Capital Thinking ~ March 18, 2013


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Capital Thinking ~ March 18, 2013

  1. 1. March 18, 2013
  2. 2. General LegislativeToday, March 18, the House will meet at 12:00 pm for morning hour and 2:00 pm for legislativebusiness. Votes will be postponed until 6:30 pm. Legislation Considered Under Suspension of theRules will include: (1) H.Con.Res 18 – Authorizing the use of the Capitol Grounds for the NationalPeace Officers’ Memorial Service; and (2) H.Con.Res. 19 – Authorizing the use of the CapitolGrounds for the Greater Washington Soap Box Derby. On Tuesday, March 19, and for thebalance of the week the House will meet to consider (1) H.Con.Res __ – Establishing the budgetfor the United States Government for fiscal year 2014 and setting forth appropriate budgetarylevels for fiscal years 2015 through 2023 (subject to a Rule); and (2) H.Res. 115 – Providing for theexpenses of certain committees of the House of Representatives in the One Hundred ThirteenthCongress (Privileged Resolution). The House will also potentially consider a Motion to Concur inthe Senate Amendment to H.R. 933 – Department of Defense, Military Construction and VeteransAffairs, and Full-Year Continuing Appropriations Act, 2013 (Subject to a Rule).The Senate will convene today, March 18, at 2:00 pm and resume consideration of H.R. 933 – theContinuing Appropriations Act.Agriculture and FoodLEGISLATIVE ACTIVITY Immigration Reform. The “Group of 8” Senators working to draft a comprehensive immigration bill continues to make progress but will wait until after the recess to unveil the bill. While the work period for the bill places its unveiling in early April, those working on the bill are still confident they will be able to come to an agreement by the end of March. Continuing Resolution. On Monday, the Senate will continue its work on the FY 2013 Continuing Resolution (H.R. 933) to fund the federal government through the remainder of the fiscal year. Although close to 100 amendments have been filed, the Senate is aiming to have an amendment package that includes the fewest amount of amendments possible. The Senate has been working closely with the House to pre-clear certain amendments to ensure House passage of the Continuing Resolution when it is sent back to the House for a vote. Key agriculture-related amendments that have been filed include: o An amendment to remove a policy rider that would allow farmers to continue planting genetically engineered seeds should a court block the U.S. Department of Agriculture’s (USDA) approval of these seeds. Democratic Senators Jon Tester (MT), Patrick Leahy (VT), Mark Begich (AK), Richard Blumenthal (CT), Barbara Boxer (CA) and Kirsten Gillibrand (NY) sponsored the amendment.Patton Boggs Capital Thinking Weekly Update | March 18, 2013 1 of 19
  3. 3. o An amendment to strike a policy rider that would require the USDA to repeal existing poultry regulations on contract fairness standards. Democratic Senators Jon Tester (MT), Sherrod Brown (OH), Tim Johnson (SD) and Patrick Leahy (VT) sponsored the amendment. o An amendment that would grant heads of federal agencies the flexibility to declare employees as “essential” in order to exempt them from furloughs. The amendment also would transfer budgetary resources within the agencies to maintain essential employees. Senators Roy Blunt (R-MO) and Barbara Mikulski (D-MD) sponsored the amendment. It remains unclear whether any of these amendments will be included in the final amendment package. Budget Resolutions. In the GOP budget proposal, House Budget Committee Chairman Paul Ryan (R-WI) proposed a cost-savings of $32 billion over 10 years for the Farm Bill. House Agriculture Chairman Frank Lucas (R-OK) has indicated that he will refer to the budget proposal as “guidance” and may incorporate some of the recommendations, but not others. Last year, the Congressional Budget Office (CBO) scored the House Agriculture Committee Farm Bill at a cost savings of $35 billion over 10 years. Meanwhile, in the Senate, the Democratic budget proposal calls for a cost savings of $23 billion over 10 years, which matches last year’s CBO-scored cost-savings of the Senate-passed bill. This year, however, CBO scored the Senate-passed Farm bill at a cost-savings of $13 billion less, which means the Senate Agriculture leadership will need to make reforms to last year’s Farm Bill to make up the difference in cost savings. Upcoming Hearings. On Monday, March 18, the Senate Judiciary Committee will hold a hearing on “Immigration Revision and Needs of Women and Families.” On Wednesday, March 20 the Senate Judiciary Committee will hold a hearing on a “New Immigration System.” That same day the House Appropriations Subcommittee on Agriculture, Rural Development, and FDA will hold a hearing on “2014 Appropriations: Agriculture, Rural, FDA.”Contact InformationFor additional insights about likely policy developments, please feel free to contact the authors of thissection: Dana Weekes at 202-457-6307 or, and Karen Kudelko at 202-457-5132 or and Appropriations FY 2013 Continuing Resolution. The Senate will resume consideration of a $984 billion FY 2013 appropriations package today after failing to reach an agreement last week on which of the 100 filed amendments would be brought up for a vote.Patton Boggs Capital Thinking Weekly Update | March 18, 2013 2 of 19
  4. 4. As expected, Senate Appropriations Chairwoman Barbara Mikulski (D-MD) expanded the House- approved measure (H.R. 933) to also include full-year budgets for federal departments and agencies that fall under the jurisdiction of the Agriculture, Commerce-Justice-Science and Homeland Security spending bills (the House bill included full-year budgets for the Departments of Defense and Veterans Affairs, and Military Construction programs). All other departments and agencies would be funded under a six-month Continuing Resolution (CR). While maintaining the House bill’s topline discretionary spending cap, the Senate bill reallocates less than one percent of the funding to boost spending primarily in the Agriculture and Transportation-Housing bills. To offset these increases, the Interior-Environment bill is reduced by $779 million. As introduced, the Senate bill does not incorporate widespread reprogramming language to provide agency flexibility in allocating sequestration reductions. Senate leaders plan to bring the bill to a vote early this week after either agreeing to the number of amendments or invoking cloture. House appropriators are involved in the amendment negotiations in an effort to prevent any additions to the Senate bill which would doom House approval. It remains Congress’ intent to finalize the FY 2013 appropriations process before its scheduled two-week recess begins on Friday. The current CR expires on March 27. House FY 2014 Budget Resolution. This week the House will consider its FY 2014 Budget Resolution, The Path to Prosperity: A Responsible, Balanced Budget. The measure was introduced by Budget Committee Chairman Paul Ryan (R-WI) and approved by the Committee on Wednesday, March 13. The plan