1. February 25, 2013

2. General Legislative
Today, February 25, 2013, the House will meet at 2:00 pm for legislative business. Votes will be
postponed until 6:30 pm. Legislation under consideration will include H.R. 667 – To redesignate
the Dryden Flight Research Center as the Neil A. Armstrong Flight Research Center and the
Western Aeronautical Test Range as the Hugh L. Dryden Aeronautical Test Range. On Tuesday,
the House will meet at 10:00 am for morning hour and 12:00 pm for legislative business to
consider H.Res __ -- Academic Competition Resolution of 2013. On Wednesday and Thursday,
the House will meet at 10:00 am for morning hour and 12:00 pm for legislative business to
consider S. 47 – Violence Against Women Reauthorization Act of 2013, Rules Committee Print.
Last votes are expected on Thursday no later than 3:00 pm.
The Senate will convene today, February 25, 2013, at 2:00 pm and proceed to the reading of
Washington’s Farewell Address. At 5:00 pm the Senate will proceed to executive session to
consider the nomination of Robert Bacharach, of Oklahoma, to be United States Circuit Judge for
the Tenth Circuit.
Sequestration
Following weeks of political finger pointing and a flurry of stakeholder pleas to Congress for an
alternative, there is no indication that congressional action this week will avert sequestration. Hence, $85
billion in FY 2013 spending cuts will likely go into effect on Friday, March 1, as mandated by the Budget
Control Act of 2011 (P.L. 112-25).
Despite the looming deadline, there will be a brief interlude before some of the impacts of sequestration
are fully implemented. For example, federal employment actions (furloughs, layoffs) require advance
notice due to union agreements, so would not likely occur until early April.
With public outcry expected over the anticipated impacts of the sequester on popular programs such as
Head Start and Meals on Wheels, as well as the residual effects of agency layoffs and furloughs including
flight delays at airports and lapsed meat inspections, it is possible that Congress may mitigate some of
these impacts by structuring the final FY 2013 Continuing Resolution (CR) in a way that will provide
agencies with flexibility in allocating the mandatory reductions. This flexibility would allow agencies to
move funds and reduce spending in some programs by a greater percentage than others in order to
prioritize critical services. As such, some accounts could absorb an even bigger spending cut than
mandated by sequestration. The CR could also serve as a vehicle for a last-minute plan to replace
sequestration. Congress must act before the current CR expires on March 27.
 Political Lines in the Sand. President Obama and Democrats continue to push for a
sequestration alternative that includes a mixture of spending cuts and revenue increases while
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3. Republican lawmakers say they will only consider a package of equal, but tailored spending cuts.
Additionally, House Speaker John Boehner (R-OH) is not intending to introduce any type of
sequestration legislation in the House but insists that any measure include plan to balance the
budget within 10 years.
On Tuesday, Senate leaders are expected to introduce competing sequestration bills. Senate
Majority Leader Harry Reid (D-NV) will propose The American Family Economic Protection Act,
which would replace sequestration for the remainder of calendar year 2013 with an equal split of
tax revenue and spending cuts, including:
o The Buffett Rule. $55 billion in revenue by requiring a phased 30 percent tax on adjusted
gross income over $1 million.
o Future Defense Cuts. $27.5 billion in future Defense spending, aligned with the troop
drawdown in Afghanistan.
o Elimination of Direct Payments. A $24 billion cut from farm programs by eliminating direct
payment subsidies, streamlining programs, and curbing food assistance waste. The
Supplemental Nutrition Assistance Program (SNAP, also known as the food stamps
program), which comprises nearly 80 percent of Farm Bill funding, will remain untouched.
Additionally, Senate Minority Leader Mitch McConnell (R-KY) may introduce a counter-proposal
focused entirely on spending cuts. Neither bill is expected to meet the required 60-vote threshold
to advance to a floor vote.
 Agencies Outline Sequestration Impact. On Thursday, February 14, several Cabinet officials
testified before the Senate Appropriations Committee on the impact of sequestration on their
departments: Danny Werfel, Federal Controller, Office of Management and Budget; Arne Duncan,
Secretary, U.S. Department of Education; Janet Napolitano, Secretary, U.S. Department of
Homeland Security; Shaun Donovan, Secretary, U.S. Department of Housing and Urban
Development; and Ashton B. Carter, Deputy Secretary, U.S. Department of Defense. Each
testified on the direct impact of sequestration, including personnel layoffs, specific funding
reductions, and the number of individuals that would be impacted by reduced services. They also
spoke about indirect implications, such as delayed permitting and filing procedures.
