Standards for Particulate Matter. EPA has issued a final rule
for National Ambient Air Quality Standards for Particulate Matter. In the final rule, EPA has made
revisions to tighten the suite of standards for particulate matter (PM). Most notably, with regard to
primary health-based standards for fine particles (particles less than or equal to 2.5 micrometers
in diameter, PM2.5), the EPA is revising the annual PM2.5 standard by lowering the level to 12.0
micrograms per cubic meter. This rulemaking was executed pursuant the Clean Air Act (Sections
108 and 109), which govern the establishment, review, and revision of the national ambient air
quality standards. Estimated cost to industry from the rule is approximately $350 million a year;
projected annual health benefits, according to the EPA, are expected to be $9.1 billion. The final
rule will become effective on March 18, 2013.
Contact Information
For additional insights about likely policy developments, please feel free to contact the author of this
section: Sarah Vilms at 202-457-5248 or svilms@pattonboggs.com.
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9. Financial Services
LEGISLATIVE ACTIVITY
House Financial Services Committee Democrats Elect Subcommittee Ranking Members.
The House Financial Services Committee Democratic caucus elected its Ranking Members for
the new Congressional Session. The elected Members are: Congressman Michael Capuano
(MA) – Insurance, Housing and Opportunity; Congressman Lacy Clay (MO) – Domestic and
International Monetary Policy; Congressman Al Green (TX) – Oversight and Investigations
Congresswoman Carolyn Maloney (NY) – Capital Markets and Government Sponsored
Enterprises; and Congressman Gregory Meeks (NY) – Financial Institutions and Commercial
Credit.
Congressman Ander Crenshaw to Chair House Appropriations Subcommittee on Financial
Services. Due to the upcoming retirement of Congresswoman Jo Ann Emerson (R-MO),
Congressman Ander Crenshaw (R-FL) will assume the Chairmanship of the appropriations
subcommittee with jurisdiction over the U.S. Department of the Treasury, the Internal Revenue
Service, and the Securities and Exchange Commission.
REGULATORY ACTIVITY
Consumer Financial Protection Bureau Issues “Qualified Mortgage” Rule. On Thursday,
January 10, the Consumer Financial Protection Bureau (CFPB) released its final rule on the
ability-to-repay requirements, including the definition of “Qualified Mortgage,” which was
mandated by the Truth-in-Lending Act, as amended by the Dodd-Frank Act. The rule requires
lenders to consider and evaluate whether prospective borrowers have the ability to repay their
mortgage loans over the long term and seeks to prohibit what the CFPB has identified as “risky
lending practices” that contributed to the 2008 housing crisis. The type of mortgage loans covered
by the new rule includes traditional residential mortgages and any consumer credit transaction
that is secured by a dwelling, subject to certain enumerated exceptions. In addition, the CFPB
has proposed an amendment to this rule that would add other exemptions from the ability-to-
repay requirements. The rule will become effective on January 10, 2014.
CFPB Completes Mortgage Servicing Final Rules. On Thursday, January 17, the CFPB issued
final rules implementing provisions of the Dodd-Frank Act regarding mortgage loan servicing. The
rules specifically address servicers’ obligations to correct errors asserted by mortgage loan
borrowers; to provide certain information requested by such borrowers; and to provide protections
to such borrowers in connection with force-placed insurance. Additionally, this final rule
addresses servicers’ obligations to establish reasonable policies and procedures to achieve
certain delineated objectives; to provide information about mortgage loss mitigation options to
delinquent borrowers; to establish policies and procedures for providing delinquent borrowers
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10. with continuity of contact with servicer personnel capable of performing certain functions; and to
evaluate borrowers’ applications for available loss mitigation options.
Contact Information
For additional insights about likely policy developments, please feel free to contact the author of this
section: Matthew Kulkin at 202-457-6056 or mkulkin@pattonboggs.com.
Health Care
LEGISLATIVE ACTIVITY
House Energy and Commerce Hearing. The House Committee on Energy and Commerce will
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meet on Tuesday January 22 to hold an organizational meeting for the 113 Congress. The
Committee will then mark up a number of bills including H.R 297, to amend the Public Health
Service Act to reauthorize support for graduate medical education programs in children’s
hospitals, H.R. 225, the National Pediatric Research Network Act of 2013, and H.R. 235, the
Veteran Emergency Medical Technician Support Act of 2013.
