July 25, 2014 Washington Update

This Week in Congress . House – The House passed the “STELA Reauthorization Act” (H.R. 4572); the “Empowering Students Through Enhanced Financial Counseling Act” (H.R. 4984); the “Student and Family Tax Simplification Act” (H.R, 3393); and the “Child Tax Credit Improvement Act of 2014” (H.R. 4935). . Senate – The Senate invoked cloture on the motion to proceed to the “Bring Jobs Home Act” (S. 2569) by a vote of 93-7. The Senate completed the Rule 14 process for S. 2648 to make emergency supplemental appropriations for the fiscal year ending September 30, 2014; and reached an agreement to begin consideration of the “Highway and Transportation Funding Act of 2014” (H.R. 5021) to provide an extension of Federal-aid highway, highway safety, motor carrier safety, transit, and other programs funded by the Highway Trust Fund.

Next Week in Congress . House – The House will consider four bills on endangered species pursuant to a rule; as well as the “Sunscreen Innovation Act” (H.R. 4250); the “National Cybersecurity and Critical Infrastructure Protection Act” (H.R. 3696); and the “Critical Infrastructure Research and Development Act” (H.R. 2952). The House may also consider legislation to address the ongoing immigration crisis on U.S.-Mexico border. . Senate – The Senate is expected to begin consideration of S. 2648, a bill making emergency supplemental appropriations for the fiscal year ending September 30, 2014. Senate Majority Leader Harry Reid (D-NV) is expected to seek cloture on the “Bring Jobs Home Act” (S. 2569), which would bar companies from deducting expenses of moving personnel or operations overseas and provide a 20 percent tax credit for returning operations from overseas.

It was a very busy week on the issue of tax TAXES inversions in Congress and in the Administration. Senate Finance Committee Holds International Tax Reform Hearing; the Table of Contents White House and Senate Continue to Drill Taxes 1 Down on Inversions Financial Services 6

Energy & Environment 12 Key Points: Defense 15 . President Obama, along with some Senate Health 19 Democrats on the Finance Committee, urge Transportation & Infrastructure 21 Congress to act soon to stop corporate Technology 24 inversions

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Williams & Jensen – Washington Update July 25, 2014

This week, President Barack Obama gave a companies that invert their headquarters speech, spoke on CNBC on inversions and also offshore. This proposal has not been included posted to the White House blog a statement in any of the inversions bills that have been attacking companies that use inversion offered and Wyden has not endorsed the idea transactions to escape U.S. taxes, calling them so far. “corporate deserters.” The President expressed his view that urgent action is needed to stop On the Senate floor, Senate Majority Leader these transactions. Harry Reid (D-NV) spoke about the potential Walgreens merger calling the strategy “dash On that note, the Senate Finance Committee and stash” referring to a company’s ability to held a hearing to discuss international tax merge offshore with the expectation of reform and specifically addressed inversions. continued use of certain U.S. tax credits. He During the hearing, Chairman Ron Wyden (D- urged Congress to address the “loophole,” OR) said that the issue must be addressed, further stating that the Senate Finance commenting that “this inversion loophole must Committee will act soon. Reid indicated that he be plugged.” Though Wyden has expressed his is ready to act now on inversions. preference to make changes as part of a comprehensive reform effort, he has also Inversions also came up in the context of the indicated the “flood” of transactions calls for defense authorization bill, the “Carl Levin urgent action explaining that tax reform is National Defense Authorization Act for Fiscal moving slowly and inversions are moving Year 2015” (S. 2410) though the Senate is not rapidly. currently considering the bill. Specifically, Senator Bernie Sanders (I-VT) filed two floor Ranking Member Orrin Hatch (R-UT) has also amendments to S. 2410 that would prohibit the seemed to signal openness to acting on government from entering into contracts with inversions though he too would like to see the certain inverted companies. The definition of issue addressed through a re-write of the an inverted company under both Sanders corporate international tax code. He has said amendments is similar to the expanded there may be steps that Congress can take to at definition proposed by the Obama least partially address this issue aside from Administration and contained in legislation comprehensive reform. While he does not (H.R. 4679 and S. 2360) the “Stop Corporate support the anti-inversion bills introduced thus far, he would consider alternative approaches, Upcoming Dates though he emphasized whatever approach is August 1: Projected insolvency of taken, it should not be retroactive or punitive Highway Trust Fund and, it should be revenue neutral. Senator September 30: FY 2014 Ends and Charles Grassley (R-IA) said that he wants the MAP-21 expires Department of the Treasury to complete a October 1: FY 2015 Begins mandated study on inversions before anything November 4: Midterm Elections moves forward. Also during the hearing March 2015: Debt limit suspension Senator Charles Schumer (D-NY) asserted that expires anti-inversion legislation should further limit or disallow the current interest expense deduction under Section 163(j) of the tax code for

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Williams & Jensen – Washington Update July 25, 2014

Inversions Act” introduced by House Ways and Means Committee Ranking Member Key Points: Sander Levin (D-MI) and Senator Carl Levin . The House passes education and child tax (D-MI). measures in its continued effort to address individual permanent tax measures Finally, during consideration of S. 2569, “The Bring Jobs Home Act,” Democratic supporters The House passed the “Empowering Students said the bill would play a part in slowing tax- Through Enhanced Financial Counseling Act” driven corporate mergers but Republicans (H.R. 4984) by a 405-11 vote, which increases countered that the bill is the wrong approach. federal financial aid counseling to include recipients of Pell Grants and Parent PLUS loan Senate Advances a Measure that Gives borrowers. The bill would require the Companies a Tax Credit for Moving Jobs counseling be tailored for the individual Back to the U.S. student's borrowing and take place annually. The House passed another permanency Key Points: measure this week, the “Student and Family . The Senate will move forward to consider a bill Tax Simplification Act” (H.R. 3393) by a 227- to incentivize brining jobs back to the U.S. by 187 vote, which makes permanent the providing a tax credit for doing so American Opportunity Tax Credit for qualifying college tuition and expenses. On July This week, Senate agreed to the motion to 25, the House also passed the “Child Tax proceed to “Bring Jobs Home Act” (S. 2569) Credit Improvement Act” (H.R. 4935) by a by a voice vote after Republicans supported 237-173 vote that would adjust the child tax bringing up the bill earlier in the week. credit for inflation and eliminate its marriage Senators John Walsh (D-MT) and Debbie penalty. Stabenow (D-MI) introduced the bill, which would give companies a tax credit on certain At this time it is uncertain whether the House expenses related to moving jobs back to the will take up additional individual measures after United States while denying a similar deduction the August recess. House Republicans are for companies that move jobs overseas. targeting including in any final negotiated extenders package some of the permanent During consideration, Republicans offered over measures the House has passed. The most 80 amendments including measures to make likely provisions for potential permanency if permanent the research and development tax the House Republicans are ultimately credit, to permanently extend Section 179 successful are those that are broadly bipartisan expensing, to repeal the estate tax, and to like the R&D tax credit and enhanced Section tighten rules on the IRS related to taxpayer 179 expensing rules for smaller businesses. audits. Stabenow said that Democrats were Nonetheless, the tax extender issue is not likely willing to negotiate on amendments, but only if to be resolved until later this year after the they were germane to the bill. As such, the election, or even in early 2015. chances of passage of this bill are less likely. Senate Permanent Investigations House Passes Education and Child Tax Subcommittee Holds Hearing on Financial Measures Products Structured for Tax Avoidance