In anticipation of the hearing, the Committee requested letters from federal agencies, including:
the Department of Agriculture; the Department of Commerce; the Department of Defense; the
Department of Justice; the Department of Education; the Department of Energy; the
Environmental Protection Agency; the FBI; the Department of Health and Human Services; the
Department of Homeland Security; the Department of Housing and Urban Development; the
Department of Interior; the Department of Labor; NASA; the National Science Foundation; the
Small Business Administration; the Social Security Administration; the Department of State; the
Department of Transportation; and the Department of Treasury, outlining the impact of
sequestration on their operations and services.
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4. SPECIFIC AGENCY ACTIVITY
Agriculture & Food
 Elimination of Direct Payments. Senate Democrats’ sequestration proposal looks to cut $24
billion from farm programs by eliminating direct payment subsidies, streamlining programs, and
curbing food assistance waste. SNAP, which comprises nearly 80 percent of Farm Bill funding,
will remain untouched. Republicans in both chambers and farm groups have opposed the
proposed measures arguing that the elimination of direct payments with no other alternative
structure will be a blow to the farming industry and the burden of the budget should at least be
balanced between farm and nutrition programs.
Defense
 A February 12 Senate Armed Services Committee hearing on sequestration provided an
opportunity for senior Obama Administration officials and SASC Members to decry the likely
effects of sequestration on U.S. national security, but it did not narrow the bipartisan chasm on
the overarching fiscal remedies needed to avert that outcome.
 This past Wednesday, February 20, the Department of Defense (DoD) informed 800,000
Pentagon civilians they would be furloughed, possibly with 20 percent pay reductions, if
sequestration becomes law.
 The Pentagon has sent Congress a package of proposed "anomalies" it hopes lawmakers will
incorporate in a full-year CR, providing exceptions to standard rules used in stopgap spending
measures.
 Specifically, DoD wants permission to proceed with plans for new weapon systems, to increase
production rates, and to conclude multiyear procurement contracts for the CH-47F helicopter
program, the DDG-51 Arleigh Burke destroyer, and the C-22 Osprey program.
 General Dennis Via, the chief of the Army’s Materiel Command, has noted that sequestration
threatens to delay the Administration's plan to exit Afghanistan by the end of 2014.
 This week, the House Armed Services will hold two hearings related to sequestration:
Wednesday, February 27 - Subcommittee on Military Personnel -- Impact of Budget Constraints
on Military Strength; and Thursday, February 28 - House Armed Services - Subcommittee on
Tactical Air and Land Forces - Impact of CRs and Sequestration on Defense Readiness.
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.
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5. Agriculture & Food
LEGISLATIVE ACTIVITY
 Sequestration: Meat Inspections. The Department of Agriculture has stated that if
sequestration takes place, then the Food Safety and Inspection Service (FSIS) will be require to
furlough employees for up to 15 days, which will, in turn, force meat processors to close for that
period as they cannot operate without FSIS inspectors. House Agriculture Committee Chairman
Frank Lucas (R-OK) continues to challenge the Department’s determination of sequestration’s
impact on meat inspections because he thinks the Office of Management and Budget is best
suited to determine how the sequester would affect meat inspectors.
For a summary of the Senate Democrats’ sequestration plan, which includes a proposal to
eliminate direct payments, please read the “Sequestration” section.
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 and Appropriations
 FY 2013 Continuing Resolution. House Appropriations Chairman Harold Rogers (R-KY)
intends to release a final FY 2013 appropriations package this week, including full Department of
Defense and Military Construction / Veterans Affairs bills and a Continuing Resolution (CR)
covering the remaining departments and independent agencies. Overall funding is expected to
reflect the $1.043 discretionary spending cap established in the fiscal cliff agreement. However,
as noted in the Sequestration section above, if no alternative to sequestration is implemented
prior to the March 1 deadline, the FY 2013 package will either incorporate those spending cuts or
serve as a vehicle for a last-minute plan to replace sequestration. The current FY 2013 CR
expires on March 27.
 Congressional Hearings. Budget and appropriations-related hearings scheduled for this week:
o Tuesday, February 26: Committee on Appropriations, Defense Subcommittee Hearing:
“Oversight Hearing, Department of Defense, Fiscal Challenges.”
o Tuesday, February 26: Senate Finance Committee, “Ten Year Budget and Economic
Outlook.”
o Tuesday, February 26: House Financial Services, “Budget Views and Estimates.”
