WJ Washington Update

October 2, 2015 Washington Update

Key Points: TAXES . Proposal lowers corporate tax rate to 15 percent, and includes deemed Ways and Means Reports Out repatriation at a 10 percent rate Reconciliation Bill Aimed At Repealing . Individual tax brackets cut to four, Major Portions of the Affordable Care Act and eliminates deductions “for the very rich” Key Points: . Updated JCT score increased the cost Republican Presidential candidate Donald of Cadillac Tax repeal to $91 billion Trump unveiled his tax proposal that centers . Obama is expected to veto if the on the goals of providing tax relief for the reconciliation bill gets through middle class; simplifying the tax code; and Congress growing the economy all while remaining deficit neutral. The House Ways and Means Committee favorably reported a reconciliation bill that Hatch Skeptical That Deal on HTF and targeted the “Patient Protection and International Tax Reform Will Be Affordable Care Act’s” (P.L. 111-148, 111- Reached; Ryan Continues Efforts on 152) (ACA) employer and individual International Tax Reform But Indicates mandates; repealed the Cadillac Tax, the There Will Not Be Agreement Before HTF medical-device tax, and the Independent Deadline Payment Advisory Board. The reconciliation bill will allow Senate passage with a simple Key Points: majority rather than the 60-vote supermajority . Hatch calls into question the needed for most legislation to move in the likelihood that a plan for international Senate. The Joint Committee on Taxation tax reform and highway funding will (JCT) released an updated estimate of happen repealing the so-called “Cadillac Tax”, . Members working on the plan have projecting it to cost $91 billion. The estimate not publicly commented on what will also said the medical device repeal would cost be included in the proposal $23.9 billion over ten years. The bill is . House Ways and Means Committee expected to go to the House floor sometime Chairman renewing efforts to reach later this month, but President Barack Obama deal, but reportedly tells House is certain to veto the bill if he receives it. Transportation and Infrastructure Committee Chairman to proceed with Trump Releases Tax Plan That Lowers HTF bill that does not include Individual and Corporate Tax Rate, international tax reform as a pay-for Broadens the Base

______©2013 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 Senate Finance Committee Chairman Orrin can then share it with tax authorities in other Hatch (R-UT) expressed doubt that Senator countries where the U.S. has tax treaties or Charles Schumer (D-NY) and House Ways information-sharing agreements. and Means Committee Chairman Paul Ryan (R-WI) will be able to strike a deal to finance IRS Master Limited Partnership Rules a surface transportation reauthorization Expected To Include ‘Exclusive List’ Of through international tax reform. Ryan and Qualified Income Schumer have been working privately on a proposal to tie international tax reform to Key Points: highway funding, and Hatch reported he was . IRS to include a specific list of supposed to hear about the agreement by activities required for MLP status October 1. Hatch has been vocal in his . A public hearing on the proposed opposition to using repatriation revenue as rules will be held October 27 part of a highway fund plan while Ryan supports repatriation as a funding mechanism. The Internal Revenue Service’s (IRS) Hatch added that Senate Majority Leader proposed rules on master limited partnerships Mitch McConnell (R-KY) is “not very (MLPs) are expected to include an exclusive enthusiastic” about such a plan. list of income-generating activities required to maintain MLP status. The list will make clear OECD To Release BEPs Plans Next Week what activities in the natural resources industry are permissible to reduce the number Key Points: of private letter rulings needed. MLPs have . The rules designed to target base relied exclusively on ruling letters for erosion and intangible income will be certainty of their tax status since 1987. An released October 5 IRS official said there may be more guidance . The rules are expected will have make issued under certain categories, or the list modifications to some of the most could be expanded in the final rules. The contentious provisions official also said the proposed rules may have incorrectly excluded olefins. The IRS has The Organization for Economic Cooperation scheduled an October 27 public hearing on and Development (OECD) will release its the proposed rules. final plan to counter corporate tax avoidance on Monday, October 5. The most anticipated Treasury Pushes Debt Limit Deadline To guidance to be released addresses transfer November 5 pricing and the status of “permanent establishment” rules for digital transactions, Key Points: and country-by-country reporting, among a . Lower than expected tax receipts cited number of other issues. The country-by- as the cause of the new deadline country reporting will require companies to detail, by location, where they make money In a letter to Congress, Secretary of the and pay their taxes. The new rules will only Treasury (Treasury) Jack Lew said that the apply to corporations with $750 million in federal government will hit a legal debt limit annual revenue, and information sharing is around November 5 as the government would limited to tax authorities. Under the final rule, likely have less than $30 billion in cash at that American businesses will file disclosures with point. In the letter, Lew noted that the the Department of the Treasury (Treasury) deadline could shift, because Treasury’s and Internal Revenue Service (IRS), which estimates are “subject to inherent variability”