balances the government’s budget within 10 years by cutting $4.6 trillion over this time period, repealing the 2010 health care law, and overhauling the tax code. The plan especially takes aim at entitlement programs and the federal workforce, which would see a 10 percent reduction by 2015. While the proposal protects defense programs from sequestration, it transfers those reductions to domestic programs. During the committee markup, a number of Democratic amendments to the plan were rejected, including one from Ranking Member Chris Van Hollen (D-MD) that would have replaced sequestration cuts with a mix of spending reductions and revenue increases. The House is expected to approve the Resolution along a party line vote. Senate FY 2014 Budget Resolution. The Senate will also take up its FY 2014 Budget Resolution this week, The Foundation for Growth: Restoring the Promise of American Opportunity. The measure was introduced by Budget Committee Chairwoman Patty Murray (D-WA) and approved by the Committee on Thursday, March 14 following a 12-hour markup of the bill in which Republican proposals to reinstate pay-as-you-go and require a balanced budget by 2023 were rejected. The plan reduces the deficit by $1.85 trillion over the next 10 years through a mix of spending cuts and new revenues. The plan includes $975 billion in revenue, primarily by ending tax breaks for corporations and higher income individuals and $975 billion in spending reductions achieved through cuts to health care, defense, discretionary spending and mandatory programs. It also replaces sequestration cuts and proposes $100 billion in stimulus spending for infrastructure and school repairs, new construction and worker training. The Senate is expected to pass the measure, making it the first Budget Resolution approved by the chamber in four years.Patton Boggs Capital Thinking Weekly Update | March 18, 2013 3 of 19
  5. 5.  President’s FY 2014 Budget Proposal. The President’s FY 2014 Budget Proposal remains scheduled for delivery to Congress on April 8.Contact InformationFor additional insights about likely policy developments, please feel free to contact the authors of thissection: Pam Welsh, at 202-457-6493 or, or Melanie Goggins at 202-457-5649 or BRANCH ACTIVITY Cybersecurity Legislation. Last week, several Congressional committees held hearings on cybersecurity-related matters that featured numerous Administration officials. The hearings covered a wide variety of cybersecurity topics such as Department of Homeland Security (DHS) cyber roles and responsibilities, investigation and prosecution of cyber threats, and oversight of the U.S. Cyber Command at the Department of Defense. All of the hearings highlighted the importance of passing cybersecurity legislation this Congress to supplement the President’s cybersecurity Executive Order (EO) released on February 12. House Homeland Security Committee Chairman Michael McCaul (R- TX) stated that cybersecurity legislation is his top priority and outlined several areas which he will likely include in a future cyber bill, including measures to codify the role of DHS in cybersecurity, liability protections for businesses that work closely with DHS, and additional privacy measures. Cybersecurity Research and Development (R&D) Legislation. Last Thursday, the House Science, Space and Technology Committee marked up and approved two cybersecurity R&D bills – H.R. 756, the Cybersecurity Enhancement Act of 2013, and H.R. 967, Advancing Americas Networking and Information Technology Research and Development Act of 2013. The Cybersecurity Enhancement Act previously passed the House with a vote of 395-10 in the last Congress and is expected to be taken up on the House floor in the coming months. Upcoming Hearings. Several cybersecurity-related hearings are scheduled for this week, including the following: o On Tuesday, March 19 at 2:30 p.m., the Senate Armed Services Subcommittee on Emerging Threats and Capabilities will receive a briefing on cybersecurity threats as it reviews the FY 2014 defense authorization request. The open portion of the briefing will feature Kevin Mandia, CEO of Mandiant Corporation. The closed section of the briefing will include testimony from Stephanie OSullivan, Principal Deputy Director of National Intelligence, and Deputy Commander of U.S. Cyber Command Lieutenant General Jon M. Davis. o On Wednesday, March 20, the House Homeland Security Subcommittee on Cybersecurity, Infrastructure Protection and Security Technologies will hold a hearing titled “Cyber Threats from China, Russia and Iran: Protecting American Critical Infrastructure." The hearing is currently scheduled for 2:00 p.m.Patton Boggs Capital Thinking Weekly Update | March 18, 2013 4 of 19
  6. 6. EXECUTIVE BRANCH ACTIVITY Senior Cyber Official at DHS Departs. DHS Deputy Undersecretary for Cybersecurity Mark Weatherford announced that he will be leaving the Department of Homeland Security to take on a new role in the private sector. Bruce McConnell, Senior Counselor for Cybersecurity at DHS, will serve as the acting Deputy Secretary for Cybersecurity after Weatherford’s departure on April 12. International Cybersecurity Efforts. General Keith Alexander, Commander of the U.S. Cyber Command, announced plans to establish 13 teams of computer programmers and experts that could carry out offensive cyber attacks on foreign nations if the U.S. were to experience a major cyber attack. This action follows a statement by National Security Adviser Tom Donilon who recently demanded that the Chinese government cease its cyber attacks against U.S. computer networks and agree to international cybersecurity standards and norms. President Obama has also been meeting with CEOs of major U.S. companies to discuss efforts to improve the cybersecurity efforts of private industries given rising concerns about cyber attacks originating in China.Contact InformationFor additional insights about likely policy developments, please feel free to contact the authors of thissection: Norma Krayem, 202-457-5206 or; or Amy Davenport, at 202-457-6528 or AND LEGISLATIVE BRANCH ACTIVITY Regulatory Update. The Department of Defense, together with the General Services Administration and NASA, proposed amendments to the Federal Acquisition Regulation’s (FAR) provisions governing small business size appeals. Among other items, the proposed amendments increase the amount of time the Small Business Administration (SBA) has to make an initial size determination. They also provide guidance to contracting officers in cases in which SBA does not meet the new 15- day timeframe. The proposal requires contracting officers to consider in each case suspending contract performance until an SBA Office of Hearings and Appeals judge makes a decision on the size appeal. The comment period for the proposed rule, FAR Case 2012-014, Small Business Protests and Appeals, ends May 6. Budget Resolution. For the first time since 2009, the Senate offered a budget resolution proposal last Wednesday. The Senate Budget Committee approved the proposal the next day. While the Senate proposal would avert sequester, it still maintains $240 billion in defense reductions over the next 10 years. The House Budget Committee also passed its budget resolution proposal, which was introduced last Tuesday by Committee Chair Paul Ryan (R-WI). Congress must agree to a budget resolution by April 15.Patton Boggs Capital Thinking Weekly Update | March 18, 2013 5 of 19