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6. o Tuesday, February 26: Senate Budget Committee, “The Impact of Federal Investments.”
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
LEGISLATIVE BRANCH ACTIVITY
 Cybersecurity Legislation. On Tuesday, February 12, just prior to his State of the Union
address, President Obama issued the long-awaited cybersecurity Executive Order (EO), which
called for the development of a “cybersecurity framework” for critical infrastructure, increased
information sharing and processing of security clearances for owners and operators of key
sectors, as well as directed the U.S. Department of Homeland Security to identify the “most
critical of critical” infrastructure. Stakeholders have generally praised the EO’s attempt to address
cybersecurity issues but many Members of Congress and Administration officials, including White
House Cybersecurity Coordinator Michael Daniel, have noted that the EO is only the foundation
on which cybersecurity legislation should be built. Last week, Daniel noted in a speech at the
Center for Strategic and International Studies that the Administration is still working on its
legislative priorities, which will likely include establishing liability protections for companies that
share cyber threat information with the government, reforming the Federal Information Security
Management Act (FISMA), crafting new data security breach requirements and updating laws for
cyber criminals.
Senate Homeland Security and Governmental Affairs Committee Chairman Tom Carper (D-DE)
plans to hold a hearing in the coming weeks to examine the EO and begin work on cybersecurity
legislation. House Homeland Security Committee Chairman Michael McCaul (R-TX) has also
indicated that he will release a cybersecurity bill in the near future. He also recently introduced a
bill that addresses cybersecurity research and development (H.R. 756), which is similar to his bill
that passed the House last Congress. On Tuesday, the House Science Space and Technology
Subcommittee on Technology and Subcommittee on Research will hold a joint hearing to review
the bill and explore the challenges associated with cybersecurity research and development.
Senior officials from PayPal, data analytics firm 21CT, and the University of Southern California’s
Information Sciences Institute will be testifying at the hearing.
 Cyber Intelligence Sharing and Protection Act. Last week, House Intelligence Committee
Chairman Mike Rogers (R-MI) and Ranking Member C.A. Dutch Ruppersberger (D-MD)
reintroduced their cybersecurity information sharing legislation, the Cyber Intelligence Sharing
and Protection Act (CISPA), which is identical to the bill that passed the House last April. Similar
to the debate surrounding CISPA last year, many privacy groups have expressed strong
opposition to the reintroduced bill given its lack of privacy protections. In response, Chairman
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7. Rogers is urging representatives from critical infrastructure sectors to launch a campaign to
educate privacy groups about information sharing and the need for this type of legislation.
Ranking Member Ruppersberger is working with the Obama Administration to address similar
privacy concerns given the White House’s veto threat that was issued for the CISPA bill last
Congress.
EXECUTIVE BRANCH ACTIVITY
 NIST Request for Information. As part of the EO, the National Institutes of Standards and
Technology (NIST) within the U.S. Department of Commerce is required to develop a standards-
based framework to reduce cyber risks to critical infrastructure within 240 days of the release of
the EO. NIST intends to issue a Request for Information (RFI) in the Federal Register to gather
initial information on the considerations, challenges and efforts that will need to be reviewed in
order to develop the cybersecurity framework. The RFI will allow 45 days for responses to be
submitted once it is published.
 Mandiant Report. A recent report from an American computer security firm, Mandiant, indicated
that a Chinese military unit – commonly known as the “Comment Crew” or “Shanghai Group” – is
likely behind a large number of cyber attacks, which has stolen data from at least 141 companies
across 20 major industries. Chinese officials have denied the military’s participation in any kind of
hacking activity, noting that China has also been a victim of computer hacking.
 Strategy on Mitigating the Theft of Trade Secrets. A few days after the Mandiant report was
released, the Obama Administration issued its Administration Strategy on Mitigating the Theft of
U.S. Trade Secrets which argues that the theft of trade secrets is a serious threat to U.S. national
and economic security. Without naming specific countries, the strategy also calls for increased
diplomatic pressure on countries where trade secret theft often occurs and advocates for greater
information sharing between the government and the private sector to prevent future attacks.
 Cybersecurity Standards for Military Contracts. Officials from the Department of Defense
indicated that they intend to issue a new set of cybersecurity requirements for private utilities and
other critical infrastructure that support the military that will be released in the fall and take effect
within a year. These rules will require military contractors to have in place a continuous
monitoring system for industrial control systems (ICS); including safeguards such as sensors and
software that regularly scan infrastructure networks for abnormal activity. Currently, military
contractors are only required to test their systems every three years.
