Publication

    Capital Thinking Update - May 2, 2011

    May 2011

    General Legislative

    The Senate and the House will return from a two-week recess on May 2 and May 3, respectively. 

    Budget, Appropriations

    LEGISLATIVE ACTIVITY

    • FY2012 Budget Proposals. On April 15, the House adopted Budget Committee Chairman Paul Ryan’s (R-WI) FY 2012 Budget Resolution (H Con Res 34). Senate Majority Leader Harry Reid (D-NV) has indicated his intent to hold a vote on the measure in the Senate during the upcoming four-week work period. Meanwhile, Minority Leader Mitch McConnell (R-KY) is pushing for a full Senate vote on President Obama’s FY 2012 budget proposal. Both votes would serve only as a litmus test to gauge party support as neither proposal has sufficient support to pass in the Senate. Additionally, Senate Budget Chairman Kent Conrad (D-ND) is working on a Democratic budget resolution which may include input from the “Gang of Six” proposal, which will be based on last year’s deficit commission recommendations.
    • FY2012 House Appropriations Subcommittee Markups. House passage of a FY2012 Budget Resolution (H Con Res 34) enables the House Appropriations Committee to begin work on the FY2012 spending bills. Subcommittee markups are expected to begin in mid-May.

    OTHER BUDGET, APPROPRIATIONS NEWS

    • Bi-Partisan Deficit Panel. As part of his plan to reduce the deficit, President Obama also called on Congress to appoint Members to serve on a bi-partisan panel led by Vice President Joe Biden with the goal of reaching a final agreement on a plan to reduce the deficit by the end of June. Congressional leaders named the following appointees: Senate Appropriations Chairman Daniel Inouye (D-HI); Senate Finance Chairman Max Baucus (D-MT); Senate Minority Whip Jon Kyl (R-AZ); House Majority Leader Eric Cantor (R-VA); House Budget Committee Ranking Member Chris Van Hollen (D-MD); and House Assistant Minority Leader James Clyburn (D-SC). The first meeting of the panel is currently scheduled for May 5.

     

    Education

    LEGISLATIVE ACTIVITY

    • STEM Master Teacher Corps Act. Following the April recess, Senator Al Franken (D-MN) plans to introduce the STEM Master Teacher Corps Act (Act). The Act looks to increase professional development opportunities for science, technology, education and mathematics (STEM) teachers, as well as provide salary increases for highly competitive teachers. States or school districts, in partnerships with universities or nonprofits, will be eligible to apply for competitive grants to plan and implement a Master Teacher Corps Program. Corps members will look to inform the development of STEM education policy, receive specialized training on leadership, mentorship and content and pedagogical skills relevant to STEM. The bill would also require 75 percent of Corps members to teach at high-need schools and ensure a fair distribution of Corps members to rural areas.

    REGULATORY ACTIVITY

    • Promise Neighborhoods. The Department of Education (Department) will share details on the application process for a new set of planning grants and implementation grants ($30 million in total) in upcoming weeks. The application process will remain open for 60 days following the official grant announcement. Grantees will be selected no later than December 31. Last year, the Department awarded $10 million to 21 applicants (both nonprofit organizations and institutions of higher education) for their efforts to support one-year planning of cradle-to-career services designed to improve educational outcomes for students within distressed neighborhoods. The Department received 339 applications from more than 300 communities across 48 states and the District of Columbia.
       Energy