House Ways and Means Hearing. The House Committee on Ways and Means has scheduled a
hearing on January 22 on the Debt Limit. The hearing will examine the history of the debt limit,
how past Congresses and Presidents have negotiated and raised the limit, and whether the
Constitution provides options to the Executive Branch when the debt limit is reached.
Senate HELP Hearing. The Senate Committee on Health, Education, Labor and Pensions will
hold a hearing on Thursday January 24, titled “Assessing the State of America’s Mental Health
System.” Witnesses include Pamela Hyde, Administrator of the Substance Abuse and Mental
Health Services Administration (SAMHSA), Dr. Thomas Insel, Director of the National Institute of
Mental Health at the National Institutes of Health (NIH), and additional witnesses to be
announced.
REGULATORY ACTIVITY
HHS HIPAA HITECH Final Rule Released. The Department of Health and Human Services
(HHS) issued a final rule to: Modify the Health Insurance Portability and Accountability Act
(HIPAA) Privacy, Security, and Enforcement Rules to implement statutory amendments under the
Health Information Technology for Economic and Clinical Health Act (“the HITECH Act” or “the
Act”) to strengthen the privacy and security protection for individuals’ health information; modify
the rule for Breach Notification for Unsecured Protected Health Information (Breach Notification
Rule) under the HITECH Act to address public comment received on the interim final rule; modify
the HIPAA Privacy Rule to strengthen the privacy protections for genetic information by
implementing section 105 of Title I of the Genetic Information Nondiscrimination Act of 2008
(GINA); and make certain other modifications to the HIPAA Privacy, Security, Breach Notification,
and Enforcement Rules (the HIPAA Rules) to improve their workability and effectiveness and to
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11. increase flexibility for and decrease burden on the regulated entities.
This final rule is comprised of four final rules, which have been combined to reduce the impact
and number of times certain compliance activities need to be undertaken by the regulated
entities. It is effective on March 26, 2013.
CMS Guidance on Mental Health Parity and Addiction Equity Act. The Centers for Medicare
& Medicaid Services (CMS) released a State Health Official letter on the application of the Mental
Health Parity and Addiction Equity Act to Medicaid managed care organizations, the Children’s
Health Insurance Program, and alternative benefit (benchmark) plans.
Hospital Readiness for EHR Reporting. CMS has extended the comment period for
the Request for Information on Hospital and Vendor Readiness for Electronic Health Records
Hospital Inpatient Quality Data Reporting (posted January 3, 2013). The comment period for the
RFI, which would have ended on January 22, is extended to February 1.
HHS Exchange Grants. Health and Human Services (HHS) Secretary Kathleen Sebelius today
announced $1.5 billion in new Exchange Establishment Grants to California, Delaware, Iowa,
Kentucky, Massachusetts, Michigan, Minnesota, New York, North Carolina, Oregon, and
Vermont, to ensure these states have the resources necessary to build a marketplace that meets
the needs of their residents.
Upcoming Regs. The Obama Administration is expected to release the Essential Health Benefits
final rule next month that will provide guidance on what are essential health benefits that must be
covered by qualified health plans beginning in 2014. The rule will also require all new health
plans cover mental health services to the same degree that medical and surgical services are
covered. The Administration has also committed to finalize regulations stemming from a 2008
mental health parity law for large-group plans.
Health care stakeholders are also awaiting final regulations regarding the Physician Sunshine
Payment rule that will provide guidance on how drug and device manufacturers will report
payments to physicians. The rule has been under review at the Office of Management and
Budget (OMB) since November 28, 2012, and reporting was set to begin January 1, 2013.
HHS’ Minimum Essential Coverage Exemptions (CMS-9958-P) proposed rule is also under
review at OMB.
OTHER HEALTH NEWS
IOM Report. The Institute of Medicine (IOM) released a report on the Supplemental Nutrition
Assistance Program (SNAP). The USDA asked the IOM and the National Research Council to
consider whether it is feasible to objectively define the adequacy of SNAP allotments that meet
the program goals and, if so, to outline the data and analyses needed to support an evidence-
based assessment of SNAP allotment adequacy. The committee concluded the adequacy of the
allotments can be defined, but doing so requires identifying the factors that affect SNAP
participants’ ability to meeting the program goals. The committee recommends individual,
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12. household, and environmental factors and program characteristics that USDA should consider in
defining the adequacy of SNAP allotments and ways to approach monitoring the ability of
participants to meet program goals with their allotment.
Contact Information
For additional insights about likely policy developments, please feel free to contact the author of this
section: Eugenia Edwards at 202-457-5622 or eedwards@pattonboggs.com.