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.
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8. Education
LEGISLATIVE ACTIVITY
 Workforce Investment Act. As expected, House Education and the Workforce’s Higher
Education and Workforce Training Subcommittee Chairwoman Virginia Foxx (R-NC) will formally
introduce The Supporting Knowledge and Investing in Lifelong Skills (SKILLS) Act, today,
Monday, February 25. The Skills Act aims to update the current workforce investment system by
streamlining federal programs and creating a single source of employment support for employers
and job seekers. A discussion draft has been released and, while a priority for Congressional
th
Republican leaders, the core tenets are similar to legislation introduced in the 112 Congress,
which was not supported by Democrats. Proposed reforms in the measure include:
o Eliminate and streamline 35 current employment and training programs and create a
Workforce Investment Fund to serve as a single source of support for employers, workers,
and job seekers.
o Strengthen the role of employers in workforce training decisions by eliminating 19 federal
mandates governing workforce investment board representation.
o Require state and local workforce investment leaders to outline the strategies they will
implement to serve at-risk youth, individuals with disabilities, veterans, and other workers with
unique challenges to employment.
o Establish common performance measures and require an independent evaluation of
programs at least once every five years.
The Subcommittee on Higher Education and Workforce Training will hold a hearing on Tuesday,
February 26, to discuss the need for job training reform and review the proposed measure.
 Manufacturing Innovation. Since the President committed in his State of the Union address to
launching three new institutes before then-end of the year as part of his National Network for
Manufacturing Innovation (NNMI) initiative, the Departments of Defense and Energy went to work
on developing their respective Request for Qualifications (RFQ) as part of that effort. The RFQ at
the Department of Energy reportedly is nearly finished and expected to be released in the coming
weeks. However, uncertainty over sequestration and its impact on the program may delay that
release.
Additionally, Senators Chuck Schumer (D-NY) and Sherrod Brown (D-OH) currently are drafting
legislation, the National Network for Manufacturing Innovation Act of 2013, which would authorize
the creation of 15 additional national NNMI institutes through a competitive application process,
as called for by President Obama nearly a year ago.
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9.  Clery Act. While the Senate passed its version of the Violence Against Women Act (VAWA)
reauthorization bill earlier this month -- which included an expansion of the Clery Act making new
requirements to report campus incidents of domestic violence, dating violence, and stalking --
House leaders are not planning to consider that measure but instead are preparing to unveil their
version this week. The House measure is expected to reduce the $600 million annual price tag of
the Senate-passed bill, but it remains to be seen as to how protections extended to certain
vulnerable populations will be addressed. Also, it is unlikely to carry the Clery Act expansion
under the Senate bill.
 Upcoming Hearings. Several education-related hearings are scheduled for this week. In
addition to the workforce investment system hearing noted above, the following hearings have
been scheduled:
o Tuesday, February 26. The Senate Budget Committee will hold a hearing titled "The Impact
of Federal Investments on People, Communities, and Long-Term Economic Growth."
Members from academia and the Association of American Universities are scheduled to
testify.
o Wednesday, February 27. The House Appropriations Committee will hold a hearing on the
oversight of Indian education.
o Wednesday, February 27. The House Education and The Workforce Committee will hold a
hearing to discuss school safety issues in the wake of the Sandy Hook Elementary School
shooting tragedy. The hearing, titled “Protecting Students and Teachers: A Discussion on
School Safety,” will seek to review how schools prepare and recover from threats of violence.
o Thursday, February 28. The House Education and The Workforce Committee’s Early
Childhood, Elementary and Secondary Education Subcommittee will hold a hearing titled
"Raising the Bar: How Are Schools Measuring Teacher Performance?"
REGULATORY ACTIVITY
 Private Student Loans. In anticipation of Congress reauthorizing the Higher Education Act
(HEA), last Thursday, the Consumer Financial Protection Bureau (CFPB) published a Notice and
Request for Information in the Federal Register soliciting information on borrower hardship,
aspects of past and existing loan modification programs appropriate for student loan affordability
programs, differences between servicing of student loans and servicing of residential mortgages,
and consumer reporting and credit scoring. The deadline for colleges, universities, finance
experts, students, professional associations and other stakeholders to submit information is
Monday, April 8.