    LEGISLATIVE ACTIVITY

    • Oil Production. In the next two weeks, the House is expected to pass three bills authored by Natural Resources Committee Chairman Doc Hastings (R-WA) and favorably reported from that Committee on April 13 to expand domestic oil and gas production. These include the Putting the Gulf Back to Work Act (H.R. 1229), the Restarting American Offshore Leasing Now Act (H.R. 1230) and the Reversing President Obama’s Offshore Moratorium Act (H.R. 1231).
    • Oil Industry Tax Credits. House Speaker John Boehner recently indicated during an interview that energy tax provisions are “certainly something we ought to be taking a look at” in the context of deficit reduction efforts. Boehner’s staff indicated that his statement was not meant to signal a change in policy and that, “What the President has suggested would simply raise taxes and increase the price at the pump.” Pointing to Speaker Boehner’s statement, Senate Majority Leader Harry Reid and Finance Committee Chairman Max Baucus have indicated that they intend to bring legislation to the floor that would eliminate tax breaks for the five largest integrated oil companies. Notwithstanding the narrow focus of the legislation, we do not expect the legislation to secure the necessary 60 votes in the Senate. Speaker Boehner has indicated that he does not intend to bring any energy tax legislation to the floor for a vote. Thus, at least in the near term, we do not expect the President’s energy tax agenda to move forward.
    • Congressional Hearings. On Wednesday, May 4, a House Energy and Commerce Subcommittee will meet  to hear testimony on the role of the Nuclear Regulatory Commission, and a House Natural Resources Subcommittee will hear from stakeholders during an oversight hearing on federal hydropower investments in the Western U.S. The Senate Energy and Natural Resources Committee will hold full committee hearings regarding the proposed Clean Energy Deployment Administration from the last Congress and the staff cybersecurity discussion draft legislation on Tuesday and Thursday, respectively.

    REGULATORY ACTIVITY

    • Renewable Development on Public Lands. The Bureau of Land Management (BLM) is seeking public comment on two rules – one temporary interim final rule effective immediately and another proposed rule – to expedite solar and wind projects on public lands through June 26, 2011. The rules would grant BLM the authority needed to segregate and temporarily remove lands in renewable energy right-of-way applications and certain lands offered for wind or solar energy leases to ensure no new resource conflicts will arise from land appropriations such as mining claims. The proposed rule is expected to be completed within two years.
    • Oil Shale. BLM will conclude the final three (out of seven) public scoping meetings to review the 2008 commercial oil shale and tar sand plans this week, in Colorado and Wyoming. The plan would open approximately 2 million acres of public lands in three Western States for oil shale research and development. Public comment is now being solicited on BLM’s planned Programmatic Environmental Impact Statement.

     

    Environment

    LEGISLATIVE ACTIVITY

    • Hydropower. On May 4, the House Committee on Natural Resources, Subcommittee on Water and Power will hold a hearing titled, "Protecting Federal Hydropower Investments in the West: A Stakeholder’s Perspective." The hearing comes on the heels of the Subcommittee’s last hearing in March that examined federal regulations that may impede water and hydroelectric resources and water diversions vital to agriculture production.
    • National Parks. Also on May 4, the House Committee on Natural Resources, Subcommittee on National Parks, Forests and Public Lands will hold a hearing covering 11 bills. Some of the items to be considered will include: conveyance of National Forest System lands in the Los Padres National Forest, CA and Camp Williams, UT; permits for a microhydro project in Denali National Park; exchange of land in the Arapaho-Roosevelt National Forests; amending the National Forest Ski Area Permit Act of 1986 to clarify the authority of the Secretary of Agriculture regarding additional recreational uses; and a project in the Lower St. Croix Wild and Scenic River.