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5021) which extends the HTF through May 31, Key Points: 2015 with the following amendments to be . Senate Permanent Subcommittee on considered: Investigations holds hearing to discuss financial products and tax avoidance . Wyden #3582- The Preserving American’s Transit and Highways Act This week, the Senate Permanent (PATH Act,) which is very similar to Subcommittee on Investigations (PSI) held a the underlying House bill but includes hearing on the use of structured financial the Finance Committee-passed offsets products to avoid income taxes on capital as an alternative to the House offsets); gains. During the hearing PSI Chairman Carl . Carper-Corker-Boxer #3583 that Levin (D-MI) examined the use of certain changes the date of authorization to the financial products to avoid taxes and leverage end of the year, thus requiring action limits. The hearing focused on maneuvers used on long term bill or another extension by Renaissance Technologies LLC, a hedge before 12/31/14 along with PATH Act fund, which allegedly converted its profits from provisions with the exception of high frequency trading into lower-taxed, long- pension smoothing provisions; term capital gains using basket options. . Lee #3584 that addressed the Specifically, Levin examined basket options devolution of surface transportation that were developed and sold by Deutsche role; funding to states; and cuts federal Bank AG and Barclays Bank PLC to more than gasoline excise taxes; among other a dozen hedge funds including Renaissance minor provisions; Technologies LLC. The theme of the hearing . Toomey #3585 addresses Exemptions- called for the need to establish reporting and Damaged Road/Bridge reconstruction data requirements to safeguard against the kind and environmental regulations; and of basket options developed in this case and in turn to prevent hedge funds from avoiding After the amendments have been disposed billions of dollars in taxes. of, the Senate will vote on final passage.

Senate to Consider House Bill to Extend All of the amendments would require 60 votes, Highway Trust Fund Authority With so it may be difficult for any to be adopted if Several Amendments they are controversial. The Senate will hold these votes on H.R. 5021 next week. If the Key Points: Senate adopts any amendments, the bill will go . The Senate reached an agreement on back to the House. Under any scenario, a short amendments for considering the House-passed term extension is expected to be enacted soon. Highway Trust Fund extension next week Reid Drops Plans for Combining Internet This week the Senate reached an agreement on Tax Bills after House Passes Legislation to amendments for a Highway Trust Fund (HTF) Permanently Ban Tax on Internet Access extension. Specifically, the Senate reached agreement on a unanimous consent order to Key Points: consider the House-passed “Highway and Transportation Funding Act of 2014,” (H.R.

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. Senate plans to take up extension of the the state’s proposed alternative. He has Internet Tax Freedom Act after the August reiterated that the block grants will spend the recess same amount as current programs and are not designed as a spending change or cut. For Last week, the House passed the “Permanent example, the Supplemental Nutrition Internet Tax Freedom Act” (PITFA) (H.R. Assistance Program would be combined with 3086,) a bill that permanently bans states from Temporary Assistance for Needy Families as taxing Internet access and placing multiple or well as child-care and housing assistance into a discriminatory taxes on e-commerce. In single “Opportunity Grant” that a select response, Senate Majority Leader Harry Reid handful of states could use for the pilot (D-NV) began the process of moving S.2609, a projects. The money would be channeled to bill that combines the “Marketplace and competing local service providers, including Internet Tax Fairness Act,” with PITFA. Reid states, charities and for-profit companies, and changed course this week and started laying the there would be work requirements for all able- groundwork for a stand-alone, short-term bodied beneficiaries. extension until early 2015 of the Internet tax moratorium that expires November 1, 2014 The discussion draft would expand the EITC instead of the combination bill. Reports for childless workers by eliminating certain indicate the Senate plans to move on the short- programs and corporate welfare (MAP term extension of the internet access tax program in USDA and energy tax incentives moratorium in September. are cited). On education, it would give states more flexibility with federal education and job- Ryan Releases Discussion Draft on training programs in exchange for more Reforming Safety Net Programs accountability. It also would simplify higher- education programs into one grant, one loan, Key Points: and one work-study program we well as open . House Budget Committee Chairman Ryan up the accreditation process. released a new discussion draft reforming safety net programs covering the earned income tax Upcoming Hearings and Events credit, education, criminal justice and regressive regulation to expand opportunity July 29 Tobacco Taxes: The Senate Finance House Budget Committee Chairman Paul Ryan Committee will hold a hearing “Tobacco: (R-WI) released a discussion draft titled Taxes Owed, Avoided, and Evaded.” “Expanding Opportunity in America.” The Scheduled witnesses include: John J. Manfreda, draft proposes a new pilot project to strengthen Administrator, Alcohol and Tobacco Tax and the safety net and discusses a number of Trade Bureau; David B. Gootnick, Director, reforms to the earned income tax credit International Affairs and Trade, Government (EITC), education, criminal justice, and Accountability Office; Ronald J. Bernstein, regressive regulation. In a USA Today op-ed, President and CEO, Liggett Vector Brands Ryan explains that the discussion draft contains LLC; Rocky Patel, Owner and Board Member, a voluntary opportunity grant where each state Rockey Patel Premium Cigars Inc., Cigar Rights that wants to participate submits a plan to the of America, Michael Tynan, Policy Officer, federal government where they lay out in detail Oregon Public Health Division, Scott

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Drenkard, Economist and Manager of State IRS Targeting Scandal: The House Judiciary Projects, Tax Foundation. Committee will hold a hearing titled “The IRS Targeting Scandal: The Need for a Special Social Security and Retirement: The House Counsel.” Ways and Means Subcommittee on Social will hold a hearing on Social Security and IRS Targeting Scandal: The House retirement issues. Oversight and Government Reform Committee will hold a hearing titled “IRS African Growth and Opportunity Act: The Abuses: Ensuring that Targeting Never House Ways and Means Subcommittee on Happens Again.” Trade will hold a hearing on Africa and the African Growth and Opportunity Act. African Growth and Opportunity Act: The Witnesses are TBA. Senate Finance Committee will hold a hearing titled “The African Growth and Opportunity U.S.-Korea Free Trade Agreement: The Act at 14: The Road Ahead.” Witnesses are Senate Finance Subcommittee on International TBA. Trade, Customs and Global Competitiveness will hold a hearing titled “The U.S.-Korea Free For more information about tax issues you may email Trade Agreement: Lessons Learned Two Years or call Christopher Hatcher at 202-659-8201. Tess Later.” Illos contributed to this report.