This regulatory action is part of CFPB’s new initiative to provide alternative repayment and
refinance options for borrowers repaying private student loans, which will be a key issue under
the HEA reauthorization. Last October, the CFPB released its first annual report discussing the
hurdles that private student loan borrowers confront during repayment. The report included
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10. complaints from student borrowers and many of the complaints paralleled those of mortgage
borrowers. The CFPB intends to announce its next steps of this initiative following the deadline.
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; and Dana Weekes, at 202-
457-6307 or dweekes@pattonboggs.com.
Energy
LEGISLATIVE ACTIVITY
 Congressional Hearings. On Tuesday, February 26, a House Energy and Commerce
Subcommittee will hold a hearing assessing private-sector successes and opportunities in
energy-efficient technologies.
REGULATORY ACTIVITY
 Renewable Energy and Energy Efficiency Advisory Committee. The Administration has
appointed 37 company, trade association, and non-profit organization representatives to the
newly re-charted Committee.
 Electric Grid. The Department of Energy is requesting comments by March 25 on two reference
documents, the “Electricity Distribution System Workshop Discussion Summary” and the
“Electricity Transmission System Workshop Discussion Summary.” The documents and
comments will help inform the development of a targeted research and development roadmap to
address grid challenges and guide short-term investments.
 DOE Advisory Committees. The Department of Energy’s Biological and Environmental
Research Advisory Committee will hold a teleconference on March 7 to discuss final edits to the
BERAC report. The Nuclear Science Advisory Committee will next meet March 8 through 9 in
Gaithersburg, Maryland. The High Energy Physics Advisory Panel will next meet March 11
through 12 in Gaithersburg, Maryland to discuss DOE’s High Energy Physics Program and the
National Science Foundation’s Elementary Particle Physics Program.
 PCAST. The President’s Council of Advisors on Science and Technology will next meet on
March 15 to discuss and update the energy and climate change letter report, among other topics.
 Renewable Fuels. The Environmental Protection Agency will hold a public hearing in Ann Arbor,
Michigan on March 8 regarding the proposed “Regulation of Fuels and Fuel Additives: 2013
Renewable Fuel Standards.” The Agency has also extended the public comment period on the
proposed rule to April 7, from March 25.
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11.  Oil and Gas Standards. The American Petroleum Institute is undertaking efforts to update
certain voluntary standards for equipment, materials, operations, and processes. This includes
recommended practices for hydraulic fracturing activities including well construction and integrity,
water management, and community engagement considerations; and repair and remanufacture
of blowout prevention equipment, among others.
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.
Financial Services
LEGISLATIVE ACTIVITY
 Federal Reserve Chairman Ben Bernanke to Address House, Senate. On Tuesday, February
26, Federal Reserve Chairman Ben Bernanke will appear before the Senate Banking Committee
to deliver “The Semiannual Monetary Policy Report to the Congress.” He will then testify before
the House Financial Services Committee on the same topic on Wednesday, February 27.
Chairman Bernanke will likely face questions about the impact of the sequester on the country’s
GDP and steps the Federal Reserve may take in response to the sequester.
 House Subcommittee to Discuss Executive Compensation. On Tuesday, February 26, the
House Oversight Subcommittee on Economic Growth, Job Creation and Regulatory Affairs will
hold a hearing titled "Bailout Rewards: The Treasury Department's Continued Approval of
Excessive Pay for Executives at Taxpayer-Funded Companies."
 CFTC Chairman to Testify Before Senate. On Wednesday, February 27, Commodity Futures
Trading Commission (CFTC) Chairman Gary Gensler will testify before the Senate Agriculture
Committee. He will likely discuss the ongoing LIBOR investigation, Dodd-Frank implementation,
and customer protection initiatives undertaken to protect against losses from events like MF
Global and Peregrine Financial.
 Senate Banking Committee to Review Federal Housing Agency. On Thursday, February 28,
the Senate Banking Committee will hold a hearing titled "Addressing FHA's Financial Condition
and Program Challenges.” The witnesses will include Gary Thomas, National Association of
Realtors; Professor Phillip Swagel, University of Maryland; Sarah Rosen Wartell, Urban Institute;
and David Stevens, Mortgage Bankers Association.
 Senate Finance Committee to Vote on Treasury Secretary Nomination. Senate Finance
Committee Chairman Max Baucus (D-MT) announced that the Senate Finance Committee will
vote on the nomination of Jack Lew to be Treasury Secretary on Tuesday, February 26, during an
already-scheduled hearing starting at 10:00 am.