    REGULATORY ACTIVITY

    • Hazardous Air Pollutant Emissions. The Environmental Protection Agency (EPA) has issued a final rule regarding four national emission standards for hazardous air pollutants (NESHAP) that regulate 12 industrial source categories. The action addresses national emissions standards for: pharmaceuticals production; the printing and publishing industry; Group I polymers and resins; and marine tank vessel loading operations. For each, EPA is finalizing revisions to the regulatory provisions related to emissions during periods of startup, shutdown and malfunction and promulgating provisions addressing electronic submission of emission test results.
    • National Ambient Air Quality Standards. EPA’s Office of Air Quality Planning and Standards has announced the availability of a final document titled, “Policy Assessment for the Review of the Particulate Matter National Ambient Air Quality Standards.” The document contains staff analyses of the scientific bases for alternative policy options for consideration by the Agency prior to rulemaking. Currently, EPA is reviewing NAAQS for particulate matter, determining whether it is appropriate to retain or revise the standards.
    • Stormwater Pollution from Construction Sites. EPA is requesting public comment on a draft permit to improve the nation’s waterways by regulating the discharge of stormwater from construction sites. Stormwater discharges during construction activities can contain sediment and pollutants that harm aquatic ecosystems, increase drinking water treatment costs and pollute waters that people use for fishing, swimming and other recreational activities. Some of the proposed permit modifications include new requirements for: sediment and erosion controls, natural buffers or alternative controls, pollution prevention and stormwater prevention plans, among others. The permit will be effective in areas where EPA is the permitting authority, including Idaho, Massachusetts, New Hampshire, New Mexico, Washington, D.C., most territories and most Indian country lands. Comments are due June 24, 2011.
    • EPA’s Faith-Based and Neighborhood Partnerships. EPA Administrator Lisa Jackson recently announced the formation of the Agency’s Faith-based and Neighborhood Partnerships initiative. EPA is seeking to build relationships with faith and neighborhood organizations that will promote environmental stewardship and lead to cleaner communities, encourage healthier families and build a stronger America. These relationships are also intended to help EPA assist communities during times of environmental crisis. The initiative will make available a website offering environmental education tool kits and resources and will work closely with the White House Office of Faith-based and Neighborhood Partnerships.
    • Administration’s Clean Water Framework. The Administration has released a Clean Water Framework that will be open for public comment. The non-binding framework specifically omits reference included in the prior draft iteration to significantly expand federal Clean Water Act jurisdiction. The omission reflects some softening by the Administration in light of concerns expressed recently by 170 bipartisan House Members in a letter to EPA and the Army Corp last month. EPA Administrator Jackson said that the current guidance is flawed and under-protects the nation's waters. In her view, the new rule will better clarify which waters do not fall under federal jurisdiction. A rulemaking will commence after the 60-day comment period closes, though no timeline has been provided on when a draft rule will be proposed.

     

    Financial Services

    LEGISLATIVE ACTIVITY

    • House Financial Services Subcommittees to Consider Dodd-Frank Related Legislation. On Tuesday, May 3, the House Financial Services Capital Markets and Government Sponsored Enterprises Subcommittee will formally markup several legislative proposals related to job creation and capital formation. The bills include  the Small Company Capital Formation Act of 2011 (H.R. 1070), the Burdensome Data Collection Relief Act (H.R. 1062), an amendment to the Securities Act of 1933 to allow church plans to invest in collective trusts (H.R. 33), the United States Covered Bonds Act of 2011 (H.R. 940), the Small Business Capital Access and Job Preservation Act (H.R. 1082), the Asset-Backed Market Stabilization Act of 2011 (H.R. 1539) and the Business Risk Mitigation and Price Stabilization Act of 2011 (H.R. 1610).  On Wednesday, May 4, the House Financial Services Financial Institutions & Consumer Credit Subcommittee will markup several legislative proposals, including the Responsible Consumer Financial Protection Regulations Act of 2011 (H.R. 1121), the Consumer Financial Protection Safety and Soundness Improvement Act of 2011 (H.R. 1315) and a proposal to postpone the date for the transfer of functions to the Bureau of Consumer Financial Protection if the Bureau does not yet have a director in place.
    • House Agriculture Committee to Address Dodd-Frank Delay Proposal. On Wednesday, May 4, the House Agriculture Committee will consider legislation to extend the implementation deadline for the derivatives provisions in Title VII of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) by 18 months (H.R. 1573). The legislation has been criticized by Democrats in both chambers of Congress and by the Obama Administration.
    • Senate Appropriations Committee to Hear from SEC, CFTC. Also on Wednesday, May 4, the Senate Appropriations Subcommittee on Financial Services will hold a hearing on the FY2012 budget request for the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC). Chairmen Mary Schapiro and Gary Gensler will appear before the Subcommittee.
    • House Oversight Committee to Analyze Risk Retention Proposals. On Wednesday, May 11, the House Oversight Subcommittee on TARP, Financial Services and Bailouts of Public and Private Programs will hold a hearing titled, “Transparency as an Alternative to Risk Retention.” The hearing will discuss the recent multiagency proposed rule implementing the credit risk retention requirements of section 941 of the Dodd-Frank Act.