______©2013 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 October 2, 2015 Washington Update but reported that Treasury had seen a negative (TILA) and Real Estate Settlement Procedure trend in its net resources in recent weeks, Act (RESPA) Integrated Disclosure (TRID) suggesting that the deadline could move up. rules. The new deadline puts pressure on Congress to act sooner than expected, and Speaker of House Financial Services Panel Holds the House John Boehner’s (R-OH) upcoming Hearing on Insurance Regulation retirement may mean negotiations will be finalized before he leaves office. Key Points: . The hearing focused on the domestic For more information about tax issues you capital framework, IAIS capital may email or call Christopher Hatcher at standards, and SIFI designations of 202-659-8201. Laura Simmons contributed insurance firms. to this section. On September 29, the House Financial FINANCIAL SERVICES Services Committee’s Housing and Insurance Subcommittee held a hearing on “The Impact House Financial Services Committee Holds of Domestic Regulatory Standards on the U.S. Hearing on the CFPB Insurance Market.” The hearing focused on domestic capital standards, work of the Key Points: International Association of Insurance . House Financial Services Committee Supervisors (IAIS), state-based regulation of holds hearing on CFPB Semi-Annual insurance, and covered agreements. Report. . Committee Republicans raise Senate Banking Panel Holds Hearing on concerns with the CFPB’s regulations SIPC regarding auto lending, payday loans, and the Truth in Lending Act (TILA) Key Points: and Real Estate Settlement Procedure . Senator David Vitter (R-LA) stated Act (RESPA) Integrated Disclosure that he would not allow pending SIPC (TRID) rules. nominations to move forward until reforms are implemented to the On September 29, the House Financial program. Services Committee held a hearing to receive the Semi-Annual Report and testimony of the On September 30, the Senate Banking Consumer Financial Protection Bureau Committee’s Securities, Insurance, and (CFPB) from CFPB Director Richard Investment Subcommittee held a hearing Cordray. The hearing focused on CFPB entitled “Oversight of the Securities Investor proposed rulemakings for the auto lending Protection Corporation.” Chairman Mike and payday lending industries, data collection Crapo (R-ID) said the Securities Investor by the CFPB, and the Truth in Lending Act Protection Corporation (SIPC) has been the

______©2013 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 subject of a great deal of attention due to acting on a fiduciary duty until after events related to the Lehman Brothers, the SEC acts on the issue. Madoff, MF Global, and Stanford Investment . The Committee also adopted Group cases. He questioned how SIPC has legislation to restructure the CFPB as responded to recent claims. He expressed a five member commission and interest in learning about what reforms may require the CFPB Inspector General be needed to SIPC. Ranking Member Mark to be confirmed by the Senate. Warner (D-VA) suggested that different products, such as securities and CDs, have On September 30, the House Financial different levels of protection. He raised Services Committee held a markup and concerns with frequency of investment approved bills aimed at reforming the adviser examinations, stressing the need to be Consumer Financial Protection Bureau more proactive on the front end. (CFPB), addressing fiduciary standards for advice provided to retail investors, and SEC Commissioner Kara Stein Speaks on requiring the National Credit Union Equity Market Structure Association (NCUA) to study the appropriate capital requirements for credit unions. Key Points: . SEC Commissioner Kara Stein For more information about financial stressed the need to bring additional services issues you may email or call Joel transparency to alternative trading Oswald at 202-659-8201. Rebecca Konst and systems and dark pools. Alex Barcham contributed to the articles. . Stein also expressed concern about the lack of progress with the ENERGY AND ENVIRONMENT Consolidated Audit Trail. Energy and Commerce Committee On September 30, Securities and Exchange Approves Energy Legislation Commission (SEC) Commissioner Kara Stein gave a speech at the Security Traders Key Points: Association’s 82nd Annual Market Structure . On September 30, the House Energy Conference, focusing on the importance of and Commerce Committee voted to transparency. Stein suggested that the markets favorably report energy legislation have become darker and more opaque. She that includes provisions addressing said the proliferation of trading venues has electric grid reliability, Federal made the market stronger and more resilient, Energy Regulatory Commission but also make it more complex. review of proposed natural gas pipelines, LNG exports, and other House Financial Services Committee issues. Approves Five Bills, Including the Retail . The House is likely to vote on the Investor Protection Act Committee-approved energy package this month. Key Points: . The House Financial Services On Wednesday, the House Energy and Committee approved the Retail Commerce Committee approved the “North Investor Protection Act which would American Energy Security and Infrastructure prevent the Department of Labor from Act” (H.R. 8), by a roll call vote of 32-20.