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12. REGULATORY ACTIVITY
 Federal Reserve Extends Comment Period for Proposed Rules Governing Foreign Banks.
The Federal Reserve extended from March 31 until April 30 the comment period for proposed
rules related to the oversight of foreign banking organizations and foreign nonbank financial
companies. The Federal Reserve indicated that “the range and complexity of the issues
addressed in the rulemaking” merited “additional time to analyze the proposed rules.”
 CFTC to Hold IOSCO Roundtable. On Tuesday, February 26, the CFTC and the International
Organization of Securities Commissioners (IOSCO) will hold a public roundtable to discuss the
IOSCO Consultation Report, “Financial Benchmarks,” which was published in January 2013.
This roundtable, along with the written comment letters and the roundtable discussion held in
London on February 20, will inform the IOSCO Final Report containing principles of best practices
for benchmark methodologies and governance.
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 Ways and Means Hearing. The House Committee on Ways and Means Subcommittee
on Health will hold a hearing on Tuesday, February 26, titled “Examining Traditional Medicare’s
Benefit Design.”
 House VA Hearing. The House Committee on Veterans’ Affairs will hold a hearing on
Wednesday, February 27, titled “Electronic Health Records U-Turn: Are VA and DoD Headed in
The Wrong Direction?”
 Senate HELP Mark. The Senate Committee on Health, Education, Labor and Pensions has
scheduled a hearing on Wednesday, February 27, titled “Animal Drug User Fee Agreements:
Advancing Animal Health for the Public Health.”
 House Energy and Commerce Hearings. The House Committee on Energy and Commerce
Subcommittee on Health will hold a hearing on Wednesday, February 27, titled “Fostering
Innovation to Fight Waste, Fraud and Abuse in Health Care.” The Subcommittee on Oversight
and Investigations has also scheduled a hearing on Tuesday, March 5, titled “After Newtown: A
National Conversation on Violence and Severe Mental Illness.
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13.  House Ways and Means Hearing. The House Committee on Ways and Means Subcommittee
on Health will hold a hearing on Tuesday, February 26, titled “Examining Traditional Medicare’s
Benefit Design.”
REGULATORY ACTIVITY
 EHB, Actuarial Value, and Accreditation Final Rule Released. The Department of Health and
Human Services (HHS) released the Patient Protection and Affordable Care Act; Standards
Related to Essential Health Benefits, Actuarial Value, and Accreditation Final Rule. This final rule
sets forth standards for health insurance issuers consistent with title I of the Patient Protection
and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act of
2010, referred to collectively as the Affordable Care Act. Specifically, this final rule outlines
Exchange and issuer standards related to coverage of essential health benefits and actuarial
value. This rule also finalizes a timeline for qualified health plans to be accredited in Federally-
facilitated Exchanges and amends regulations providing an application process for the
recognition of additional accrediting entities for purposes of certifying qualified health plans.
 CMS Posts Bulletin on MAGI-Based Eligibility Verification Plans. CMS Released an
informational bulletin to provide information to state Medicaid and Children’s Health Insurance
Program (CHIP) agencies on the verification plans required for Medicaid and CHIP eligibility, the
MAGI-based (Modified Adjusted Gross Income) Eligibility Verification Plan Template, and a
review of the final verification regulations.
OTHER HEALTH NEWS
 IOM Meetings. The Institutes of Medicine’s (IOM) Committee on Sports-Related Concussions in
Youth will hold a public workshop on Monday, February 25. The workshop will include panels on
strategies for the reduction of sports-related concussions in youth, the diagnosis and
management of concussions in youth, and the interface between medical and education systems
in managing concussed athletes’ return to school, among other topics.
 The Roundtable on Value & Science-Driven Health Care will hold a meeting on Monday and
Tuesday on, “Partnering with Patients to Drive Shared Decisions, Better Value, and Care
Improvement.” Workshop discussions will focus on building insights and recognition on the
necessity of increased patient, family, and citizen engagement in achieving better outcomes and
lower costs in health care, exploring what has been learned about effective approaches for
building patient demand and involvement in improving evidence, care and value, and other topics.
 The Board of Health Sciences Policy will hold a workshop on Wednesday, February 27, on
“Refining Processes for the Co-Development of Genome-Based Therapeutics and Companion
Diagnostic Tests.” The workshop will examine challenges of and potential solutions for co-
development of molecular tests and targeted therapeutics.
 MEDPAC Meeting. The Medicare Payment Advisory Commission has scheduled a public
meeting on March 7 through 8.