    REGULATORY ACTIVITY

    • CFTC, SEC Staff to Hold Dodd-Frank Roundtable. The staffs of the CFTC and the SEC will hold a two-day joint public roundtable on May 2-3, to discuss the schedule for implementing final rules for swaps and security-based swaps under the Dodd-Frank Act. Items to be considered during the two-day event include 1) compliance dates for new rules for trading platforms, clearinghouses and data repositories; 2) compliance dates for new requirements for dealers and major participants in swaps; 3) implementation of clearing mandates; 4) compliance dates for financial entities such as hedge funds, asset managers, insurance companies and pension funds subject to a clearing mandate and other requirements; and 5) considerations with regard to non-financial end users.

     

    Health Care

    LEGISLATIVE ACTIVITY

    • House Congressional Hearings. On Thursday, May 5, the House Committee on Energy and Commerce has scheduled a hearing to discuss “The Need to Move Beyond the SGR” (the Sustainable Growth Rate); the House Committee on Education and the Workforce has also scheduled a hearing that same day on “Policies and Priorities of the U.S. Department of Health and Human Services.”
    • Senate HELP Hearing. The Senate Committee on Health, Education, Labor and Pensions has scheduled a hearing on Thursday, May 5 titled, “First, Do No Harm: Improving Health Quality and Patient Safety.”
    • Ways and Means Letter to IRS. Ways and Means Committee Chairman Dave Camp (R-MI) and Oversight Subcommittee Chairman Charles Boustany (R-LA) sent a letter to Internal Revenue Service (IRS) Commissioner Douglas Shulman on April 28 requesting information about how the IRS is spending monies received from the $1 billion Health Insurance Reform Implementation Fund (HIRIF) as established by the Affordable Care Act. Specifically, the letter seeks information regarding expenditure plans; funds requested and received in both FY 2010 and 2011, as well as any anticipated requests in the future; the number of employees; and all correspondence between the IRS and White House Office of Management and Budget regarding the Government Accountability Office’s request for similar information. The Committee has asked the IRS to provide the information by May 12, 2011.

    REGULATORY ACTIVITY

    • Medicare IPPS Rule. Last week, the Centers for Medicare and Medicaid Services (CMS) released regulations for FY 2012 payment regulations for hospitals and rehabilitation facilities. The hospital payment rule reduces payments by 0.5 percent beginning October 1, 2012. Official publication of the proposed hospital rule is expected to be published on May 5, 2011.
    • IRS Notice for Tax-Exempt Qualified Nonprofit Health Insurance Issuers. The Affordable Care Act requires the Department of Health and Human Services to establish the Consumer Operated and Oriented Plan program (CO-OP program). It also provides for tax exemption under section 501(c)(29) for recipients of CO-OP grants and loans that meet additional requirements. The IRS issued Notice 2011-23 that outlines the requirements for tax exemption under section 501(c)(29) and solicits written comments regarding these requirements as well as the application process. Comments must be submitted by May 27, 2011.

    OTHER HEALTH NEWS

    • ACA Lawsuits. On Monday, April 25, the U.S. Supreme Court turned down a request by Virginia Attorney General Kenneth Cuccinelli asking that the high court immediately take up a challenge to the health care law and bypass the appeals courts.
    • AMA on the SGR. In anticipation to the upcoming Energy and Commerce hearing on physician payments in Medicare, the AMA has submitted comments to the Committee addressing the reform of the Sustainable Growth Rate formula used to determine physician payments under the Medicare program. The AMA calls for immediate repeal of the Medicare SGR, implementation of a five-year period of stable payments and immediate testing of new payment models that will lay the pathway for permanent physician payment reforms by September 30, 2015. The Committee asked the stakeholder community to submit legislative proposals to overhaul the SGR by the end of April, but the AMA is requesting a longer timeframe to test various models before implementing a new system.