Senate Banking Committee Votes to Approve Oil Export Legislation For more information about energy and environment issues you may email or call Key Points: Frank Vlossak at 202-659-8201. Marc . The Senate Banking Committee voted Pitarresi contributed to this report. Updates to approve legislation that would on energy and environment issues are also repeal the ban on exports of domestic available on twitter. crude oil. . The Senate Energy and Natural DEFENSE Resources Committee approved its version of oil export legislation in NDAA Conference Report Passes House July. Key Points: On October 1, the Senate Banking, Housing . SASC and HASC reach agreement on and Urban Affairs Committee held a markup, a FY 2016 NDAA, but the White approving the “American Crude Oil Export House threatens a veto Equality Act” (S. 1372) by a 13-9 vote. . The top Democrats on HASC and SASC refuse to sign the Conference Hearing Highlights Senators’ Pipeline Report Safety Priorities . The Senate may take up the package next week Key Points: . The Senate Commerce Committee’s This week, the conferees for the conference Surface Transportation Subcommittee committee on the FY 2016 National Defense held a hearing on pipeline safety on Authorization Act (NDAA) (H.R. 1735/S. September 29. 1376) reached agreement on a final bill and . The Subcommittee held a field hearing released the Conference Report. However, for on the same topic on September 18, the first time in recent memory, the Ranking and the Commerce Committee is Members on both Armed Services expected to begin work shortly on Committees refused to sign the Conference pipeline safety reauthorization Report for the NDAA and have announced legislation. their opposition to the package. Additionally, the White House signaled its intent to veto the On Tuesday, the Senate Commerce, Science, NDAA because it preserves the disparity and Transportation Committee’s Surface between defense and non-defense spending Transportation and Merchant Marine and uses the Overseas Contingency Infrastructure, Safety, and Security Operations (OCO) to circumvent the cap on Subcommittee held a hearing entitled defense funding. Whether the White House “Pipeline Safety: Oversight of Our Nation’s follows through on the threat is uncertain, but Pipeline Network”. if it did there may not be the votes to override

______©2013 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 a veto given Democratic opposition to cost, on-time, and with its planned increasing Department of Defense (DOD) capabilities.” The GAO added that funding without lifting the cap on non- “[s]imilarly, the business case for CVN 79 is defense discretionary funding. not realistic.”

HASC Subcommittee Examines The LRSB SASC/HASC Cyber Hearings

Key Points: Key Points: . The Seapower and Projection Forces . HASC and SASC hear testimony from Subcommittee questions the Air the NSA head and DOD Deputy Force’s procurement officials on the Secretary regarding the DOD’s Cyber costs and development of the long Strategy range strike bomber . Members focused on U.S. retaliation for cyber attacks and what sorts of On September 29, the House Armed Services hacks constitute acts of war Committee’s Seapower and Projection Forces Subcommittee held a hearing titled “USAF This week, the Senate and House Armed Bomber Force Structure-Current Services Committees held a series of hearings Requirements And Future Vision.” The on the Department of Defense’s (DOD) April hearing takes place a few weeks after the Air 2015 Cyber Strategy. Force revised downward its estimates of the ten year cost of procuring a replacement for For more information on defense issues you the B-1, B-2, and B-52. may email or call Michael Kans at 202-659- 8201. Kevin Prior and Nicole Ruzinski SASC Assesses The Ford Class Carrier contributed to this section.