  7. 7.  Continuing Resolution. Last Thursday, House Intelligence Committee Chair Michael Rogers (R-MI) and Ranking Member C.A. Dutch Ruppersberger (D-MD) announced their support for Senate Intelligence Committee Chair Dianne Feinstein’s (D-CA) amendment to the Senate Fiscal Year (FY) 2013 Continuing Resolution that would give the Intelligence Community more flexibility on how it would make budget reductions required under the sequester. The Senator’s amendment does not reduce the amount of the required budget reduction but provides some latitude to the Central Intelligence Agency (CIA) and the Defense Department intelligence agencies in how they will make the sequester reductions. Last Thursday evening, however, the Senate was unable to reach an agreement on which amendments should be considered during the limited time to debate. Therefore, Senate Majority Leader Harry Reid (D-NV) said the Senate will continue action next week on the Continuing Resolution (H.R. 933). This Week’s Hearings: o Tuesday, March 19: The Senate Armed Services Committee will hold an oversight hearing on the U.S. European Command, U.S. Northern Command, and U.S. Southern Command in review of the Defense Authorization request for FY 2014 and beyond. o Tuesday, March 19: The House Armed Services Subcommittee on Tactical Air and Land Forces will hold a hearing titled “Equipping, Modernizing, and Sustaining the National Guard and Reserve Components as an Operational Force in a time of Budget Uncertainty.” o Wednesday, March 20: The House Armed Services Committee will hold a hearing titled “The Posture of the U.S. Northern Command and U.S. Southern Command.” o Thursday, March 21: The House Armed Services Subcommittee on Military Personnel will hold an update hearing on military suicide prevention.Contact InformationFor additional insights about likely policy developments, please feel free to contact the authors of thissection: Stacy Swanson, at 202-457-5627 or; Mary Beth Bosco, at 202-457-6420 or; and John Sharp, at 303-894-6183 ACTIVITY Workforce Investment Act (WIA). The House passed (215-202) the Supporting Knowledge and Investing in Lifelong Skills (SKILLS) Act (H.R. 803) last week. While passage occurred primarily on a partisan basis, 14 Republicans crossed party lines to vote against the bill, and 2 Democrats voted in favor of it. With Senate Democrats opposing the bill and the White House issuing a Statement of Administration Policy against the measure last week, it is unlikely to see action in the Senate. However, Republican leaders in the House are urging their Senate counterparts to put forward ideasPatton Boggs Capital Thinking Weekly Update | March 18, 2013 6 of 19
  8. 8. so that the process to reform the nation’s workforce development system can move forward through a compromise measure. Reauthorization of WIA is long overdue, with the last major authorization bill passed in 1998. Upcoming Hearings and Events. On Tuesday, March 19, the House Appropriations Subcommittee on Labor, Health and Human Services, and Education will hold a hearing on “Labor, HHS, Education Management Challenges.” On Thursday, March 21, the House Energy and Commerce Subcommittee on Commerce, Manufacturing and Trade will hold a hearing on “U.S. Manufacturing Issues.” Also, on Friday, March 22, Center Forward will hold a panel discussion on the “Skills Gap in the American Workforce” with Senator Joe Donnelly (D-IN), Fred Humphries of Microsoft, and Aric Newhouse of the National Association of Manufacturers.Contact InformationFor additional insights about likely policy developments, please feel free to contact the authors of thissection: Amy Budner Smith, at 202-457-6154 or; and Dana Weekes, at 202-457-6307 or ACTIVITY Congressional Hearings. On Tuesday, a House Energy and Commerce Subcommittee will hold a hearing on “The Role of Regulators and Grid Operators in Meeting Natural Gas and Electric Coordination Challenges;” the House Oversight and Government Reform Committee will hold a hearing on the Department of Energy’s LNG export strategy. On Thursday, a House Natural Resources Subcommittee will hold an oversight and legislative hearing on mineral resources, mining and manufacturing jobs.REGULATORY ACTIVITY Uranium. The Department of Energy has issued a Draft Uranium Leasing Program Programmatic Environmental Impact Statement, which will be open for public comment through May 16. Four public hearings will be held in Colorado next month: in Grand Junction on April 22; in Montrose on April 23; in Telluride on April 24; and in Naturita on April 25. Nuclear Waste. The Nuclear Waste Technical Review Board will meet in Richland, Washington on April 16 to discuss the Department of Energy’s (DOE) work on vitrifying high-level radioactive waste at the Hanford facility for ultimate storage in a deep geologic repository. The Board will also discuss the Obama Administration’s response to a Blue Ribbon Commission’s recommendations on DOE’s work regarding the potential direct disposal in a deep geologic repository of existing storage containers used at commercial nuclear utility sites.Patton Boggs Capital Thinking Weekly Update | March 18, 2013 7 of 19
  9. 9.  Offshore Wind – Virginia. The Bureau of Ocean Energy Management has determined that there is no competitive interest for an offshore wind research lease requested by Virginia’s Department of Mines, Minerals and Energy. The Bureau can now proceed with the research lease issuance process. International. The Industry Advisory Board to the International Energy Agency will next meet in Paris on March 25 – 27, to discuss electricity security, emergency response measures and oil market demands, among other topics.Contact InformationFor additional insights about likely policy developments, please feel free to contact the author of thissection: Tanya DeRivi, at 202-457-6504 or ACTIVITY Mineral Resources. On Thursday, March 21, the House Committee on Natural Resources, Subcommittee on Energy and Mineral Resources will hold an oversight hearing titled “America’s Mineral Resources: Creating Mining and Manufacturing Jobs and Securing America.” The Subcommittee will also hold a legislative hearing at that time on related bills, including H.R. 761, the National Strategic and Critical Minerals Production Act of 2013. Public Lands. On Monday, March 14, the Senate Committee on Energy and Natural Resources will hold a business meeting to consider 20 public lands bills that the Committee previously approved, or that passed the full Senate in the last Congress. The meeting will consider use and activities on federal lands including hydroelectric power, boundary modifications of national parks, permitting efficiency pilot projects and designations of wild and scenic rivers, among others issues. Fisheries Management. On