     

    International

    • Trade Developments. The White House and Congress are moving in fits and starts toward a multi-pronged “grand bargain” on trade issues. The most concrete indication of this approach came during remarks President Obama made in a joint press statement Thursday with President Ricardo Martinelli of Panama. After the two leaders discussed the pending U.S.-Panama Free Trade Agreement (FTA) President Obama said, ”So my expectation is, is that as part of a broader trade package that we’re going to be presenting to Congress, that we’re going to be able to get this [the Panama FTA] done.”  Earlier on Thursday, in a speech to the Washington International Trade Association, U.S. Trade Representative Ron Kirk made clear that the Obama Administration envisions including in that package not only the Panama, South Korea and Colombia FTAs but also renewal of Trade Adjustment Assistance (TAA) and trade preference programs (namely, the Andean Trade Preference Act and the Generalized System of Preferences). However, the White House does not yet envision the “package” consisting of one large vote, in part due to continued resistance to TAA among many Republicans and to the Colombia FTA among many Democrats. The Administration will not rush the official submission to Congress of the Colombia agreement, believing that further implementation by Bogota of the action plan on labor issues will help to calm some Congressional critics, with House Ways and Means Committee Ranking Member Sander Levin (D-MI) at the top of the White House’s target list. Congressman Levin feels the Korea FTA is being held hostage and still wants the agreement submitted immediately.

      As for TAA, Ambassador Kirk has called for robust assistance levels along the lines of the 2009 stimulus bill, but the Republican Leadership views that approach as a non-starter. Instead, Ways and Means Chairman Dave Camp (R-MI) will likely help engineer a compromise on more modest TAA funding. Meanwhile, Senate Finance Committee Chairman Max Baucus (D-MT) still could alter the entire trade equation in two primary ways. First, Senator Baucus has signaled he may choose to schedule Finance Committee action on TAA and the trade preference programs prior to consideration of the three FTAs. Second, Chairman Baucus still has yet to indicate what kind of progress toward full U.S. access to the Korean beef market he would view as sufficient to offer his blessing for the Korea FTA.

     

    Tax

    LEGISLATIVE ACTIVITY

    • Baucus Developing Legislation to Roll Back Oil and Gas Tax Subsidies. On April 28, Finance Committee Chair Max Baucus (D-MT) announced his plans to develop legislation to cut subsidies for oil and gas companies in exchange for tax breaks for clean energy. Baucus said his legislation would focus on incentives for clean fuels, fuel-efficient vehicles and clean energy infrastructure, and would seek to repeal tax breaks for the oil and gas industry. Baucus would specifically target the section 199 manufacturing deduction for fossil fuel producers and the foreign tax credit available for royalty payments to foreign governments. He also plans to propose an excise tax on drilling leases for operations in the Gulf of Mexico. President Obama’s 2012 budget proposed elimination of the section 199 manufacturing deduction, as well as the percentage depletion for oil and gas wells and the expensing of intangible drilling costs. Baucus’ statements came on the same day that ExxonMobil reported its first-quarter operating profit for 2011 was $10.7 billion, a 69 percent increase from a year ago. House Speaker John Boehner recently indicated that energy tax provisions are “certainly something we ought to be taking a look at” in the context of deficit reduction efforts. Boehner’s staff indicated that his statement was not meant to signal a change in policy and that “what the President has suggested would simply raise taxes and increase the price at the pump.” Notwithstanding the narrow focus of the legislation, we do not expect the legislation to secure the necessary 60 votes in the Senate. Speaker Boehner has indicated that he does not intend to bring any energy tax legislation to the floor for a vote. Thus, at least in the near term, we do not expect the President’s energy tax agenda to move forward.