Key Points: HEALTH . SASC hears testimony about the Ford class carrier program that is over House Panels Markup Reconciliation budget and behind schedule Legislation Targeting the ACA

On October 1, the Senate Armed Services Key Points: Committee examined the Navy’s procurement . House Ways and Means and Energy of the Ford class carrier at a hearing with and Commerce Committees report testimony from the Government reconciliation legislation; House Accountability Office (GAO) Navy’s and the Budget Committee expected to Department of Defense’s (DOD) senior markup legislation next week procurement officials. In its assessment of the Navy’s development and purchase of the On Tuesday, the House Ways and Means three Ford class carriers, CVN 78, CVN 79, Committee favorably reported two proposals and CVN 80, the GAO claimed that “[t]he that target provisions of the “Patient Ford-class aircraft carrier’s lead ship began Protection and Affordable Care Act” (P.L. construction with an unrealistic business 111-148, 111-152) (ACA). Chairman Paul case” and remarked that “in 2007, GAO Ryan (R-WI) noted that this legislation would found that CVN 78 costs were underestimated dismantle several core provisions of the ACA, and critical technologies were immature—key and noted that other Committees are working risks that would impair delivering CVN 78 at on proposals to repeal additional portions of

______©2013 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 October 2, 2015 Washington Update the law. He predicted that the legislation . The outgoing Speaker may push to being considered through the budget enact a long-term surface reconciliation process would allow ACA transportation reauthorization before repeal to reach the President. stepping down at the end of this month . The odds on favorite to be the next House, Senate Clear Small Group Speaker may support such a push Legislation . However, the prospects for passage may depend on whether a deal can be Key Points: reached on international tax reform . ACA Modification sent to President’s and the Ex-Im Bank desk, would provide states authority to change definition of small group Speaker of the House John Boehner’s (R-OH) health insurance market for certain announcement last week to resign his businesses leadership position and Congressional seat effective October 3 has changed the dynamics Legislation providing states the authority to and timing surrounding the possible prevent companies with 51 to 100 employees enactment of a long term surface from being forced into the “small group” transportation reauthorization ahead of health insurance market under the ACA pending expiration of the current extension of passed the House and Senate this week. The the “Moving Ahead for Progress in the 21st “Protecting Affordable Coverage for Century Act” (MAP-21) (P. L. 112-141) on Employees (PACE) Act” (H.R. 1624), had the October 29, 2015. support of a wide coalition of business groups, who had urged Congress to make the FAA Authority and Funding Extended change to prevent the new coverage Until April requirements from taking effect for companies with 51 to 100 employees starting Key Points: in 2016. President Barack Obama is expecting . A six-month, clean extension of the to sign the bill when it reaches his desk. FAA is signed into law, giving stakeholders more time to work out For more information about healthcare issues the remaining issues that have you may email or call Matthew Hoekstra or stopped consideration of a long-term George Olsen at 202-659-8201. reauthorization

TRANSPORTATION AND This week, Congress passed and President INFRASTRUCTURE Barack Obama signed the “Airport and Airway Extension Act of 2015” (H.R. 3614), Outlook For Surface Transportation a clean six-month extension of current Reauthorization Federal Aviation Administration (FAA) authorities and funding that expires on March Key Points: ______©2013 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 31, 2016. Now Congressional stakeholders have additional time to try to work out the PTC Extension Floated remaining issues that prevent a long-term FAA reauthorization from being enacted, Key Points: which include the potential privatization of . The House Transportation and the FAA’s air traffic control system. Infrastructure Committee released a However, it is also possible that a succession bill to extend the PTC deadline until of extensions will be enacted until agreement December 31, 2018 and would give can reached on the outstanding matters. the Secretary discretion to extend on a case-by-case basis beyond that Increased Scrutiny of VW’s Emissions deadline Defeat Devices . The Senate Commerce Committee Chairman expresses support for Key Points: extending the deadline . The House committee of jurisdiction will begin to examine Volkswagen’s On September 30, the House Transportation circumventing emissions from diesel and Infrastructure Committee introduced the cars “Positive Train Control Enforcement and . Two Democratic Senators call for a Implementation Act of 2015” (H.R. 3651) thorough DOJ investigation and that would extend the current December 31, criminal charges for VW executives 2015 deadline for railroads to implement . The EPA informs automakers of Positive Train Control (PTC) until the end of increased scrutiny regarding 2018 according to a press release. The emissions going forward measure is sponsored by House Transportation and Infrastructure Committee This week, the scope of government inquiry Chairman Bill Shuster (R-PA), Ranking into the admission by Volkswagen (VW) that Member Peter DeFazio (D-OR), Railroads, nearly half a million VW and Audi 2009- Pipelines, and Hazardous Materials 2015 diesel engine vehicles were equipped Subcommittee Chairman Jeff Denham (R- with software to circumvent emissions testing CA), and Ranking Member Michael Capuano (aka defeat devices) continues to widen. On (D-MA). September 29, the House Energy and Commerce Committee released a statement FTA TAM Rulemaking indicating that it had requested documents and information from Volkswagen and the Key Points: Environmental Protection Agency (EPA). In . The Federal Transit Administration letters sent to the German carmaker and the released another significant piece of EPA, Chairman Fred Upton (R-MI), Ranking the new transit regulation regime Member Frank Pallone Jr (D-NJ) and called for in MAP-21 Oversight and Investigations Subcommittee Chairman Tim Murphy (R-PA) and Ranking On September 30, the Federal Transit Member Diane DeGette (D-CO) indicated Administration (FTA) released a Notice Of that they are “investigating the facts and Proposed Rulemaking (NPRM) to “establish a circumstances surrounding VW’s use of National Transit Asset Management System software in vehicle emissions control systems to monitor and manage public transportation to affect Clean Air Act related compliance capital assets to achieve and maintain a state and emissions test results.” of good repair, improve safety, and increase