Tuesday, March 19, the Senate Committee on Commerce, Science, and Transportation, Subcommittee on Oceans, Atmosphere, Fisheries, and Coast Guard will hold hearings to examine developments and opportunities in United States fisheries management.REGULATORY ACTIVITY Great Lakes Advisory Board. The U.S. Environmental Protection Agency (EPA) has announced the first ever Great Lakes Advisory Board. The advisory board, comprised of scientists, business leaders, public servants and representatives of non-profit organizations, will serve 16 federal agencies and will support the implementation of the Great Lakes Restoration Initiative (GRLI). The advisory board is tasked with providing advice and recommendations to the EPA Administrator, who serves as chair of the Federal Interagency Task Force. The Great Lakes provide more than 30 million Americans with drinking water. In February 2009, President Obama proposed the GRLI, the largest investment in the Great Lakes in two decades. GLRI funds are being used to accelerate cleanup work in the 29Patton Boggs Capital Thinking Weekly Update | March 18, 2013 8 of 19
  10. 10. remaining areas of concern identified by the U.S. and Canada under the Great Lakes Water Quality Agreement. The first two-year appointments to the advisory board are: o J. David Allen, Professor – University of Michigan o Patricia Birkholz, Founder – Great Lakes Legislative Caucus o Kathryn Buckner, President – Council of Great Lakes Industries o Naomi Davis, President – Blacks in Green o Molly Flanagan, Program Officer – The Joyce Foundation o Steve Galarneau, Director – Office of the Great Lakes, Wisconsin Department of Natural Resources o Jennifer Hill, Field Manager – National Wildlife Federation and Healing Our Waters - Great Lakes Coalition o Roger Germann, Executive Vice President – John G. Shedd Aquarium o Bill Hafs, Director of Environmental Programs – Green Bay Metropolitan Sewerage District o Michael Isham, Tribal Councilman – Lac Courte Oreilles Tribal Government and Chair of the Great Lakes Indian Fish and Wildlife Commission o Simone Lightfoot, Manager of Conservation & Sustainability – NAACP Detroit Branch o Joy Mulinex, Director – Public Policy and Great Lakes Land Conservancy Coalition Director – Western Reserve Land Conservancy o Jim Ridgway, Vice President – Environmental Consulting and Technology, Inc. o Joan Rose, Professor – Michigan State University o Richard Stewart, Co-Director – Great Lakes Maritime Research Institute o Matt Thompson, Environmental Resources Coordinator – Saint Regis Mohawk Tribe o David Ullrich, Executive Director – Great Lakes and St. Lawrence Cities Initiative o Jim Wagner, City Administrator – Trenton, Michigan. Wetlands and Downstream Waters. Nominations are due by March 29 for the EPA’s Science Advisory Board (SAB), which will review the agency’s draft science synthesis report on the connectivity of streams and wetlands to downstream waters. The SAB is a chartered Federal Advisory Committee that provides independent scientific and technical peer review and advice to the EPA Administrator on the technical basis for EPA actions. EPA’s Office of Research and Development (ORD) is developing a draft report synthesizing literature pertaining to biological, chemical and hydrologic connectivity of waters, and the effects that small streams, wetlands and open waters have on larger downstream waters such as rivers, lakes, estuaries and oceans. ORD has asked the SAB to conduct a peer review of the agency’s draft report. Energy Star Cities. EPA has released a list of U.S. metropolitan areas with the most Energy Star certified buildings in 2012. EPA’s Energy Star certified buildings program is intended to reduce greenhouse gas emissions and utility bills. Energy use in commercial buildings accounts for 17 percent of U.S. greenhouse gas emissions at a cost of more than $100 billion per year. For the fifth year in a row, Los Angeles continues to be in first place, with 528 buildings; Washington, D.C., withPatton Boggs Capital Thinking Weekly Update | March 18, 2013 9 of 19
  11. 11. 462 buildings, is in second place. In third place, with 353 buildings is Chicago, and New York secured fourth place. A complete list of the top 25 cities can be accessed at InformationFor additional insights about likely policy developments, please feel free to contact the author of thissection: Sarah Vilms, at 202-457-5248 or ServicesLEGISLATIVE ACTIVITY Senate Banking Committee to Vote on Nominations of Mary Jo White and Richard Cordray. On Tuesday, March 19, the Senate Committee on Banking, Housing and Urban Affairs will meet to vote on the nominations of: Mary Jo White to be a member of the Securities and Exchange Commission (SEC); and Richard Cordray, to be Director of the Consumer Financial Protection Bureau (CFPB). Of note, the Committee has already held a nomination hearing for Mary Jo White and Director Cordray on Tuesday, March 12. Senate Banking Committee to Discuss Solutions for Housing Finance Reform. On Tuesday, March 19, the Senate Banking Committee will hold a hearing on “Bipartisan Solutions for Housing Finance Reform.” The witnesses participating at the hearing will be: The Honorable Mel Martinez, Co- Chair of the Bipartisan Policy Center’s Housing Commission; The Honorable Peter Wallison, Arthur F. Burns Fellow in Financial Policy Studies at the American Enterprise Institute; and Ms. Janneke Ratcliffe, Senior Fellow at the Center for American Progress. Senate Banking Subcommittee to Examine Regulation, Consumer Protection, and Competition in Insurance Markets. On Tuesday, March 19, the Senate Banking Subcommittee on Securities, Insurance and Investment will hold a hearing titled “Streamlining Regulation, Improving Consumer Protection and Increasing Competition in Insurance Markets.” The witnesses attending the hearing will include The Honorable Monica J. Lindeen, Commissioner of Securities and Insurance of the Montana State Auditor (on behalf of the National Association of Insurance Commissioners); Mr. Jon A. Jensen, President of the Correll Insurance Group and Government Affairs Committee Chairman for the Independent Insurance Agents and Brokers of America (IIABA); and Mr. Scott Trofholz, President and CEO of the Harry A. Koch Company of Omaha in Nebraska (on behalf of the Council of Insurance Agents and Brokers). House Financial Services Committee to Discuss GSE Conservatorships. On Tuesday, March 19, the House Financial Services Committee will hold a hearing titled “Sustainable Housing Finance: An Update from the Federal Housing Finance Agency on the GSE Conservatorships.” The hearing is part of the House Financial Services Committee’s plans to address overall housing finance reform and its impact on the financial crisis. House Agriculture Committee to Markup Dodd-Frank Act Amendments. On Wednesday, March 20, the House Agriculture Committee will hold a markup of several bills intended to amend Title VII ofPatton Boggs Capital Thinking Weekly Update | March 18, 2013 10 of 19