International, Defense, and Homeland Security
LEGISLATIVE AND REGULATORY ACTIVITY
Senate Foreign Relations Committee (SFRC) and State Department Developments. The
SFRC faces a high-profile week ahead. Secretary of State Hillary Clinton will testify on the
Benghazi, Libya attacks and their aftermath on Wednesday. New Committee Member Rand Paul
(R-KY) likely will serve as the most pointed critic of the State Department and Secretary Clinton
herself, already having deemed the stewardship on Benghazi of his potential 2016 White House
rival “a career-ending mistake”. SFRC Democrats will not hesitate to defend the popular
Secretary, and Secretary Clinton will take the opportunity to highlight the quick response of the
U.S. Consulate’s security team and to stress the need for additional resources for diplomatic
security. On Thursday, January 24, SFRC Chairman John Kerry (D-MA) will appear before his
Committee colleagues as President Obama’s nominee to replace Secretary Clinton as Secretary
of State. Senator Robert Menendez (D-NJ), who is all-but-certain to serve as the next SFRC
Chairman following Senator Kerry’s expected confirmation by the full Senate, will chair both
hearings. Senator Kerry’s hearing and ensuing confirmation process are expected to proceed
smoothly. However, interventionist SFRC Republicans such as Senator Marco Rubio (R-FL) and
Senator John McCain (R-AZ) may use the hearing to set up a contrast between the relatively
forward-leaning Senator Kerry and the more circumspect Secretary of Defense-designate, former
Senator Chuck Hagel (R-NE) on issues like potential U.S. military involvement in Syria and Mali.
House Foreign Affairs Committee (HFAC) and State Department Developments. Secretary
Clinton also will testify before the HFAC on Benghazi on Wednesday, January 23. New
Committee Chairman Ed Royce (R-CA) may employ a slightly softer tone than his predecessor as
Chair, new HFAC Middle East Subcommittee Chairwoman Ileana Ros-Lehtinen (R-FL), but both
Members and other HFAC Republicans will be highly critical of the State Department’s role in
failing to predict and prevent the attack. New HFAC Ranking Member Eliot Engel (D-NY), new
Middle East Subcommittee Ranking Member Ted Deutch (D-FL), and Terrorism Subcommittee
Ranking Member Brad Sherman (D-CA) are expected to lead the defense of Secretary Clinton in
what is likely her final appearance before the Committee.
House Ways and Means Committee Trade and USTR Developments. This past week,
Chairman Dave Camp (R-MI) and Ranking Member Sander Levin (D-MI) officially named
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13. Congressman Devin Nunes (R-CA) and Congressman Charles Rangel (D-NY) as Chairman and
Ranking Member, respectively, of the Ways and Means Trade Subcommittee. Congressman
Nunes is an ardent free-trader, like his predecessor as Subcommittee Chair, Congressman Kevin
Brady (R-TX). Congressman Rangel is generally open to supporting trade liberalization, although
he is not quite as forward-leaning on trade issues as the Subcommittee’s previous Ranking
Member, Congressman Jim McDermott (D-WA). Last Tuesday, Chairman Camp, Ranking
Member Levin, and Chairman Nunes were quick to praise the Office of the U.S. Trade
Representative’s (USTR’s) announcement that USTR soon will enter into plurilateral negotiations
to establish an International Services Agreement for tariff reductions in the service industries of
participating member nations of the World Trade Organization.
House Homeland Security Committee (HHSC) Developments. At the HHSC organizational
meeting on Wednesday, at which Subcommittee Chairs and Ranking Members will be officially
chosen, new Committee Chairman Mike McCaul (R-TX) likely will mention the ongoing
campaigns against Islamist militants in southern Algeria and Al Qaeda in the Islamic Maghreb in
Mali. Congressman McCaul has used his perch as Chairman to highlight the threat to U.S.
homeland security that he sees emerging among extremist elements in Northern Africa.
Senate and House Armed Services Committee (SASC and HASC) Developments. Expect
SASC and HASC Committee Members, especially on the Republican side, to continue their focus
on sequestration issues in the coming weeks. On the heels of their policy retreat near
Williamsburg, Virginia this past week, House Republicans reportedly have made the strategic
decision to concentrate more on sequestration and related spending decisions than on the debt
ceiling in the weeks ahead, as they engage the White House and Senate Democrats over the
approaching fiscal deadlines. Of course, SASC Democrats and Republicans also will continue
their preparations for Secretary-designate Hagel’s nomination hearing, scheduled for January 31.