U.S.-EU Trade Agreement: The House FINANCIAL SERVICES Foreign Affairs Subcommittee on Terrorism, Nonproliferation, and Trade hearing titled “A SEC Approves Rules on Money Market U.S.-EU Trade Agreement: Bolstering Funds Economic and National Security.” Scheduled witnesses include: Retired Air Force General Key Points: James L. Jones, Founder, Jones Group . A divided SEC approves money market fund International; Tod Cohen, Vice President and rules which would require institutional prime Deputy General Counsel, eBay, Inc.; Jeffrey J. money market funds to maintain a floating Schott, Senior Fellow, Peterson Institute for NAV and allow funds to impose liquidity fees International Economics; to redemptions gates. Celeste Drake, Trade and Globalization Policy . Treasury and IRS issue proposal on a Specialist, American Federation of Labor and simplified tax accounting method for Congress of Industrial Organizations determining gains and losses related to a floating NAV and a new revenue procedure to July 30 provide relief from “wash sale” rules for losses Dynamic Scoring and Macroeconomic on shares of a floating NAV. Analysis: The House Ways and Means . The Financial Stability Oversight Council Subcommittee on Select Revenue Measures will (FSOC) will hold a closed meeting on July 31 hold a hearing on macroeconomic analyses of which will include a discussion on money Chairman Camp’s comprehensive discussion market mutual fund reform draft, the Tax Reform Act of 2014.

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On July 23, the Securities and Exchange announced a public hearing scheduled for Commission (SEC) at an open meeting November 19 to discuss issues relating to the approved a final rule on money market funds proposed rules on a simplified accounting (MMFs) in a 3-to-2 vote. The rule, as described method for gains and losses on MMF shares. by the SEC Fact Sheet, would: (1) require a In addition, White noted the rule includes floating net asset value (NAV) for institutional enhancements to disclosures, diversifications prime money market funds, with “the current and reporting requirements for money market market value of the securities in their portfolios funds. rounded to the fourth decimal place (e.g., $1.0000)”; and (2) allow money market fund SEC Commissioners Kara Stein and Michael boards “the ability to impose liquidity fees or to Piwowar voted against the rule. Stein in her suspend redemptions temporarily [known as statement expressed concerns about the gates] if a fund’s level of weekly liquid assets “significant shortcomings” of redemption falls below a certain threshold.” Money market gates, suggesting that it will create a “strong funds defined as government and retail funds incentive to rush to redeem ahead of others to would be exempt from the floating NAV avoid the uncertainty of losing access to their requirement, allowing them to maintain stable capital.” e Piwowar in a statement opposed the share pricing. The rule defines a government combination approach explaining the floating MMF as one that invests at least 99.5% of its NAV will not stop runs, but will impose costs “total assets in cash, government securities on money market funds that will ultimately be and/or repurchase agreements that are borne by its shareholders in the form of higher collateralized solely by government securities or fees and expenses, and lower returns. He also cash.” Retail MMFs are defined as those that suggested an “investor choice” alternative to have “policies and procedures reasonably allow investors to choose whether to investor designed to limit all beneficial owners of the in a MMF with a floating NAV or one with money market fund to natural persons.” The fees and gates. He further noted that “if rule requires a floating NAV for municipal (tax- banking regulators are concerned by banks’ exempt) MMFs unless it is a retail MMF. The over-reliance on short-term funding from rule would allow a two year transition period money market funds”, then they have the for funds to be compliant with the floating authority to address this bank regulatory NAV as well as the fees and gates provisions. shortcoming directly.” The Financial Stability Oversight Council (FSOC) in a statement on SEC Chair Mary Jo White in a statement noted July 23 noted they look “forward to more fully that the combination of discretionary fees and examining the SEC’s rule and its potential gates for all non-government funds and a impact on MMFs and financial stability.” floating net asset value (NAV) only for FSOC will hold a closed meeting on July 31, institutional prime funds is now possible which is expected to include a discussion on because of a new proposal from the Treasury money market mutual fund reform. Department and IRS on a simplified tax accounting method for determining gains and The SEC also unanimously approved related losses related to a floating NAV and a new money market fund proposals on a rule to revenue procedure to provide relief from “remove of references to credit ratings and “wash sale” rules for losses on shares of a amendment to issuer diversification floating NAV money market fund. The IRS provisions” and a rule exempting “broker-

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dealers from the written notification before the National Flood Insurance Program requirement…for transactions effected in (NFIP) authorization expires in 2017. She shares of floating NAV money market funds.” noted that the Subcommittee’s jurisdiction over the NFIP is limited to FEMA flood mapping. She emphasized that the NFIP cannot do good CFTC Commissioner O’Malia Resigns work without accurate flood maps. FEMA Administrator Craig Fugate stated that about Key Point: 50 percent of FEMA’s flood maps are accurate, . CFTC Commissioner Scott O’Malia resigns about 40 percent need to be reviewed, and as CFTC Commissioner and will serve as about 8-10 percent need to be updated. He CEO of the International Swaps and stated that FEMA is partnering with the U.S. Derivatives Association (ISDA) Geological Survey (USGS) to look at ways to use technology to update base maps faster and On July 21, Commodity Futures Trading at a lower cost. Commission (CFTC) Commissioner Scott O’Malia announced he will resign his position Subcommittee Ranking Member Dan Coats (R- on August 8 after four years of service. The IN) emphasized that flood insurance is not just International Swaps and Derivatives a coastal issue, as inland states like Indiana also Association (ISDA) announced that he will suffer from flooding. He stressed the need to become the Chief Executive Officer of ISDA encourage flood insurance adoption and ensure on August 18. O’Malia will be barred for two that FEMA has accurate flood maps. years from communicating or appearing before the CFTC on matters he was involved with House Panel Holds Hearing on SEC while serving on the CFTC. O’Malia’s Division of Corporation Finance departure will leave the CFTC with one vacancy on the five member commission. Key Points: . Representatives Scott Garrett (R-NJ) and Senate Panel Holds Hearing on Flood Robert Hurt (R-VA) urged the SEC to Insurance streamline its disclosure requirements. . Representative Brad Sherman (D-CA) Key Points: expressed concern with the impact of high . Senator Mary Landrieu urges FEMA to frequency trading (HFT) on the market. update its flood maps before the National Flood Insurance Program (NFIP) On July 24, the House Financial Services authorization expires in 2017. Committee’s Capital Markets and Government Sponsored Enterprises Subcommittee held a On July 23, the Senate Appropriations hearing entitled: “Oversight of the SEC’s Committee’s Homeland Security Subcommittee Division of Corporation Finance.” The hearing held a hearing entitled: “Insuring our Future: focused on reviewing Securities and Exchange Building a Flood Insurance Program We Can Commission (SEC) activities on issues such as Live With, Grow With, and Prosper With.” proxy advisory firms, the general disclosure Subcommittee Chairwoman Mary Landrieu (D- regime, conflict mineral disclosures, LA) urged the Federal Emergency Management international financial reporting standards, and Agency (FEMA) to update its flood maps high frequency trading.