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14. 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
EXECUTIVE AND LEGISLATIVE BRANCH ACTIVITY
 North Korea. On Tuesday, February 12, North Korea conducted its third nuclear test, which the
U.N. Security Council (UNSC) immediately condemned. While the UNSC is still working on a
further response, the Senate Foreign Relations Committee advanced the bipartisan North Korea
Nonproliferation and Accountability Act (S. 298) by Chairman Robert Menendez (D-NJ). On
Thursday, February 14, House Foreign Affairs Committee (HFAC) Chair Ed Royce (R-CA) and
Ranking Member Eliot Engel (D-NY) introduced a resolution condemning North Korea, which
passed 412-2 the following day. It is expected Congress will continue to advance additional
sanctions against North Korea, despite Pyongyang’s warning of additional acts if new sanctions
are imposed.
 Asia-Pacific. On Friday, February 22, President Obama met with Japanese Prime Minister
Shinzo Abe to discuss the U.S. Asia-Pacific pivot, North Korea’s recent nuclear transgressions,
Japan’s potential inclusion in the Trans-Pacific Partnership trade discussions, and the East China
Sea disputes. On Tuesday, the HFAC’s Asia Subcommittee will hold a hearing on the South
Asian aspects of the U.S. Rebalance to Asia, with Assistant Secretary of State Robert Blake
expected to testify. On Thursday, the Tom Lantos Human Rights Commission will hold a hearing
on Burma, with Assistant Secretary of State for Human Rights Michael Posner slated to appear.
 Secretary of State. Last Tuesday, February 19, John Kerry gave his first major policy address
as Secretary of State, where he focused on defending the State Department’s relatively small
budget, encouraging U.S. investments abroad, and again calling on Congress to get the U.S.’s
“fiscal house in order.” Secretary Kerry departed Washington Sunday for a nine-day trip with
planned stops in the United Kingdom, Germany, France, Italy, Turkey, Egypt, Saudi Arabia, the
United Arab Emirates, and Qatar. Secretary Kerry also will join President Obama later in March
in Israel and Jordan. Russian Foreign Minister Sergey Lavrov is expected to meet with Secretary
Kerry in Berlin this week, with potential Syria negotiations among the top agenda items.
 Middle East Developments. Last Friday, February 22, the International Atomic Energy Agency
reported Iran is advancing construction of a reactor that analysts claim could expedite its
production of fissile material. Also last Friday, Russia accused the United States of blocking a
UNSC statement to condemn last Thursday’s car bomb attack near the Russian Embassy in
Syria. A U.S. spokesperson countered the United States had instead sought to add criticism of
President Bashar al-Assad’s forces, which Russia had rejected. The Syrian regime and
opposition are expected to meet this week in Moscow. Also, the HFAC Middle East
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15. Subcommittee will hold a hearing on Egypt on Tuesday, although no Administration official is
scheduled to testify.
 Mali. At an HFAC hearing on Thursday, February 14, Republican and Democratic House
Members expressed reservations over the U.S. role in Mali. Chairman Royce said, “When
France sought U.S. assistance, the Administration was tepid in answering our ally’s call.”
Congressman Royce also praised the Department of Defense for wanting to counter threats in
the Sahel region directly but questioned why, in his view, a “cautious” State Department instead
seeks only to contain them.
 Trade Developments. EU Trade Commissioner Karel De Gucht said Thursday he hopes U.S.-
EU trade negotiations can formally launch in June. In the coming months, U.S. business groups
plan to push for renewal of expired “fast-track” Trade Promotion Authority (TPA). However, some
generally trade-friendly Congressional Democrats are withholding judgment on TPA until they see
the final outlines of the Trans-Pacific Partnership agreement, possibly later this year.
 Secretary of Defense-Designate. While Senate Majority Leader Harry Reid (D-NV) accused
Republicans of filibustering the February 14 cloture vote on the nomination of Defense Secretary-
Designate Chuck Hagel, Senator John McCain (R-AZ) and several other Republicans said they
will be willing to allow the nomination to move forward when Congress returns. During the
recess, fifteen Republican Senators called on President Obama to withdraw Hagel’s name.
However, last Thursday, Senator Richard Shelby (R-AL) said he will vote to confirm Hagel, joining
Senators Thad Cochran (R-MS) and Mike Johanns (R-NE) to provide the necessary votes to be
confirmed as soon as this Tuesday, assuming no unexpected Democratic defections.
