WJ Washington Update s1

June 3, 2016 Washington Update

package of small tax bills into a larger TAX “miscellaneous” tax bill. Presumably the legislation would include some of the more Treasury Expects to Finalize Debt modest proposals that Members have worked Equity/IRC Section 385 Rules This Year on outside of broader efforts to move tax reform forward, such as some extender items, Key Points: changes to education incentives, addressing . Treasury official says public tax treatment of incidental benefits to first comments have yet to raise issues that responders, or any number of items raised or could be a “show stopper” for debt introduced by Members. equity rules For more information about tax issues you This week, the Assistant Secretary of the may email or call Christopher Hatcher at Treasury for Tax Policy Mark Mazur said that 202-659-8201. Laura Simmons contributed so far none of the public comments on its to this section. recent debt equity regulations (that recharacterize debt and equity under Internal FINANCIAL SERVICES Revenue Code (IRC) Section 385) have raised any issue that would cause the Department of Federal Insurance Office Holds Meeting of the Treasury to reconsider the proposed rule. the Advisory Committee on Risk-Sharing He reported that a number of comments Mechanisms discuss specific practices in some industries and ask whether they can be carved out. Key Points: Mazur encouraged comment letters to identify . The Advisory Committee discussed problems and offer solutions. alternative approaches to insuring terrorism risk. Brady Suggests House Might Consider a Miscellaneous Tax Bill Later This Year On June 1, the Department of the Treasury’s Federal Insurance Office (FIO) held an open Key Points: meeting of its Advisory Committee on Risk- . The House and Senate may put Sharing Mechanisms (ACRSM). The agenda together a package of smaller tax for the meeting included: (1) discussion of the bills later this year, demonstrating elements needed to support and encourage a some of the tax priorities of Members robust private market for terrorism risk outside of broader tax reform. insurance and reinsurance; (2) examination of a comparison of international terrorism risk Late last week, House Ways and Means insurance programs; and (3) discussion of an Committee Chairman Kevin Brady (R-TX) outline of next steps the Committee will take suggested that he is considering compiling a to fulfill the goals and purpose outlined in the

______©2016 Williams & Jensen, PLLC 701 8th Street, N.W. Suite 500 Washington, D.C. 20001 Telephone: (202) 659-8201 Fax: (202) 659-5249 www.williamsandjensen.com Terrorism Risk Insurance Program cost installment loans. The comment period Reauthorization Act of 2015 and the on the proposal ends on September 14, 2016. Committee’s charter. The next meeting will As described in a CFPB press release, the occur in August. proposal includes: . A requirement that lenders determine White Speaks on Equity Market Structure before extending the loan that the Initiatives consumer has an “ability-to-repay” the loan without reborrowing, referred to Key Points: as a ‘full payment test’. . SEC Chair stated that she expects the . A “principal payoff option” for short- Consolidated Audit Trail plan to be term loans of “up to $500 without the finalized by the end of the year. full-payment test as part of the . She also noted that she expects the principal payoff option”. However, Commission to consider a proposal on lenders would not be allowed “to offer customer-specific institutional order this option to consumers who have routing disclosures and targeted outstanding short-term or balloon- enhancements to existing order payment loans or have been in debt on routing disclosures for retail short-term loans more than 90 days in customers. a rolling 12-month period.” Under the principal payoff option, the proposal On June 2, Securities and Exchange would allow a lender to “offer a Commission (SEC) Chair Mary Jo White borrower up to two extensions of the gave a speech entitled “The Continuous loan, but only if the borrow pays off at Process of Optimizing the Equity Markets.” least one-third of the principal with White noted that in May the SEC completed each extension.” its mandatory rulemaking under the JOBS . The proposal would require lenders Act. She said the SEC also reached the final “to give consumers written notice phase of implementation of the Dodd-Frank before attempting to debit the Act (DFA), noting that their two major consumer’s account to collect remaining work areas are security-based payment” for any covered loan. swaps and executive compensation. For more information about financial CFPB Holds Field Hearing on Small Dollar services issues you may email or call Joel Lending and Releases Proposed Rule Oswald at 202-659-8201. Rebecca Konst and Alex Barcham contributed to the articles. Key Points: . The Consumer Financial Protection ENERGY AND ENVIRONMENT Bureau released a proposed rule on payday, vehicle title, and certain PHMSA Moving Forward with Gas installment loans and also held a field Storage Regulations hearing on this topic. Key Points: On June 2, the Consumer Financial Protection . The Pipeline and Hazardous Bureau (CFPB) held a field hearing to discuss Materials Safety Administration is issues related to small dollar lending. Earlier planning to move forward with the same day the CFPB released a proposed regulations targeting underground rule on payday, vehicle title, and certain high-

natural gas storage facilities with an interim final rule. Obama Speech On Foreign Policy . The planned rule follows the recent methane leak from California’s Aliso Key Points: Canyon underground natural gas . The President seeks to frame foreign storage facility, and is expected to policy in the context of the adopt, and make mandatory, existing presidential election and explains his voluntary industry standards. foreign policy