    OTHER TAX NEWS

    • Hearings on Tax Exempt Organizations. On April 28, an aide to the Senate Finance Committee said the Committee plans to hold hearings on exempt organizations and charitable issues. The aide said the hearings may focus on President Obama’s 2012 budget, which proposes replacement of the current two-tiered system for excise taxes on investment income earned by private foundations with a single flat rate excise tax. The 2012 budget also proposes limiting the deductibility of charitable giving for high income taxpayers. According to the aid, other issues that also may be discussed include new types of exempt organizations (such as low-profit limited liability companies); distinctions between private foundations and charities; the effectiveness of the tax exempt organization regime; and further extension of tax provisions set to expire at the end of 2011, such as the provision allowing taxpayers to make tax free charitable distributions from their IRA’s. According to a Member of the Joint Committee on Taxation, another issue for discussion is whether, once the economy has slowed, it will be appropriate to limit or expand the definition of “charity.” The Senate Finance aide said the hearings on exempt organizations will likely occur after the Committee holds further hearings to discuss broad issues in potential tax reform.
    • E&Y Survey: Reduced Corporate Rate, No Switch to Territorial System. At a conference held by Ernst & Young, E&Y representatives reported that, in a survey of 400 clients, 45 percent of respondents expect the marginal tax rate on corporate income will be reduced in the next five years. However, just over half of respondents said they believed the U.S. would maintain its current system of worldwide taxation. Panelists at the conference agreed that comprehensive tax reform could move forward before the 2012 election, but only if reform of tax expenditures is a part of that effort. Tax counsels for major corporations at the conference claimed they seek to create jobs outside the U.S. because the current marginal rate is around 40 percent and is one of the highest tax rates in the world.

     

    TechComm

    LEGISLATIVE ACTIVITY

    • Privacy. On the heels of media reports that Apple’s iOS 4 operating system and Android’s operating system are collecting customers’ personal location data, Representative Ed Markey (D-MA), Co-Chairman of the House Bi-Partisan Privacy Caucus and a Senior Energy and Commerce Committee Member, became the first Member of Congress to call for a Congressional investigation into the companies’ tracking disclosure policies. In a statement, Representative Markey said, “Congress should immediately commence an investigation into this critical issue to help improve companies’ disclosure policies so consumers and families can understand who is seeing their information. I will continue to monitor this issue closely and I plan to introduce child online privacy protection legislation with a 'Do Not Track' requirement so that children do not have their online behavior tracked or their personal information collected or disclosed.”

      On April 25, House Energy and Commerce Committee Chairman Fred Upton (R-MI), Communications and Technology Subcommittee Chairman Greg Walden (R-OR), Vice Chair Lee Terry (R-NE), Commerce, Manufacturing, and Trade Subcommittee Chairman Mary Bono Mack (R-CA) and Vice Chair Marsha Blackburn (R-TN) sent letters to Apple, Google, Microsoft, Nokia, Research in Motion and Hewlett-Packard seeking information about location data that is tracked, used, stored or shared by mobile device operating systems and the implications of such tracking for individual privacy and federal communications policy.
      Following suit, the newly established Senate Judiciary Subcommittee on Privacy, Technology and the Law, chaired by Senator Al Franken (D-MN), has scheduled a hearing titled, “Protecting Mobile Privacy: Your Smartphones, Tablets, Cell Phones and Your Privacy,” for May 10. Both Apple and Google have agreed to testify. Other witnesses include Department of Justice (DOJ) and Federal Trade Commission representatives as well as Justin Brookman from the Center for Democracy and Technology and Ashkan Soltani, a privacy researcher. The Senate Commerce Committee also has announced that it will hold a hearing this month on consumer privacy.


      Meanwhile, Senator Richard Blumenthal (D-CN) called for DOJ to investigate the data breach that recently brought down the PlayStation Network,  determine who is responsible and  examine Sony's notification of customers. "Any individual hacking into the PlayStation Network online and stealing personal information would appear to be criminally liable. It is vital that we aggressively investigate these hackers and hold them accountable," Blumenthal said in an April 28 letter to Attorney General Eric Holder.