  12. 12. the Dodd-Frank Act. These bills were discussed in last week’s hearing by the Committee on potential legislative improvements to Title IIV and include: the Business Risk Mitigation and Price Stabilization Act of 2013 (HR 643), the Inter-Affiliate Swap Clarification Act (HR 677), the Swap Data Repository and Clearinghouse Indemnification Correction Act of 2013 (HR 742), the Swaps Regulatory Improvement Act (HR 992), the Public Power Risk Management Act of 2013 (HR 1038), the Swap Jurisdiction Certainty Act (HR __), and HR 1003, a bill to improve consideration by the Commodity Futures Trading Commission (CFTC) of the costs and benefits of its regulations and orders. House Appropriations Subcommittee to Explore CFTC’s Budget. On Wednesday, March 20, the House Appropriations Subcommittee on Agriculture, Rural Development, Food and Drug Administration, and Related Agencies will hold a hearing on the proposed FY 2014 budget for the CFTC, which will include consideration of whether the agency’s budget should be increased given its regulatory workload as a result of the Dodd-Frank Act. The witnesses testifying at the hearing will be CFTC Chairman Gary Gensler and CFTC Commissioner Scott O’Malia. House Financial Services Subcommittee to Examine Impact of Regulations on Small Financial Institutions. On Wednesday, March 20, the House Financial Services Subcommittee on Financial Institutions and Consumer Credit will hold a hearing titled “State of Community Banking: Is the Current Regulatory Environment Adversely Affecting Community Financial Institutions?” The hearing will examine how federal regulations affect small financial institutions and the impact of such regulations on consumers.Contact InformationFor additional insights about likely policy developments, please feel free to contact the authors of thissection: Mara Giorgio, at 202-457-6522 or, and Caroline Cauley at 202-457-6625 or CareLEGISLATIVE ACTIVITY House Energy and Commerce Hearings. The House Committee on Energy and Commerce Subcommittee on Health has scheduled a hearing on Monday, March 18, on “Saving Seniors and Our Most Vulnerable Citizens from an Entitlement Crisis.” Witnesses include James Capretta with the Ethics and Public Policy Center, Joshua Archambault with the Pioneer Institute, and Dr. Paul Van De Water with the Center on Budget and Policy Priorities. The Subcommittee will also hold a hearing on Wednesday, March 20, on “Health Information Technologies: How Innovation Benefits Patients.” Senate Finance Hearing. The Senate Committee on Finance has scheduled a hearing on Wednesday, March 20, on “Reforming the Delivery System: The Center on Medicare and Medicaid Innovation.” Dr. Richard Gilfillan, Director for Medicare and Medicaid Innovation at CMS, will testify.Patton Boggs Capital Thinking Weekly Update | March 18, 2013 11 of 19
  13. 13.  Senate HELP Hearing. The Senate Committee on Health, Education, Labor and Pensions has scheduled an Executive Session on Wednesday, March 20, to consider S. __, Animal Drug and Animal Generic Drug User Fee Reauthorization Act of 2013 and S. 330, HIV Organ Policy Equity Act.REGULATORY ACTIVITY CMS LTC Requirements; Notice of Facility Closure Final Rule. This rule adopts, with technical changes, the interim rule that was published on February 18, 2011. That interim rule revised the requirements that a long-term care (LTC) facility must meet in order to qualify to participate as a skilled nursing facility (SNF) in the Medicare program or a nursing facility (NF) in the Medicaid program. The requirements implemented section 6113 of the Patient Protection and Affordable Care Act to ensure that, among other things, in the case of an LTC facility closure, individuals serving as administrators of a SNF or NF provide written notification of the impending closure and a plan for the relocation of residents at least 60 days prior to the impending closure or, if the Secretary terminates the facility’s participation in Medicare or Medicaid, not later than the date the Secretary determines appropriate. AHRQ Releases Toolkit to Reduce Hospital Readmissions. Every year millions of patients are readmitted to hospitals, and many of their stays could have been prevented. The Re-Engineered Discharge (RED) Toolkit, funded by the Agency for Healthcare Research and Quality, can help hospitals reduce readmission rates by replicating the discharge process that resulted in 30 percent fewer hospital readmissions and emergency room visits. Developed by the Boston University Medical Center, the newly expanded toolkit provides guidance to implement the RED for all patients, including those with limited English proficiency and from diverse cultural backgrounds. By helping hospitals plan and monitor the implementation of the RED process, the toolkit ensures a smooth and effective transition from hospital to home.OTHER HEALTH NEWS MedPAC March Report to Congress. The Medicare Payment Advisory Commission (MedPAC) formally submitted its annual March report (attached) to lawmakers this morning and urged them not to increase payment rates for a number of health care sectors. MedPAC recommends “no update” for five fee-for-service payment systems: long-term acute care hospitals, inpatient rehabilitation facilities, hospice programs, ambulatory surgery centers and dialysis facilities. The report calls for a 1 percent update — or increase — for the hospital inpatient and outpatient payment systems. In the case of skilled nursing facilities and home health agencies, the commission suggests various revisions including rebasing. The report urges lawmakers to overhaul the Sustainable Growth Rate (SGR). Commission leaders are scheduled to present the findings of the report at a hearing this morning by the House Ways and Means Health Subcommittee. GAO Report on Additional Data on TMAP. The Government Accountability Office (GAO) released a report on Additional Enrollment and Expenditure Data for the Transitional Medical Assistance Program. This report adds to GAO’s findings included in its December 2012 report to Congress that provided more information to inform deliberations on TMAP reauthorization. After GAO completed the analysis for the December 2012 report, four states that had responded to GAO’s survey providedPatton Boggs Capital Thinking Weekly Update | March 18, 2013 12 of 19