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Later.” The hearing focused on the impact of Chairman Scott Garrett (R-NJ) and the Dodd-Frank Act (DFA) four years after Representative Robert Hurt (R-VA) stressed enactment, the systemically important financial the need for the SEC to streamline its institution (SIFI) designation process, disclosure requirements to avoid “disclosure regulatory burdens, and whether too big to fail overload.” SEC Corporation Finance Division has been addressed. Chairman Jeb Hensarling Director Keith Higgins responded that (R-TX) suggesting the DFA has added disclosures can be made more effective but “incompressible complexity” to the financial emphasized that information can be found regulatory system and “codified” too big to fail, useful to some and burdensome to others. He rather than ending it. Ranking Member Maxine contended that big financial institutions want Waters (D-CA) emphasized the benefits of the more information. Garrett stated that the Consumer Financial Protection Bureau SEC’s guidance on proxy advisory firms (CFPB), the Volcker Rule and executive addresses concerns from industry stakeholders, compensation provisions of the DFA. requiring firms to disclose and address conflicts of interest and to correlate advice to the goals Representative Edward Royce (R-CA) asked if of the client fund. Garrett asked if they will there are other unintended issues as a result of proactively monitor how the proxy rule will be the DFA. Former House Financial Services enforced to limit activist shareholder activities. Committee Chairman Barney Frank (D-MA) Higgins said that his office devotes substantial stated he is not happy with how regulators are resources to look at shareholder proposals. managing the issues of risk retention and he also noted that asset managers should not be Representative Brad Sherman (D-CA) designated as SIFIs. He said that if all a contended that high frequency trading (HFT) is company does is manage assets or sell life discouraging average investors who are under insurance, they should not be designated as a the impression they are at a disadvantage in the SIFI. Representative Brad Sherman (D-CA) trading marketplace. explained that his bill entitled: “Too Big to Fail, Too Big to Exist” (H.R. 1450), forces the House Committee Assesses the Impact of breaking up of entities considered by the the Dodd-Frank Act, Releases Reports on Department of the Treasury to be “Too Big to the Law’s Impact Fail”.

Key Points: Representative Scott Garrett (R-NJ) asked if it . House Financial Services Committee examines was the intention of DFA to designate non- Dodd-Frank Act, Republican and Democrat bank Systemically Important Financial Committee Staff release competing reports. Institutions (SIFI) in perpetuity. Frank stated . Former House Financial Services Committee that this was not the intention. Garrett asked Chairman Barney Frank defends Dodd- who would pay for the bailout if a SIFI failed, Frank in testimony at hearing on Dodd- to which Frank noted that in the event of a Frank Act impact. bailout of a SIFI, the money would come from other institutions already designated as SIFIs. On July 23, the House Financial Services Committee held a hearing entitled “Assessing In conjunction with the fourth anniversary of the Impact of the Dodd-Frank Act Four Years the Dodd-Frank Act, the House Financial

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Services Committee Republican Staff released a Group; (2) Adam Nunes, President, Hudson report on July 21 entitled: “Failing to End Too River Trading; (3) Joe Ratterman, President Big to Fail: An Assessment of the Dodd-Frank and Chief Executive Officer, BATS Global Act Four Years Later.” The report summarizes Markets; (4) Brett Redfearn, Head of Market findings of the Committee’s oversight of DFA Structure Strategy Americas, J.P. Morgan implementation “and concludes that not only Securities; (5) Edward Tilley, Chief Executive did the Dodd-Frank Act not end ‘too big to Officer, Chicago Board Options Exchange; and fail’ it had the opposite effect of further (6) Fred Tomczyk, President and Chief entrenching it as official government policy. Executive Officer, TD Ameritrade. Panel III The Committee’s Democratic Staff released a participants include: (1) Bill Baxter, Head of competing report, which stated that progress in Global Program Trading and Market Structure, implementing the DFA “has been regularly Fidelity Management and Research, on behalf stymied by a concerted effort by the Majority of the Investment Company Institute; (2) Doug to underfund regulators’ operations, relentlessly Cifu, Chief Executive Officer, Virtu Financial; pressure them to weaken regulations, and (3) Patrick Hickey, Head of Market Structure, otherwise erect roadblocks to implementation.” Optiver, on behalf of the FIA Principal Traders Group; (4) Jamil Nazarali, Head of Citadel Upcoming Hearings and Events Executions Services, Citadel Securities; (5) July 28 Jamie Selway, Managing Director and Head of Roundtable on Market Structure: The Electronic Brokerage and Sales, ITG; and (6) House Financial Services Committee’s Capital Jim Toes, President and Chief Executive Markets and Government Sponsored Officer, Security Traders Association. Enterprises Subcommittee will hold a three panel roundtable on market structure issues July 29 relating to: (1) “Exchanges and Alternative Export-Import Bank Oversight: The House Trading Venues: Promoting a Level Playing Committee on Oversight and Government Field and Enhancing Competition”; (2) Reform’s Subcommittee on Economic Growth, “Market Infrastructure: Improving Resiliency Job Creation and Regulatory Affairs will hold a and Eliminating Single Points of Failure”; and hearing entitled: “Examining Allegations of (3) “Market Making and Trading in the 21st Corruption at the Export-Import Bank”. Century”. Panel I participants include: (1) Matt Andresen, Co-Chief Executive Officer, Financial Services Markup: The House Headlands Technologies; (2) Kenneth Bentsen, Financial Services Committee is scheduled to Jr., President and Chief Executive Officer, markup the following bills: (1) the Federal Securities Industry and Financial Markets Reserve Accountability and Transparency Act Association; (3) Daniel Coleman, Chief (H.R. 5018); (2) the Native American Housing Executive Officer, KCG; (4) Joseph Assistance and Self-Determination Gawronski, President and Chief Operating Reauthorization Act (H.R. 4329); (3) the Officer, Rosenblatt Securities; (5) Robert Regulation D Study Act (H.R. 3240); (4) a bill Greifeld, Chief Executive Officer, NASDAQ to amend the Bank Holding Company Act to OMX; and (6) Jeffrey Sprecher, Chairman and require the Federal banking agencies, the Chief Executive Officer, Intercontinental Commodity Futures Trading Commission and Exchange. Panel II participants include: (1) the Securities and Exchange Committee to Bryan Durkin, Chief Operating Officer, CME make additional considerations when issuing or