According to the most recent “Unified On June 2, President Barack Obama gave the Agenda for Regulatory and Deregulatory commencement address at the United States Actions“, the Pipeline and Hazardous Air Force Academy, in which he made the Materials Safety Administration (PHMSA) case for his approach to foreign policy that “is planning to issue an interim final rule to presented the case against the U.S. being require operators of underground storage isolationist, committing its military to many facilities for natural gas to comply with places around the world, and not engaging minimum safety standards, including diplomatically. compliance with API [Recommended Practice] RP 1171, Functional Integrity of For more information on defense issues you Natural Gas Storage in Depleted Hydrocarbon may email or call Michael Kans at 202-659- Reservoirs and Aquifer Reservoirs, and API 8201. RP 1170, Design and Operation of Solution- mined Salt Caverns Used for Natural Gas HEALTH Storage.” PHMSA may adopt “the non- mandatory provisions of the RPs in a manner Congress and Administration Remain at that would make them mandatory, except that Odds Over Zika Funding operators would be permitted to deviate from the RPs if they provide justification.” Key Points: According to the Unified Agenda, PHMSA . Senate Democrats to push for vote plans to issue this interim final rule in August. next week on $1.9 billion in new Zika While these dates can often slip, the projected funding. August action indicates PHMSA’s interest in . House approved $622 million in Zika moving expeditiously on this issue. funding while the Senate approved $1.1 billion in new funding. For more information about energy and environment issues you may email or call Senate Minority Leader Harry Reid (D-NV) Frank Vlossak at 202-659-8201. Updates on has said he will continue to push for full energy and environment issues are also funding for the Zika virus. He has argued the available on twitter. funding should happen now and not wait for DEFENSE the appropriations process. President Barack

______©2016 Williams & Jensen, PLLC 701 8th Street, N.W. Suite 500 Washington, D.C. 20001 Telephone: (202) 659-8201 Fax: (202) 659-5249 www.williamsandjensen.com Obama has requested $1.9 billion in new for replacement inflators, or moving away funding for both a national and global from Takata altogether, at least four response to the virus. The Senate has already automakers said that some new vehicles will passed $1.1 billion in new funding on a contain the non-desiccated inflators that will bipartisan vote. The House has authorized be recalled in a few years. The report $622 million in funding which the White concludes that the sale of vehicles with non- House has already indicated it would veto. desiccated inflators should cease until they are repaired; that Takata and the NHTSA For more information about healthcare issues should work to increase the availability of you may email or call Matthew Hoekstra or non-desiccated inflators; and that Takata and George Olsen at 202-659-8201. NHTSA must continue to keep consumers informed about recalls and replacement parts. TRANSPORTATION AND INFRASTRUCTURE CBO Report Explores Costs and Alternatives to Scanning Seaborne Cargo Senate Commerce Committee Democrats Release Report on Takata Airbags Key Points: . Five options were presented to scan Key Points: and image all U.S.-bound cargo by . Automaker recall completion rates 2018 remain low . More than 2.1 million inflators that This week, the Congressional Budget Office have been installed will have to be (CBO) released a report from the offers replaced solutions for the U.S Customs and Border Protection (CBP) Agency to comply with a The minority staff of the Senate Commerce, 2007 Congressional mandate that requires all Science, and Transportation Committee seaborne containers destined for the U.S. to released a report that stated more than 60 be scanned an imaged. The goal is detect million Takata airbags, or one out of every weapons of mass destruction, especially four cars currently on the road, may be nuclear weapons, before they are loaded onto recalled. The report found that recall U.S.-bound ships. completion rates were low and varied from under one percent to almost 40 percent. Most Kevin Prior and Michael Kans wrote this of the airbags that have been replaced section. For more information on contained ammonium-nitrate inflators that transportation issues you may email or call have been found to cause serious injury or Michael Kans at 202-659-8201. death. Responses from automakers indicate that as of March, more than 2.1 million non- TECHNOLOGY desiccated ammonium-nitrate replacement inflators have been installed on U.S. vehicles. EU Data Protection Supervisor Issues The report notes that non-desiccated inflators Recommendations For Improving EU-US are only a temporary short term fix and will Data Privacy Shield be recalled by December 31, 2019, according to National Highway Traffic Safety Key Points: Administration’s (NHTSA) Amended . EU official calls for alterations to the Consent Order. Although several automakers replacement to the Safe Harbor are in the process of securing other suppliers agreement on data flows out of the EU

Act” (FITARA) that pertains to “information On May 30, the European Data Protection technology (IT) category management, and Supervisor (EDPS) issued his opinion on the specifically software licensing, in order to EU-U.S. Data Privacy Shield, calling for help agencies improve the acquisition and significant changes in the agreement that management of common IT goods and would govern data flows between the United services.” OMB explained that the States and the European Union (EU). The memorandum is “the second in a series of EDPS is an “independent advisor to the EU information technology (IT) policies to make institutions on the implications of policies the acquisition and management of common which have an impact on the rights to privacy IT goods and services more efficient and save and data protection.” taxpayer dollars” according to the White House’s blog posting. However, it bears note OMB Releases Category Management Memo that the OMB memorandum “only applies to On Software commercial and COTS software, not custom services or the development of new software” Key Points: but contains a sequence of items OMB has . The Administration continues to tasked agencies with performing in order to revamp how the federal government implement the new requirements regarding buys computer hardware, software, software purchasing. and services For more information on technology issues On June 2, the Office of Management and you may email or call Michael Kans at 202- Budget (OMB) released a memorandum as 659-8201. the next step of implementing its Category Management initiative and the “Federal This Week in Congress was written by Laura Information Technology Acquisition Reform Simmons.