______©2013 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 October 2, 2015 Washington Update reliability and performance” as the agency . The GAO found that agencies explained in the NPRM. The FTA added that struggled to meet the requirements of “this notice includes proposed amendments to FISMA and that major vulnerabilities the National Transit Database regulations to persist conform to the proposed reporting requirements for transit asset management.” This week, the Government Accountability Comments are due by November 30, 2015. Office (GAO) released an assessment of the FY 2013 and 2014 information security For more information on transportation policies and practices of 24 Federal agencies issues you may email or call Michael Kans at as directed by the Federal Information 202-659-8201. Tracy Taylor wrote the first Security Management Act of 2002 (FISMA). article. The GAO concluded that “Federal agencies’ information and systems remain at a high risk TECHNOLOGY of unauthorized access, use, disclosure, modification, and disruption” and that House Homeland Security Reports Out implementation of FISMA 2002 was “mixed” Cybersecurity Bills in FY ‘13 and ‘14. However, the GAO’s primary recommendation is the Office of Key Points: Management and Budget (OMB) “in . The five bills marked up and reported consultation with the Secretary of Homeland to the House would seek to ramp up Security, the Chief Information Officers the DHS’ cybersecurity capabilities Council, and the Council of the Inspectors General on Integrity and Efficiency, enhance On September 30, the House Homeland reporting guidance to the inspectors general Security Committee held a markup of five for all rating components of agency security bills related to cybersecurity and the programs, such as configuration management Department of Homeland Security (DHS). and risk management, so that the ratings will Chairman Michael McCaul (R-TX) explained be consistent and comparable.” The report that the bills would reform and improve key was addressed to the Chairs and Ranking elements of DHS by streamlining Members of the Senate Homeland Security bureaucracy, saving money, and providing and Governmental Affairs Committee and the strong Congressional direction. He said the House Oversight and Government Reform bills would help ensure taxpayer dollars are Committee. not wasted and are better spent to protect the homeland. Members Call For Delay of Stage 3 Meaningful Use GAO Calls Into Question Federal Information Security Policies And Practices Key Points: . 116 Representatives and Two Senate Key Points: Committee Chairmen call on HHS

______©2013 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 and OMB to delay promulgation of that “[t]o that end, we urge you to refrain the Stage 3 Meaningful Use EHR rule from finalizing Meaningful Use Stage 3 and . GAO releases a report focusing on 2015 Edition Certification at this time.” They oncerns about implementation of the claimed that “the proposed Stage 3 rule, federal push to drive implementation currently under review at the OMB, of EHR exacerbates current problematic policies of Stage 2.” They added that “[w]e should On September 28, Representative Renee incentivize technology that enables Ellmers (R-NC), House Budget Committee interoperability and improved health Chairman Tom Price (R-GA), and outcomes rather than incentivizing technology Representative David Scott (D-GA) sent a that counts how many times a provider letter to Secretary of Health and Human performs an activity.” They claimed that Services (HHS) Sylvia Burwell and the Office “[t]he additional time would also give of Management and Budget (OMB) Shaun policymakers a chance to understand how the Donovan asking “that you refrain from private sector performs relative to finalizing Meaningful Use Stage 3 at this time modifications proposed for program years and work to refocus the program to better 2015 through 2017.” serve patients and the providers who care for them.” 113 other Representatives signed the For more information on technology issues letter, which asserted that “[w]e have an you may email or call Michael Kans at 202- interest in being active partners in 659-8201. Lucas Rogers contributed to this successfully enabling health information section. technology to serve as the digital infrastructure necessary to achieve delivery This Week in Congress was written by Laura system reform and meet the needs of a Simmons. modern healthcare system.” They asserted