 Defense Sequestration Atmospherics. On Tuesday, February 12, the Senate Armed Services
Committee conducted a hearing on sequestration. The hearing provided an opportunity for senior
Obama Administration officials and SASC Members to decry the likely effects of sequestration on
U.S. national security, but it did not narrow the bipartisan chasm on the overarching fiscal
remedies needed to avert that outcome. The Department of Defense (DoD) faces potential cuts
of $46 billion this fiscal year and $500 billion over 10 years. Chairman Carl Levin (D-MI) noted
sequestration would leave the Army with $24.6 billion instead of the $36.6 billion requested in its
FY 2013 budget, and with only approximately $8 billion left for the rest of the fiscal year. Deputy
Defense Secretary Ashton Carter asked Senators to delay the looming cuts at the very least,
although Chairman of the Joint Chiefs of Staff Martin Dempsey cautioned the panel to “resist
kicking this problem further down the road" regarding the nation’s overall fiscal picture. This past
Wednesday, DoD added to the collective sense of gloom by informing 800,000 Pentagon civilians
they would be furloughed, possibly with 20 percent pay reductions, if sequestration becomes law.
 Defense Budget Details. The Pentagon has sent Congress a package of proposed "anomalies"
it hopes lawmakers will incorporate in a full-year Continuing Resolution, providing exceptions to
standard rules used in stopgap spending measures. Specifically, DoD wants permission to
proceed with plans for new weapon systems, to increase production rates, and to conclude
multiyear procurement contracts for the CH-47F helicopter program, the DDG-51 Arleigh Burke
destroyer, and the C-22 Osprey program. In addition, DoD is requesting that Congress grant the
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16. Navy latitude to continue shipbuilding plans and to increase flexibility to manage funds in
operations and maintenance accounts. To cover cost growth for ships under construction, the
Navy is also seeking language to provide $156.6 million for the LHA Replacement program, $80.8
million for the LPD-17 program, and $67 million for aircraft refuelings.
 Sequestration and Afghanistan. General Dennis Via, the chief of the Army’s Materiel
Command, has noted that sequestration threatens to delay the Administration's plan to exit
Afghanistan by the end of 2014. General Via noted the planned expense of pulling between $22
billion and $28 billion in equipment out of Afghanistan. He added that Chief of Staff General
Raymond Odierno has said the Army faces a shortfall of more than $6 billion in Overseas
Contingency Operations funding because of increased transportation costs in Afghanistan. When
coupled with the possibility of sequestration and a yearlong Continuing Resolution, the service
faces a potential $18 billion operation and maintenance funding shortfall in FY 2013.
Contact Information
For additional insights about likely policy developments, please feel free to contact the authors of this
section: Scott Thompson, at 202-457-6110 or sthompson@pattonboggs.com; John Sharp, at 303-894-
6183 or jsharp@pattonboggs.com; or Stacy Swanson, at 202-457-5627 or sswanson@pattonboggs.com.
Tax
LEGISLATIVE ACTIVITY
 Ways and Means Tax Reform Working Groups to Hold Organizational Meetings. The
bipartisan tax reform working groups announced by the House Ways and Means Committee
earlier this month are expected to hold initial organizational meetings on Tuesday, February 26.
The groups will be led by one Republican Member serving as Chair and one Democratic Member
serving as Vice Chair. Each of the 11 groups will review current law in its designated issue area
and then research and compile feedback related to the topic of the working group. The
designated issue areas are: (1) charitable/exempt organizations; (2) debt, equity and capital; (3)
education and family benefits; (4) energy; (5) financial services; (6) income and tax distribution;
(7) international; (8) manufacturing; (9) pensions/retirement; (10) real estate; and (11) small
business/pass throughs.
The working groups will be responsible for compiling feedback from stakeholders, academics/
think tanks, practitioners, the general public, and colleagues in the House. Once the working
groups have completed their analysis, the Joint Committee on Taxation will prepare a report for
the full Committee, due by April 15, 2013, that describes current law in each issue area and
summarizes the information gathered by the Committee Members.
 Tax Hearing Next Week. The following tax hearing is scheduled in the Senate Finance
Committee next week:
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17. o Tuesday, February 26: Senate Finance Committee hearing on the Budget and
Economic Outlook: Fiscal Years 2013 to 2023.
Contact Information
For additional insights about likely policy developments, please feel free to contact the author of this
section: Erin McGrain at 202-457-5344 or emcgrain@pattonboggs.com.
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