  14. 14. additional information. Specifically, two states (Virginia and Washington) provided TMA enrollment data, and four states (Arkansas, North Dakota, Virginia, and Washington) provided TMA expenditure data. Congress asked GAO to update the survey results to include these data. With these states included, TMA enrollment in 2011 totaled more than 3.7 million in the 43 states that provided enrollment data, and TMA expenditures in 2011 totaled about $4.1 billion in the 36 states that provided expenditure data, which is about $241 million higher than what we originally reported. MACPAC March Report to Congress. Today the Medicaid and CHIP Payment and Access Commission (MACPAC) released its March 2013 Report to the Congress on Medicaid and CHIP. This MACPAC report provides information on and analyses of four key issues as well as state- specific Medicaid and CHIP data and program information: Medicaid and CHIP interactions with exchange coverage related to eligibility; service use and spending patterns for persons dually eligible for Medicare and Medicaid; state Medicaid policies for payment of Medicare premiums and cost sharing; and Medicaid rate setting for integrated managed care plans serving dual eligibles.Contact InformationFor additional insights about likely policy developments, please feel free to contact the author of thissection: Eugenia Edwards, at 202-457-5622 or Security Impact of Sequestration. While the House passed a Continuing Resolution (H.R. 933) that only included new appropriations for the Department of Defense and Veterans Affairs, the Senate’s FY 13 Continuing Resolution (CR) includes a full year appropriations bill for the U.S. Department of Homeland Security (DHS). Overall discretionary spending for DHS for FY 2013 would remain steady at $39.609 billion. This amount includes an across the board reduction of 0.092 percent and prioritizes cybersecurity, border security, immigration reform and maritime and aviation security. The House and Senate plan to reconcile their bills and vote on a final plan by the end of this week, before the current Continuing Resolution expires on March 27, and lawmakers return to their districts for Easter Recess. TSA Small Knives Rule. Transportation Security Administrator John Pistole spent the week defending Transportation Security Administration’s (TSA) new rule – effective April 2013 – allowing airline passengers to carry on certain pocket knives and sporting equipment, arguing that those objects don’t present the kind of threat that TSA was created to address and are in line with International Civil Aviation Association standards. In a Thursday hearing, House Homeland Security Subcommittee on Transportation Security Chairman Richard Hudson (R-NC) supported the new policy, calling it a balance of security and efficiency, but a number of Democrats expressed concerns. This issue is brought into starker focus by concerns about furloughing TSA workers due to sequestration, but DHS Secretary Napolitano announced this week that such furloughs could be avoided.Patton Boggs Capital Thinking Weekly Update | March 18, 2013 13 of 19
  15. 15.  Immigration and Border Security. DHS Secretary Napolitano spent the week testifying on the Hill and talking through the Obama Administration’s perspective on comprehensive immigration reform. The Hill has made it clear to DHS that tighter border security is a prerequisite within whatever program they draft for comprehensive immigration reform. The Senate Appropriations Committee’s DHS funding bill counters DHS’s planned sequestration cuts by mandating Border Patrol staffing levels. The House postponed a related hearing on Customs and Border Protection’s budget and management until a future date. The bipartisan “Gang of 8” Senators working to draft a comprehensive immigration reform bill plan to include strong border patrol protections and expect to introduce their bill as soon as the second week of April. Upcoming Hearings. Several homeland security-related hearings are expected in the coming weeks, including the following: o Senate Committee on Homeland Security and Governmental Affairs: The full committee will hold a hearing titled “Hurricane Sandy: Getting the Recovery Right and the Value of Mitigation” on March 20 at 10:00 a.m. The full committee will hold another hearing titled “The Department of Homeland Security at 10 Years: A Progress Report on Management” on March 21 at 10:00 a.m. o House Committee on Homeland Security: The Subcommittee on Emergency Preparedness, Response, and Communications will hold a hearing titled “Homeland Security Grants: Measuring Our Investments” on March 19 at 10:00 a.m. The Subcommittee on Border and Maritime Security will hold a hearing titled “Measuring Outcomes to Understand the State of Border Security” on March 20 at 10:00 a.m. The Subcommittee on Oversight and Management Efficiency will hold a hearing titled “DHS Information Technology: How Effectively Has DHS Harnessed IT to Secure Our Borders and Uphold Immigration Laws?” on March 19 at 2:00 p.m.Contact InformationFor additional insights about likely policy developments, please feel free to contact the authors of thissection: Alexis Early, at 202-457-5105 or; and Norma Krayem, at 202-457-5206 or AND LEGISLATIVE BRANCH ACTIVITY White House Visit and Presidential Trip Abroad. Before departing for the Middle East, President Obama will welcome Prime Minister (Taoiseach) Enda Kenny of Ireland to the White House on Tuesday. The President will also greet Northern Ireland First Minister Peter Robinson and Deputy First Minister Martin McGuinness the same day. On Wednesday, President Obama will travel to Israel, the West Bank and Jordan. Secretary of State John Kerry will join the President on this trip.Patton Boggs Capital Thinking Weekly Update | March 18, 2013 14 of 19
  16. 16.  Syria. Last week marked the second anniversary of the uprising in Syria. Since March 15, 2011, it is estimated that over 70,000 people have been killed, and over one million people have fled the country. Last Friday in Brussels, France and the United Kingdom worked to persuade other European Union states to lift an arms embargo on Syria. The U.S. Administration maintains it will continue to provide non-lethal assistance to the Syrian Opposition Coalition (SOC). Vatican City. Last week, President Obama, Vice President Biden and Secretary Kerry congratulated His Holiness Pope Francis on his election as the Bishop of Rome and leader of the Catholic Church. President Obama particularly noted Pope Francis is “the first pope from the Americas” and his selection “speaks to the strength and vitality of the region.” Vice President Biden is scheduled to travel to Rome to attend Pope Francis’ Inaugural Mass. Asia-Pacific Region. In an address to the Asia Society in New York City last Monday, National Security Advisor (NSA) Tom Donilon spoke about the rebalance toward Asia, strengthening regional alliances, and North Korea’s provocations. NSA Donilon addressed North Korea’s recent “highly provocative statements,” and reaffirmed that “the United States is committed to the defense of our homeland and our allies.” He also announced the U.S. Treasury Department imposed sanctions that day against the Foreign Trade Bank of North Korea, the country’s primary foreign exchange bank. Last Friday, Secretary of Defense Chuck Hagel said the Pentagon would procure 14 new antimissile interceptors to be deployed in Alaska to combat the potential intercontinental ballistic missile (ICBM) threat from North Korea. Last week, the State Department announced Secretary Kerry will travel to London (April 10-11) to attend the G-8 meetings. The Secretary will then travel to the Republic of Korea, Japan, and China. During his trip to Seoul, Tokyo and Beijing, Secretary Kerry is expected to meet with his counterparts to discuss bilateral, multilateral and regional issues, as well as economic cooperation and the environment. The State Department also announced a second impending trip for June, where the Secretary will participate in the