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modifying certain regulations (H.R. 3913); (5) Bergeron, Vice President for Postsecondary the Community Bank Mortgage Service Asset Education Policy, Center for American Capital Requirements Study Act (H.R. 4042); Progress; Christine Lindstrom, Higher and (6) the Access to Affordable Mortgages Education Program Director, U.S. Public Act (H.R. 5148). Interest Research Group; Kenneth Kocer, President, South Dakota Association of July 30 Student Financial Aid Administrators and Flood Insurance: The Senate Banking Director of Financial Assistance, Mount Marty Committee will hold a hearing entitled: “The College; and Richard Hunt, President and Flood Insurance Claims Process in CEO, Consumer Bankers Association. Communities after Sandy: Lessons Learned and Potential Improvements.” Witnesses to testify FSOC Closed Meeting on Money Market include Craig Fugate, Administrator, Federal Funds, Asset Management: The Financial Emergency Management Agency; and Donald Stability Oversight Council will hold a closed Griffin, Vice President, Property Casualty meeting on “discussions of nonbank financial Insurers Association of America. company designations, including annual re- evaluations of the designations of certain CFPB Oversight: The House Financial nonbank financial companies; money market Services Committee’s Subcommittee on mutual fund reform; and asset management.” Oversight and Investigations will hold a hearing entitled, “Allegations of Discrimination August 7 and Retaliation and the CFPB Management Treasury Department Advisory Committee Culture”. on Insurance: The Department of the Treasury’s Federal Advisory Committee on July 31 Insurance (FACI) will hold a meeting to GAO Report on Government Support of “discuss its renewed charter, bylaws, identify Banks: The Senate Banking Committee’s and form subcommittees, and discuss pending Subcommittee on Financial Institutions and issues of concern to members, including Consumer Protection will hold a hearing matters of regulatory modernization and entitled “Examining the GAO Report on international standard-setting.” Expectations of Government Support for Bank Holding Companies.” Witnesses will include: August 19-21 Dr. Lawrance Evans, U.S. Government Labor Department Advisory Meeting on Accountability Office (GAO); Dr. Deniz Pensions: The Department of Labor’s Anginer, Assistant Professor of Finance, Employee Benefits Security Administration’s Pamplin School of Business, Virginia Tech; Dr. Advisory Council on Employee Welfare and Edward Kane, Professor of Finance, Boston Pension Benefit Plans (ERISA Advisory College; and Dr. Anat Admati, Professor of Council) will hold a meeting. The ERISA Finance and Economics, Stanford University. Advisory Council is studying (1) “Outsourcing Employee Benefit Plan Services,” (2) “PBM Student Financial Products: The Senate Compensation and Fee Disclosure,” and (3) Banking Committee will hold a hearing on “Issues and Considerations around Facilitating “Financial Products for Students: Issues and Lifetime Plan Participation.” Challenges.” Witnesses to testify include: David

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For more information about financial services issues you McCarthy told the Committee that the may email or call Joel Oswald at 202-659-8201. Eric regulations would, by 2030, result in “about 30 Robins, Rebecca Konst, and Alex Barcham contributed percent less carbon pollution from the power to the articles. sector across the U.S. when compared with 2005 levels – 730 million metric tons of carbon ENERGY AND ENVIRONMENT dioxide out of the air.”

McCarthy Defends EPA’s GHG Rule for Senator Sheldon Whitehouse (D-RI) declared Existing Power Plants that the EPA has a duty and a mandate to respond to climate change. He said the Key Points: proposed rule exercises the EPA’s existing . The Senate Environment and Public Works Clean Air Act authority, as established by Committee held a hearing on the EPA’s rule Congress and confirmed by the Supreme for reducing greenhouse gas emissions from Court. Whitehouse also asserted that states can existing power plants. develop plans that cut electricity costs by . EPA Administrator Gina McCarthy boosting efficiency and achieve major pollution defended the proposal, contending that it reductions. He indicated that the proposed rule provides states with flexibility and a 15-year could produce up to $93 billion in public timeline to implement the emissions reduction benefits per year by 2030. requirements. . Republicans criticized the rule as regulatory Full Committee Ranking Member David Vitter overreach, and argued that it would increase (R-LA) stated that the EPA’s proposed rule is electricity prices and cost jobs. an unprecedented regulation that will have major negative impacts on the U.S. electricity On July 23, the Senate Environment and Public system. He asserted that the proposed rule Works Committee held a hearing entitled usurps the role of state governments, public “EPA’s Proposed Carbon Pollution Standards utility commissions, the Federal Energy for Existing Power Plants.” The Regulatory Commission (FERC), and the Environmental Protection Agency (EPA) Department of Energy, which currently have issued the proposed rules, which would limit authority over electricity generation issues. He greenhouse gas (GHG) emissions from power said the power to change dispatch rules and plants in June. mandate efficiency and use of renewable energy is reserved to the states. Vitter asserted the In her testimony, EPA Administrator Gina EPA’s proposal goes beyond the authority McCarthy, emphasized the flexibility provided provided by the Clean Air Act, directing states to states in implementing the regulations, as to achieve questionable emission reduction well as the extended implementation timeline: targets from a limited menu of economically “[T]he states have a flexible compliance path damaging and legally questionable options. that allows them to design plans sensitive to their needs, including considering jobs and Administration Issues Proposed Rule on communities in a transitioning energy world.” Oil Train Safety She also declared that the regulations allow states to “chart their own, customized path to Key Points: meet [the] goals” set forth in the proposal.

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. The Department of Transportation released a . Establish enhanced braking proposed new rule to increase the safety requirements for trains transporting requirements for rail transportation of crude crude oil and other flammable material. oil. . Once finalized, the new regulations would Senator Mark Warner (D-VA) welcomed the phase-out the use of older tank cars used in rule. In a press release, Warner said the crude oil rail transportation and set Department of Transportation’s action “…to requirements for new tank cars. move forward with proposed regulations on crude by rail transport is a positive step.” He On Tuesday, the Department of added that he looks “forward to working with Transportation’s Pipelines and Hazardous [the Department of Transportation], the Materials Safety Administration (PHMSA) business community and Virginia localities to released a notice of proposed rulemaking move this process forward so that we can (NPRM), “Enhanced Tank Car Standards and protect our communities and transport these Operational Controls for High-Hazard materials in the safest possible manner.” In a Flammable Trains.” The proposed rule would statement, Senator John Hoeven (R-ND) said impose new safety standards for railroads he “appreciate[s] that DOT has issued its transporting crude oil and other hazardous proposal for rail tank cars…that appears to be materials. comprehensive and deals with prevention, mitigation and response”, but added that “[w]e The proposed rule would: will continue to review these proposed . Phase out the use of DOT-111 tank standards to ensure they are workable and will cars to transport “Packing Group I” keep our communities safe”. flammable material, which includes Bakken crude oil, by 2017; In a statement, American Association of . Establish safety standards for new tank Railroads President Edward Hamberger said cars that are constructed after October the organization will conduct a “data-driven 1, 2015; analyses of the impacts various provisions of . Establish testing, sampling and the proposal will have on both freight reporting requirements for crude oil customers and passenger railroads that ship transported by rail; millions of tons of goods and serve millions of . Require trains containing one million commuters and travelers across the nationwide gallons of Bakken crude oil to notify rail network every day.” State Emergency Response Commissions (SERCs) or other Upcoming Hearings and Events appropriate state delegated entity about the operation of these trains through July 28 their States”; Gas-Electric Coordination: The Department . Impose speed restrictions on trains of Energy will hold a public meeting, as part of transporting crude oil and other the Quadrennial Energy Review process, in flammable material; and Denver, Colorado, on “Gas-Electricity Interdependence”.