      Sony acknowledged that an illegal attack brought down the network and compromised the personal and financial information of up to 77 million customers worldwide. It began notifying customers via email on April 27 that their account information had been compromised and encouraged them to monitor their financial accounts and credit reports for identity theft.
    • Spectrum. A report released last week said the Federal Communications Commission’s (FCC) claims about a looming spectrum “crisis” are unfounded. The study, sponsored by the National Association of Broadcasters, shows "that insufficient analysis and reliance on faulty information in the formation of the FCC's National Broadband Plan has led to the overstated assumption of a nationwide spectrum 'crisis.'" The author, former FCC official Uzoma Onyeije, wrote that the basis for the spectrum crisis language is "underwhelming" noting it is unclear how much spectrum mobile providers need. The study indicates that there are ways to use spectrum more efficiently without reassigning the airwaves, such as deploying network technology that makes spectrum use more efficient and encouraging the development of low-bandwidth applications. An FCC spokesman responded to the study by saying, “We simply can’t afford to study this to death while the rest of the world passes us by."
    • AT&T/T-Mobile Merger. AT&T has filed its application with DOJ for review of the T-Mobile merger and filed its FCC application on April 21. The FCC announced its pleading cycle for comments: Petitions to Deny are due May 31, Oppositions are due June 10 and Replies are due June 20. In addition, the FCC included in the docket (subject to a protective order) information about telephone number utilization and portability from all wireless telecommunications carriers and will consider this information in its analysis of the transaction. The Senate Judiciary Subcommittee on Antitrust, Competition Policy and Consumer Rights has scheduled a hearing on the proposed merger for May 11, while the House Judiciary Committee has indicated that it will hold a hearing around May 26.
    • Hearings. The following hearings have been scheduled:
      • May 3, 10:00a.m. – House Energy and Commerce Communications and Technology Subcommittee hearing regarding “FCC Process Reform.”
      • May 4, 10:00a.m. – House Judiciary Subcommittee on Intellectual Property, Competition and the Internet hearing titled, “ICANN Generic Top-Level Domains Oversight.”
      • May 5, 10:00a.m. – Senate Homeland Security Ad Hoc Subcommittee on Disaster Recovery and Intergovernmental Affairs hearing titled, “Understanding the Power of Social Media as a Communications Tool in the Aftermath of Disasters.”
      • May 10, 10;00a.m. – Senate Judiciary Privacy, Technology and the Law Subcommittee hearing titled, “Protecting Mobile Privacy: Your Smartphones, Tablets, Cell Phones and Your Privacy.”
      • May 11, 10:15a.m. - Senate Judiciary Subcommittee on Antitrust, Competition Policy and Consumer Rights hearing titled, "The AT&T/T-Mobile Merger: Is Humpty Dumpty Being Put Back Together Again?"
      • May 26, TBD – House Judiciary Committee review of the proposed AT&T/T-Mobile merger.

    REGULATORY ACTIVITY

    • May 12 FCC Open Meeting. The next open meeting on May 12 will include the following notices:
      • A Notice of Proposed Rulemaking to extend the outage reporting requirements for interconnected VoIP and broadband service providers to promote the resiliency of America’s 9-1-1 system and the country’s critical communications infrastructure;
      • As part of the FCC’s regulatory reform efforts, a Notice of Proposed Rulemaking to remove outdated regulations governing the exchange of telephone traffic between U.S. and foreign carriers that are no longer necessary to protect consumers and competition, while strengthening protections against anticompetitive practices by foreign carriers; and
      • As part of the Commission's Data Innovation Initiative, a First Report and Order and Further Notice of Proposed Rulemaking to eliminate unnecessary reporting requirements regarding international telephone service, while also streamlining and modernizing.

     