ASEAN Regional Forum chaired by Brunei, and will “visit other Southeast Asian partners.” Trade. The 16 round of the Trans-Pacific Partnership (TPP) negotiations concluded last th Wednesday. The Office of the U.S. Trade Representative noted the chapters on customs, telecommunications, regulatory coherence and development are nearly finished, except for key political decisions that will be made later. In mid-April, the TPP trade ministers are scheduled to meet on the margins of an Asia-Pacific Economic Cooperation (APEC) meeting. The TPP negotiators will th next meet in Peru in May for the 17 formal round of negotiations. Under the current schedule, there will then be one more round in September before the APEC Summit in October. However, there is speculation an additional round of talks may be inserted, possibly in July, to facilitate more progress before the October Summit. After Japan formally expressed interest in joining the TPP last Friday, House Ways and Means Chair Dave Camp (R-MI) cautiously welcomed the development, saying: “I remain concerned that Japan has not yet provided adequate assurances that it is fully committed to resolving the outstanding barriers to trade between the United States and Japan, especially as it relates to our auto exports and insurance, which is essential to receiving my support for Japan to join the negotiations. Once we getPatton Boggs Capital Thinking Weekly Update | March 18, 2013 15 of 19
  17. 17. this commitment from Japan, I look forward to continuing consultations with the Administration with respect to Japan’s participation in the negotiation of a comprehensive and ambitious agreement that addresses tariff and non-tariff barriers in all areas, including agriculture.” Continuing Resolution. Last week, the State Department welcomed the respective House and Senate efforts to include language in the Fiscal Year (FY) 2013 Continuing Resolution to ensure adequate funding and flexibility for Diplomatic Security. The funds were requested by the Department to support implementation of the recommendations made by the Benghazi Accountability Review Board. Both bills provide $1.4 billion for increased security proposal requirements, with $1.3 billion designated for construction and upgrades to U.S. Embassy facilities and $158 million for personnel and equipment upgrades to Diplomatic Security. The Senate bill also grants the State Department the authority to transfer Overseas Contingency Operation funds to Diplomatic Security. Last Thursday evening, the Senate was unable to reach an agreement on which amendments should be considered during the limited time to debate. Therefore, Senate Majority Leader Harry Reid (D-NV) said the Senate will continue action next week on the Continuing Resolution (H.R. 933). Senators Johnny Isakson (R-GA) and Jeanne Shaheen (D-NH) introduced a bill (S. 554) last week that would move Congress to a biennial budgeting and appropriations cycle. In February, Congressman Joe Wilson (R-NC) introduced a similar bill (H.R. 738) in the House with five Republican co-sponsors. Last Thursday, Senate Majority Leader Reid said he is open to exploring a two-year budget cycle, possibly as an amendment to the Continuing Resolution. Venezuela. The presidential election in Venezuela is slated to be held April 14. While campaigning is not supposed to begin until 12 days before the election, many expect this rule will be ignored. Interim President Nicolas Maduro is the frontrunner and widely anticipated to be elected as the next President of Venezuela. The leading opposition candidate, Henrique Capriles Radonski, previously challenged former President Hugo Chávez in the October 2012 presidential election and lost by 11 percentage points. Cabinet Turnover and Nominations. Effective last Thursday, U.S. Trade Representative Ron Kirk resigned. The next day, Deputy U.S. Trade Representative Demetrios Marantis assumed the post of Acting U.S. Trade Representative. Last week, President Obama announced the following nominations: Deborah Jones to be U.S. Ambassador to Libya and James Knight to be Ambassador to Chad. This Week’s Hearings: o Tuesday, March 19: The Senate Foreign Relations Subcommittee on Near Eastern Affairs will hold a hearing on Syria’s Humanitarian Crisis. Assistant Secretary of State for Population, Refugees, and Migration Anne Richard, and Assistant Administrator of USAID for Democracy, Conflict and Humanitarian Assistance Nancy Lindborg are scheduled to testify. o Tuesday, March 19: The House Foreign Affairs Subcommittee on the Middle East and North Africa will hold the first joint hearing to examine The Way Forward in Afghanistan and Pakistan after the Withdrawal. The Administration is not scheduled to testify.Patton Boggs Capital Thinking Weekly Update | March 18, 2013 16 of 19
  18. 18. o Wednesday, March 20: The Senate Foreign Relations Committee will hold a hearing on Counterterrorism Policies and Priorities and Addressing the Evolving Threat. The Administration is not scheduled to testify. o Wednesday, March 20: The House Foreign Affairs Committee will hold a hearing on The U.S. Response to the Crisis in Syria. U.S. Ambassador to Syria Robert Ford, Assistant Secretary of State for Population, Refugees, and Migration Anne Richard, and Assistant Administrator of USAID for Democracy, Conflict and Humanitarian Assistance Nancy Lindborg are scheduled to testify. o Wednesday, March 20: The House Appropriations Subcommittee on State, Foreign Operations, and Related Programs will hold a Public and Outside Witness Hearing. The Administration is not scheduled to testify. o Thursday, March 21: The Senate Foreign Relations Subcommittee on East Asia and Pacific Affairs will hold a hearing on the What the Rebalance to Asia Means for Democracy, Good Governance and Human Rights. Scheduled to testify from the State Department are Deputy Assistant Secretary for Democracy, Human Rights and Labor Daniel Baer and Acting Assistant Secretary for East Asian and Pacific Affairs Joseph Yun.Contact InformationFor additional insights about likely policy developments, please feel free to contact the author of thissection: Stacy Swanson, at 202-457-5627 or and Infrastructure FY 2013 Funding. Votes in the Senate are expected next week on a Continuing Resolution (CR) for the remainder of FY 2013 that makes significant changes to transportation programs from the version the House of Representatives passed on March 6. Unlike the House bill, the Senate bill funds the surface transportation program at the levels authorized in MAP-21, increasing the obligation limitation by $555 million for highways and $117 million for transit to conform to the level of contract authority provided in MAP-21. The Senate CR also contains a number of “anomalies” or fixes to carry-over language from FY 2012 that were not addressed in the House bill, including removing problematic language from the New Starts/Small Starts appropriation and providing the Federal Transit Administration (FTA) with a clean $1.85 billion to allocate among projects. Nonetheless, this post- sequester funding level is substantially below the project funding recommendations included in the President’s FY 2013 budget – and the $1.93 billion in existing Full Funding Grant Agreement (FFGA) commitments to New Starts projects. Additional anomalies in the Senate bill not included in the House legislation include aligning National Highway Transportation Safety Administration (NHTSA) safety grants with the funding and program structure established in MAP-21; providing funding for the new FTA Transit Safety office established in MAP-21; and making technical changes to the appropriations language for the FTA Research program to align it with changes in MAP-21. As debate continues in the Senate, the primary transportation related issue is expected to be an amendment byPatton Boggs Capital Thinking Weekly Update | March 18, 2013 17 of 19