July 29

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Climate Change: The Senate Environment August 5 and Public Works Committee’s Clean Air and Pipeline Cracking Challenges: The Pipeline Nuclear Safety Subcommittee will hold a and Hazardous Materials Safety Administration hearing entitled “Examining the Threats Posed will hold a public meeting titled “Managing by Climate Change.” Pipeline Cracking Challenges”. The event will “gather and disseminate information on the Budget Impacts of Climate Change: The state of the art of crack detection in hazardous Senate Budget Committee will hold a hearing liquid and natural gas pipelines.” entitled “The Costs of Inaction: The Economic and Budgetary Consequences of Climate August 6-7 Change”. Pipeline Safety Research and Development: The Pipeline and Hazardous Materials Safety Energy Production on Public Lands: The Administration will hold a Senate Energy and Natural Resources “Government/Industry Pipeline R&D Committee will hold a hearing entitled Forum”. “Breaking the Logjam at BLM: Examining Ways to More Efficiently Process Permits for August 8 Energy Production on Federal Lands”. Energy Infrastructure Constraints: The Department of Energy will hold a public FERC and Grid Reliability: The House meeting as part of the Quadrennial Energy Energy and Commerce Committee’s Energy Review process in Bismarck, North Dakota. and Power Subcommittee will hold a hearing The meeting will focus on “Infrastructure entitled “FERC Perspectives: Questions Constraints”. Concerning EPA’s Proposed Clean Power Plan and other Grid Reliability Challenges.” Energy Transportation: The Department of Energy will hold a public meeting, as part of July 30 the Quadrennial Energy Review process, in Public Lands Legislation: The Senate Energy Chicago, Illinois. The meeting will focus on and Natural Resources Committee’s Public “Rail, Barge, Truck Transportation”. Lands, Forests and Mining Subcommittee will hold a hearing on a series of public lands bills. For more information about energy and environment issues you may email or call Frank Vlossak at 202- Greenhouse Gas Regulations: The House 659-8201. Lucas Rogers contributed to this report. Science, Space and Technology Committee will Updates on energy and environment issues are available hold a hearing titled “EPA’s [Environmental during the week on twitter. Protection Agency] Carbon Plan: Failure by Design.”

EPA and Small Business: The House Small Business Committee will hold a hearing titled “Regulatory Overreach: Is EPA [Environmental Protection Agency] Meeting its Small Business Obligations?”

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DEFENSE Administration’s request and is an increase from the FY 2014 enacted funding for these Senate Appropriations Committee Releases programs of $7.781 billion. The bill would Subcommittee Reported FY 2015 Energy- provide $2.673 billion for NNSA’s Directed Water Appropriations Act Stockpile Work, an increase above the FY 2014 enacted funding of $2.442 billion but below the Key Points: Administration’s $2.746 billion request. The . Senate Appropriations Committee may be Subcommittee recommended $2.077 billion for signaling the end of regular order for FY 2015 the NNSA’s Readiness in Technical Base and appropriations Facilities programs, an increase above both the . The Energy and Water Subcommittee would FY 2014 enacted level of $2.067 billion and the provide more funding for NNSA activities Administration’s request of $2.055 billion. than the Administration requested For the NNSA’s Defense Nuclear In what may be a sign that the Senate Nonproliferation programs, the bill would Appropriations Committee will not be marking allocate $1.978 billion, an increase above the up any more FY 2015 bills, the Committee FY 2014 enacted level of $1.954 billion and the released three bills and committee reports that Administration’s request of $1.555 billion. were marked up at Subcommittee. This is Finally, the Subcommittee recommended unusual because the Committee’s practice has $1.208 billion for the Naval Reactors programs, long been to not release Subcommittee bill text an increase above the $1.095 billion FY 2014 and reports until the full Committee marks up enacted level but below the Administration’s bills. It is also notable that the Committee did $1.377 billion request. Additionally, the not release a schedule to markup these Subcommittee explained that it appropriations bills. Nonetheless, the bills will “recommend[ed] no funding for the design and likely serve as the Committee’s markers in construction of a new spent fuel handling negotiations with the House Appropriations facility…[because] NNSA cannot identify Committee on a FY 2015 continuing resolution needed funding for the construction of this or omnibus appropriations bill. $1,500,000,000 facility in its 5-year Future Years Nuclear Security Program budget.” The One of the bills released was the “Energy and Subcommittee added that it “does not believe Water Development Appropriations Bill, 2015” NNSA should complete the design of a facility and the accompanying Committee Report, it cannot afford to build.” which provides funding for the Department of Energy’s (DOE) national defense programs. In terms of programmatic changes, the The Energy and Water Subcommittee’s Subcommittee directed “NNSA to implement (Subcommittee) bill would provide a total of the new budget structure for the fiscal year $33.683 billion for FY 2015, an increase of 2016 budget submission that was developed $525 million above the Obama jointly with this Committee.” The Administration’s request and $146 million Subcommittee stated that “[t]he budget should above FY 2014 enacted levels. The include four major funding categories that Subcommittee provided $8.314 billion for reflect the needs of maintaining a safe, secure, National Nuclear Security Administration’s and effective nuclear weapons stockpile: (NNSA) Weapons Activities, which meets the Directed Stockpile Work for maintaining and

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refurbishing weapons systems; Science, attacks in that year and that it planned to Technology, and Engineering for science-based challenge the Iraqi government for control of stockpile stewardship activities; Major western Iraq and Baghdad.” He added that Production Capabilities for new infrastructure “[t]he Administration told us that ISIS must be, investments in critical nuclear and non-nuclear in their words, constantly pressured and their capabilities; and Site Operations and safe havens destroyed and that its objective Maintenance for non-security operations of was, quote, ‘to ensure that ISIS can never again sites and maintenance of general gain safe haven in western Iraq.’” Royce infrastructure.” The Subcommittee expressed asserted that “what the Administration did not its belief that “the new budget structure will be say was that the Iraqi government had been more transparent and reflect NNSA’s new urgently requesting drone strikes against ISIS programmatic focus on life extension camps since August of 2013, that there had programs, infrastructure modernization, and a been the opportunity to use drone strikes on science, technology, and engineering capability those camps both in eastern Syria before they to assess the stockpile without underground came over the border and to use drone strikes testing.” as their units moved across the desert.” He claimed that “[t]hese repeated requests, Iraq Hearings unfortunately, were turned down.” Royce contended that “Americans have spent enough Key Points: blood and treasure in Iraq…[a]nd that is exactly . The committees with jurisdiction over foreign why the Administration should have taken the affairs examined ISIS’ progress in Iraq and opportunity to inflict decisive damage on ISIS the Administration’s response to date from the air, through drone strikes while its fighters were encamped in the desert months This week, the Senate Foreign Relations and ago.” House Foreign Affairs Committees heard from Obama Administration officials regarding the Ranking Member Eliot Engel (D-NY) claimed situation in Iraq. Deputy Assistant Secretary Of that “ISIS is an existential threat to our allies in State For Iraq And Iran Brett McGurk and the region, and it’s a threat to the United Deputy Assistant Secretary Of Defense For States.” He contended that “[w]e’ve seen this International Security Affairs Elissa Slotkin story before, and we know how it ends.” Engel testified before both committees regarding a said that “[w]hen Russia withdrew from Department of Defense (DOD) assessment Afghanistan in the late ‘80s, that country was that may inform potential Administration allowed to become a no man’s land…[and] action. [v]iolent extremists found a safe haven in which to strengthen their ranks, train their On July 23, the House Foreign Affairs recruits, and plan attacks on the United States Committee held a hearing titled “Terrorist and our allies.” He declared that “[w]e cannot March in Iraq: The U.S. Response.” Chairman allow Iraq to follow the same path, to become Ed Royce (R-CA) remarked at a hearing six another safe haven from which another months Administration witnesses “testified at September 11 could be launched.” Engel said that hearing that ISIS had begun to shift that “we need to use all the tools at our resources from Syria to Iraq in early disposal because in the end, there’s no military 2013…[and] [t]hat it had tripled its suicide solution to this problem.” He said that “[w]e