    Transportation

    LEGISLATIVE ACTIVITY

    • SAFETEA-LU. Action on SAFETEA-LU reauthorization is expected to pick up substantially after the recess in order to meet timeframes for Committee consideration this spring. In a notable development, a partial draft - in legislative form of the Obama Administration’s SAFETEA-LU reauthorization proposal is currently circulating among stakeholder groups, along with a section-by-section analysis. The draft is preliminary and partial. It does not include, for example, the transit title, and several other sections clearly remain under development. The bills produced in the House and Senate authorizing committees, moreover, are expected to play a much more significant role in driving the reauthorization process. Nonetheless, this represents the first and most extensive legislative proposal for SAFETEA-LU reauthorization in the 112th Congress, and it encapsulates many of the Administration’s key policy priorities and addresses other key reauthorization policy issues. Notable elements of the partial draft include:
      • National Infrastructure Bank. The text lays out an extensive and detailed legislative framework for a National Infrastructure Innovation and Finance Fund. It is authorized to make grants, direct loans, loan guarantees and to provide lines of credit. The funding criteria largely parallels the TIGER program, with a predominant emphasis on economic competitiveness. Grants can be made for up to 50 percent of eligible project costs. The direct loan, loan guarantee and line of credit provisions generally mirror TIFIA, with the exception that the credit instrument could cover up to 70 percent of total eligible costs (versus 33 percent currently for TIFIA). The draft authorizes $4 billion in the first year, growing to $6 billion in the last year of the reauthorization period.
      • Reforms to the Federal-Aid Highway Program. Consistent with the Administration’s budget proposal, the bill consolidates highway programs into five core programs: Safety; Livability; Federal Allocation; the National Highway Program; and Research, Technology and Education. The National Highway Program would be the core funding program for highways, streamlining and consolidating portions of several existing programs including Interstate Maintenance, National Highway System, Bridge and the Surface Transportation Program into two new subprograms: (1) Highway Infrastructure Performance Program (HIPP) and (2) the Flexible Investment Program (FIP). 
        • Highway Infrastructure Performance Program (HIPP): With limited exceptions, only facilities on a redefined National Highway System (NHS) would be eligible. The bill would expand the existing NHS to include all interstates, the current NHS, urban and rural principal arterials and intermodal connectors. Funds are to be used for preservation and operational improvements. Capacity expansion is limited to construction of auxiliary lanes or widening of a bridge during rehabilitation or replacement. Funds must be invested in accordance with a strategic performance plan.
        • Flexible Investment Program (FIP): Funds can be used to improve the condition and performance of any federal-aid highway and bridges on any public road (i.e. off system bridges). FIP funds can also be used for capacity improvements. 
      • NEPA Reforms and Expedited Project Delivery. The bill makes a number of reforms to the NEPA process to streamline and expedite project delivery, including measures to increase the integration of the planning and environmental processes. Key measures include:
        • Allowing all states to assume delegated responsibility for NEPA by making permanent the Surface Transportation Project Delivery Pilot Program.
        • Creating a new pilot program for local governments with a population greater than 2.5 million where the local government could assume the responsibilities of the state with respect to federal aid highway projects. The pilot would be open to three states with demonstrated organizational and financial capacity. 
        • Requiring all agency decisions under NEPA to occur within 180 days.
        • Allowing the Final EIS and Record of Decision (ROD) to be combined into one document/process.
        • Allowing federal funds to be used for the acquisition of rights-of-way prior to completing the EIS.
      • MPO Reforms. The bill includes a number of provisions intended to increase the effectiveness of MPOs, including coordination with other local and state entities, and to have MPOs better reflect regional growth patterns. The minimum population threshold for MPO designation is increased from 50,000 to 200,000, and two tiers are created to better align technical capacity and resource availability with planning requirements: Tier I for MPOs greater than 1 million population with more stringent, performance-based planning requirements; and Tier II for MPOs between 200,000 and 1 million population, with more streamlined, performance-based planning requirements. Existing MPOs in areas less than 200,000 can either request designation as a Tier II MPO or will be dissolved.

        The core substantive reforms are designed to implement more performance-based, outcome-driven planning processes. MPOs are required to consider certain outcomes as objectives in the planning process. MPO TIPs must then focus on projects selected to achieve performance and outcome targets. TIPs are also to be financially constrained and, for large projects, include some initial cost benefit discussion. MPOs are required to periodically report on the performance of their transportation system. Parallel reforms focusing on performance and outcomes are made to the Statewide Planning Process. 
      • Tolling Provisions. The bill substantially amends existing law, repealing the existing pilot programs for Interstate tolling and creating two new, permanent and flexible tolling authorities that allow (1) congestion pricing in major metropolitan areas on Interstate as well as non-Interstate facilities and (2) tolling for new capacity on Interstate as well as non-Interstate facilities.