  19. 19. Senator Jerry Moran (R-KS) to restore funding for FAA’s Contract Tower program (by shifting funding from other accounts) to keep air traffic control towers open at small and rural airports that would otherwise face closures because of the sequester. TIGER Funding. Both the House and Senate CRs continue funding for the TIGER discretionary grant program for FY 2013. The TIGER program received $500 million in FY 2012 and would be funded at $475 million in FY 2013 post-sequestration. Once full year appropriations are finalized, USDOT can be expected to move forward quickly in issuing a Notice of Funding Availability (NOFA). House and Senate Budgets. The House and Senate released dueling budget blueprints this week, offering not only dramatically different fiscal approaches for the country, but for transportation finance as well. The House Budget architected by House Budget Committee Chairman Paul Ryan (R-WI), which will see floor action next week, again limits Highway Trust Fund expenditures to revenues coming into the Highway Trust Fund, and does not establish a “reserve fund” that would allow other committees of jurisdiction to raise revenue and permit that to offset increased transportation spending (as occurred with MAP-21). The result would be a substantial contraction in Highway Trust Fund budget authority in FY 2015 after the expiration of MAP-21. The Senate Budget architected by Senate Budget Committee Chairwoman Patty Murray (D-WA), which will also see floor action next week, holds mandatory transportation funding (i.e. Trust Fund spending) slightly below current levels over the next 10 years, though it (1) establishes a “deficit neutral reserve fund for investments in America’s infrastructure” to allow for increased revenue to offset increased spending; and (2) following the President’s State of the Union proposal, calls for $50 billion in immediate transportation investment in FY 2013 and $10 billion to fund a National Infrastructure Bank. The Senate Budget also allows for the expansion of tax-credit bond programs along the lines of Transportation and Regional Infrastructure Bonds (TRIPS) and similar to tax-credit Build America Bonds, while highlighting the Congressional Budget Office’s finding that tax-credit bonds offer a more efficient subsidy than traditional tax exemptions. Overall, the Senate budget calls for $100 billion in new infrastructure spending (including broadband, energy and water infrastructure), to be offset by “closing tax loopholes.” Most importantly, both budgets are primarily statements of policy and political priorities, and should not be taken as legislative blueprints with any meaningful chance of enactment in their current forms. That being said, neither budget portends good news for discretionary transportation spending (i.e. transportation spending from the General Fund), with even the Senate budget holding 10-year discretionary spending essentially at current levels. This means in particular that substantial revenue or spending offsets would have to be found for the High Speed Rail Program to be funded again in the future (it was not funded in FY 2012), and will also continue to apply pressure to the New Starts program. FY2014 T/HUD Appropriations Hearings. The House Appropriations Subcommittee on Transportation, Housing and Urban Development, and Related Agencies (T/HUD) is scheduled to hold a series of hearings on proposed FY2014 appropriations for agencies, programs, and activities under its jurisdiction. FTA Administrator Peter Rogoff is scheduled to testify before the Subcommittee st on March 21 – before the Administration releases its budget proposal for the next fiscal year. A th hearing with FAA Administrator Michael Huerta was originally scheduled for March 20 but is now postponed.Patton Boggs Capital Thinking Weekly Update | March 18, 2013 18 of 19
  20. 20.  MAP-21 Implementation Hearing. On Thursday, March 14, the House Transportation and Infrastructure Subcommittee on Highways and Transit held a hearing titled “MAP-21: Progress Report from U.S. DOT Modal Administrators.” Four Department of Transportation (DOT) modal administrators testified: Victor Mendez, Administrator of the Federal Highway Administration; Peter Rogoff, Administrator of the Federal Transit Administration; Anne Ferro, Administrator of the Federal Motor Carrier Safety Administration; and David Strickland, Administrator of the National Highway Traffic Safety Administration. Administrators Rogoff and Mendez largely focused their testimony on the funding challenges that DOT is facing due to sequestration, the CR and highway trust fund insolvency. Subcommittee Members requested information on the implications of the agencies’ funding challenges, to which Rogoff and Mendez highlighted the potential for unfunded projects (including New Starts projects) and slow or delayed payments to funding recipients. As a result of the hearing, Administrator Rogoff will be providing Congress with a list of projects that would lose funding because of the sequester and the House-passed CR. WRDA Reauthorization. On Wednesday, March 20, the Senate Environment and Public Works Committee (EPW) will hold a hearing on new draft Water Resources and Development Act (WRDA) legislation developed by EPW Chairman Barbara Boxer (D-CA) and Ranking Member David Vitter (R- LA). The bi-partisan product is widely seen as signaling the strong momentum behind WRDA legislation. The draft is expected to make substantial reforms to the Army Corps of Engineers process and to address the utilization of funds from the Harbor Maintenance Trust Fund (HMTF), which historically has seen Congress release only a fraction of its collections to be expended on harbor maintenance. House Transportation and Infrastructure Committee Chairman Bill Shuster (R-PA) also continues to view WRDA as a top priority for the Transportation and Infrastructure Committee. The Chairman has said that he and his staff are meeting with stakeholders and working towards draft legislation, but will not be releasing anything or moving forward before the EPW.Contact InformationFor additional insights about likely policy developments, please feel free to contact the authors of thissection: Jessica Monahan at 202-457-6302 or and Jared Fleisher at 202-457-6341 or Boggs Capital Thinking Weekly Update | March 18, 2013 19 of 19