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need to see real political changes in Iraq, more Chairman Robert Menendez (D-NJ) remarked inclusive policies and a greater effort to avoid that “[e]arlier this year I held a hearing on the sectarian conflict…[and] [i]n fact, [Prime spill-over from the Syria conflict to examine Minister Nouri] Maliki must go, and the sooner the implications of continued violence in Syria the better.” and how it would impact the stability and security of neighboring countries.” He stated Royce said that “no one likes Maliki…[b]ut that “[n]ow we are seeing the very dangerous given this ISIS threat and given the results of that spill-over with the advancement Administration’s stated goal of preventing an of the Islamic State of Iraq and Syria (ISIS), the ISIS sanctuary in western Iraq, why didn’t we increase in sectarian violence, underscored by support, at least in this limited way, attacks that the dissolution of any real border between Iraq would have done damage to these columns, or and Syria, and the designation by ISIS of a to the encampments.” McGurk responded that caliphate across Syria and Iraq that is “[t]he Iraqi government wanted to act on its threatening to create a security vacuum in the own with our assistance in enabling heart of the Middle East.” Menendez said that functions…[and] [w]e worked through the “I’m deeply disappointed that after years of summer and fall, through our own surveillance U.S. investment and time and resources, the and also by showing Iraqis how they could use loss of thousands of American lives, and the their capability to be able to target some of commitment of billions of dollars to support these sites.” McGurk added that “[t]he formal Iraq’s political development and the creation of request from the Iraqis for direct U.S. air a responsible, capable Iraqi security force that support did not come in a formal way until they deserted the communities they were May.” responsible for protecting, abandoned U.S. military equipment, and fled from ISIS Engel said that “Iraq is not a real fighters.” state…[because] [i]t was slapped together.” He asked for views on whether Iraq should remain Ranking Member Bob Corker (R-TN) stated intact. McGurk said that “[t]here’s a that “[t]hough significantly outnumbered, ISIS recognition in Iraq that from the center out, managed to overwhelm entire divisions of the you’re never going to fully control all of these Iraqi army, many of whom removed their areas, and particularly, given the capacity of uniforms and ran.” He said that the “United [ISIS], and there’s also recognition that locals Nations (UN) reports that last month was the alone, and tribal forces alone cannot defeat deadliest in Iraq since 2008 with 2,400 Iraqis [ISIS].” He claimed that “[t]hey need the killed, two thirds of which were civilians.” support and resources of the central state.” Corker said that “[d]espite the connection to Slotkin said that “from a security point of view, Syria, it is important to note that is not just an the single best blunt, frankly, to both [ISIS] and invasion from foreign fighters…[and] ISIS to a strong, dominant Iranian influence in Iraq simply cannot hold this much territory in Iraq is a strong, capable federal government based while maintaining operations in Syria without in Baghdad.” help on the ground.” He said that “I’m open to working with the Administration to determine On July 24, the Senate Foreign Relations what we can do as a nation to help shore up Committee held a hearing titled “Iraq At A the defenses of the Iraqis and encourage Crossroads: Options For U.S. Policy.” political reconciliation among its Iraqi leaders.”

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learned over the last three weeks that you did Menendez said that “many look and say that not know prior to the assessment.” Slotkin what is happening on the ground is accelerating responded that “I think the thing when we put towards a breakup of Iraq, because too many the assessors on the ground, that was the of Iraq’s communities no longer trust the biggest open question given the march [ISIS] Maliki government…[a]nd the question is had had across and into Mosul and down was whether there is anything we can do to prevent what was the status of Baghdad.” She asserted it.” McGurk responded that “I don’t think that “one of the early things that we saw as we anyone is trying to create a strong central got on the ground was that there was a government that is gonna (sic) retain control all stiffening of the Iraqi security forces in and over the country…[and] [i]n fact, I think around Baghdad to protect the capital, which everybody recognizes now that from the center we thought was critically important.” out, you’re not gonna (sic) be able to retain control in all parts of the country.” Menendez Senate Confirms National Security noted that Slotkin “commented in the House Nominees hearing yesterday that options being developed for the President are more concrete and Key Points: specific as a result of the U.S. military advisers . The Senate confirmed new Marine Corps on the ground and increase intelligence Commandant, ISAF Commander, NNSA collection.” He asked that “[w]hat guidance Principal Deputy Administrator, and others have you received in terms of timing for these decisions..[a]nd how will the political and This week, a number of high profile national security conditions on the ground influence the security nominations were cleared by the President’s decisions.” Slotkin responded that Senate. On July 23, the Senate confirmed by “the assessments came in last week…[which unanimous consent a number of general are] dense…[and] significant.” She added that officers, including International Security “we’re still working through those…[and] Assistance Force (ISAF)/United States Forces- [a]fter we have done that…[the Secretary of Afghanistan Commander General Joseph Defense and the Chairman of the Joint Chiefs Dunford, Jr. to be Commandant of the Marine of Staff] will make informed recommendations Corps and Army Vice Chief of Staff General to the president.” John Campbell to succeed Dunford as ISAF/ United States Forces-Afghanistan Commander. Corker asked McGurk to “assess our influence The Senate also confirmed Assistant Secretary to be in Iraq right now.” McGurk said that of Defense for Global Strategic Affairs “since this crisis, particularly in Mosul, we have Madelyn Creedon to be the Department of been embraced particularly, our military Energy’s (DOE) Principal Deputy personnel, who have come in.” He claimed that Administrator for the National Nuclear “[w]e have been embraced by their military, Security Administration (NNSA) on July 23. particularly special forces assessment Creedon’s nomination was confirmed by voice team…[and] [t]he Iraqis have given us full vote. On July 24, Lisa Disbrow was confirmed access to air space for intelligence flights we as the Assistant Secretary of the Air Force for want to do…[and] the legal requirements we Financial Management by unanimous consent. need to be there.” Corker asked Slotkin to “broadly tell us of anything that y’all have Upcoming Hearings and Events

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Subcommittee will hold a hearing to discuss July 29 policy regarding North Korea. Iran: The Senate Foreign Relations Committee will hold a hearing to discuss nuclear For more information on defense issues you may email negotiations with Iran. or call Michael Kans at 202-659-8201.