The hearing is still expected to be contentious, with Ranking Member James Inhofe (R-OK),
Senator Lindsey Graham (R-SC), and other Republicans detailing their opposition to Senator
Hagel’s views on defense spending cuts, support for Israel, Iran sanctions policy, and other
topics. However, no Member of the SASC’s Democratic Caucus, which controls the Committee
by a 14-12 margin, has come out in opposition to Secretary-designate Hagel to this point.
Moreover, Senator Charles Schumer (D-NY) and Senator Barbara Boxer (D-CA), two non-SASC
Members who sought clarifications of Senator Hagel’s views on Israel policy and gay rights,
announced their support for President Obama’s nominee this past week.
Contact Information
For additional insights about likely policy developments, please feel free to contact the author of this
section: Scott Thompson at 202-457-6110 or sthompson@pattonboggs.com.
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14. Tax
LEGISLATIVE ACTIVITY
Short-Term Debt Ceiling Increase under Consideration by Republicans. In the face of two
more looming “cliffs” – exceeding the current debt limit sometime in mid-February and
implementation of $210 billion in delayed sequestration cuts in March – Republicans are
discussing a short-term elevation of the debt ceiling and are expected to put legislation on the
House floor this week. The measure would extend the debt ceiling for three months and, to
incentivize the Senate to engage in serious spending reduction discussions, it would withhold
Member paychecks if either Chamber fails to adopt a budget by April 15. Senate Majority Leader
Harry Reid’s (D-NV) office responded by indicating that the Senate would be willing to consider
an increase in the debt ceiling absent conditions. Reid’s office did not address specifically how
the Senate would treat the House’s proposal to tie Member pay to the passage of a budget.
However, in an interview today, Senator Chuck Schumer (D-NY) indicated that Senate
Democrats will, for the first time in four years, draft a budget, suggesting that the proposal will
provide instructions for fundamental tax reform and call for higher tax revenues.
From Senate Republicans, Senate Minority Whip John Cornyn (R-TX) last week indicated that
Congress would raise the debt ceiling to prevent the U.S. from defaulting on its debt. Republican
actions this week mark a shift from previous statements made by some Republicans that the
party would allow a government shutdown rather than increase the debt.
Tax Reform on the House Agenda for 2013. On January 17, Paul Ryan emphasized the
commitment of House Republicans to reforming the U.S. tax system, asserting that House
Republicans intend to take on the issue of tax reform in 2013. Earlier in the week, Rep. Sander
Levin (D-MI), Ranking Member of the House Ways and Means Committee, indicated that he is
hopeful, but not confident, Congress will accomplish tax reform this year.
Tax Hearings Next Week. The following tax hearings are scheduled in the House Ways and
Means and Senate Finance Committees next week:
o Tuesday, January 22: House Ways and Means Committee hearing on the debt limit. The
hearing will focus on ways the debt limit has been handled in the past and constitutional
options available to the Executive Branch when the debt limit is reached.
REGULATORY ACTIVITY
Final FATCA Regulations Issued. On Thursday, January 17, Treasury and the IRS issued final
regulations implementing information reporting and withholding provisions under FATCA. The
Foreign Account Tax Compliance Act (FATCA) contains provisions designed to prevent U.S.
taxpayers from evading U.S. tax by holding funds in offshore accounts in foreign financial
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15. institutions (FFIs). The final regulations issued this week will provide greater certainty for financial
institutions by finalizing the process for FATCA compliance.
In a press release announcing the final regulations, Treasury emphasized ways the regulations
clarify and streamline compliance requirements. Specifically, the regulations clarify the treatment
of investment entities to better align FATCA obligations with the levels of risked posed by certain
kinds of entities. The regulations further streamline registration and compliance procedures for
certain groups of financial institutions including commonly managed investment funds. The
regulations also clarify types of payments that are not subject to withholding, including certain
grandfathered obligations and certain payments made by non-financial entities. The regulations
further clarify compliance obligations for financial institutions operating in multiple jurisdictions by
coordinating requirements of the regulations with those of intergovernmental agreements. Finally,
the regulations phase-in over an extended period to allow financial institutions time for due
diligence and to establish necessary systems. These regulatory timelines are aligned with those
included in intergovernmental agreements.
Contact Information
For additional insights about likely policy developments, please feel free to contact the authors of this
section: Erin McGrain at 202-457-5344 or emcgrain@pattonboggs.com; Joseph Urso at 202-457-5349 or
jurso@pattonboggs.com; and Libby Fallon at 202-457-5126 or efallon@pattonboggs.com.
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