Iraq/Syria: The House Armed Services HEALTH Committee will hold a hearing to discuss foreign policy in Iraq and Syria. House Panel Holds Hearing and Roundtable on 21st Century Cures Malaysian Flight 17: The House Foreign Relations Committee’s Europe, Eurasia, and Key Points Emerging Threats Subcommittee & Terrorism,  Health Subcommittee hearing examined Nonproliferation, and Trade Subcommittee will barriers to communication among all involved hold a hearing to discuss the shootdown of in discovery, development, and the delivery cycle Malaysian Flight 17.  Committee held its third roundtable discussion on the topic of 21st Century Cures, discussing Iran: The House Foreign Relations Committee how advances in personalized medicine such as will hold a hearing to discuss nuclear genomic sequencing and diagnostic testing can negotiations with Iran. accelerate the pace of cures

Nuclear & Radiological Threats: The House This week, the House Energy and Commerce Homeland Security Committee’s Cybersecurity, Committee’s Health Subcommittee held a Infrastructure Protection, and Security hearing entitled “21st Century Cures: Barriers Technologies Subcommittee will hold a hearing to Ongoing Communication and Evidence to discuss protecting the nation from nuclear Development.” Members and witnesses and radiological threats. discussed issues surrounding continued evidence development and communication of Climate Change: The Senate Budget information regarding treatments and cures in Committee will hold a hearing to discuss the the real world setting. Improving research and economic and budgetary consequences of communication was a major theme of the climate change. hearing, with Members on both sides of the aisle discussing ideas and raising questions July 30 about the current process. Afghanistan: The House Armed Services Committee will hold a hearing to discuss risks  Access to Information: Chairman Joe to stability in Afghanistan. Pitts (R-PA) asked if limitations on the exchange of information are inhibiting Sealift Forces: The House Armed Services delivery of care to patients. Committee will hold a hearing to discuss  Patient Registries: Members logistics and sealift force requirements. discussed the importance of patient

registries as a tool for data and evidence North Korea: The House Foreign Relations collection. Committee’s Asia and the Pacific

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 CMS Coverage with Evidence: Upcoming Hearings and Meetings Members discussed the impact of coverage determinations on evidence July 28 development and how Coverage with Health Care Law and Plan Cancellations: Evidence Development (CED) The Health Subcommittee of House Energy innovation can be improved. and Commerce Committee hearing titled Representative Renee Ellmers (R-NC) "Protecting Americans from Illegal Bailouts asked how the Centers for Medicare & and Plan Cancellations Under the President's Medicaid Services’ (CMS) authority Health Care Law." over coverage is currently limited. Witnesses explained that in any July 30 particular trial, there may be an overlap Contact Lens Industry: The Antitrust, of the many different regulatory silos Competition Policy and Consumer Rights making it difficult for CMS staff to Subcommittee of Senate Judiciary Committee determine whether a study would be hearing titled "Pricing Policies and Competition covered. They called for a singular CMS in the Contact Lens Industry: Is What You See authority to publish an integrated What You Get?" policy. Medicare Observation Status: The Senate On July 23, the House Energy and Commerce Special Aging Committee hearing titled Committee held a roundtable discussion "Admitted or Not? The Impact of Medicare entitled “21st Century Cures: Roundtable on Observation Status on Seniors." Personalized Medicine.” Members and panelists discussed how the rise of personalized July 31 medicine and advances in science and Affordable Care Act Implementation: The technology can shape the health care system in Oversight and Investigations Subcommittee of the 21st century. Panelists participating in the House Energy and Commerce Committee discussion included directors from the U.S. hearing on implementation of the Patient Food and Drug Administration, and individuals Protection and Affordable Care Act, including representing advocacy organizations for cancer, updates from the Centers for Medicare and genomic research and personalized medicine. Medicaid Services and the Government Accountability Office. Members asked about data analytics and sharing, panelists replied that researchers need Telemedicine and Small Medicine access to information stressing the need to Practices: The Health and Technology improve data sharing while protecting patient Subcommittee of House Small Business privacy. Members and panelists discussed Committee hearing titled "Telemedicine: A improvements in disease specific testing Prescription for Small Medical Practices?" through genomics. The discussion also explored how individuals can best utilize these For more information about healthcare issues you may advances in personalized medicine. Panelists email or call Matthew Hoekstra or George Olsen at emphasized the need to balance innovation 202-659-8201. with reliability and patient safety.

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TRANSPORTATION AND Ranking Member Rick Larsen (D-WA) said INFRASTRUCTURE that, in 2012, the U.S. aviation manufacturing industry generated over $150 billion. He stated State of Domestic Aviation Hearing his interest in hearing how the FAA has brought more efficiency and consistency to Key Points: their certification process, saying that the . The Aviation Subcommittee focused on the “predictable and timely” certification of aircraft progress the FAA has made in implementing and components is “critical” for domestic reforms to the certification process and how this manufacturers to get their products to market. affects the domestic industry He emphasized the vital importance of engaging labor in implementing changes to On July 23, the House Transportation and FAA processes, saying that changes in day-to- Infrastructure Committee’s Aviation day activities are necessary to establishing large Subcommittee held a hearing titled “Domestic policy shifts. He expressed support for Aviation Manufacturing: Challenges and ensuring the FAA has adequate staffing Opportunities.” The Subcommittee discussed resources as their oversight duties are the progress made on the Federal Aviation expanded, while acknowledging frustration Administration’s (FAA) implementation of with unnecessary delays in validating of FAA- provisions from the “FAA Modernization and certified products. Reform Act of 2012,” which required the FAA to improve the efficiency of its certification FAA Associate Administrator for Aviation process and address inconsistent application of Safety Peggy Gilligan stated that the FAA its regulations. operates the most complex and safest airspace system in the world. She said that, in 2013, civil Chairman Frank LoBiondo (R-NJ) stated that aviation supported 11.8 million jobs, generated the American aviation manufacturing industry $1.5 trillion in total economic activity, and is a critical sector of the national economy, contributed 5.4 percent to the U.S. GDP. She generating billions of dollars and supporting argued that the FAA sets the “gold standard” millions of jobs annually. He warned that, for aircraft design and manufacture. She despite some recovery in the industry following explained that, through provisions outlined in the economic downturn in 2008, manufacturers the “FAA Modernization and Reform Act of continue to face challenges as they work to 2012,” the FAA and industry have agreed on bring products to market. He stressed that six recommendations that will “streamline and delays in the approval process can cost reengineer” the certification processes. Gilligan manufacturers millions of dollars. He expressed stated that “the Aircraft Certification Process interest in receiving an update on the FAA’s Review and Reform Advisory Rulemaking development and implementation of Committee (ARC) developed consensus recommendations created through the “FAA recommendations on ways to reduce the time Modernization and Reform Act of 2012.” He and cost of certification without compromising emphasized that it is critical that the FAA safety,” notably, “six recommendations, which adapts certification processes to accommodate are mapped to 14 specific FAA initiatives.” She industry innovation and not limit contended that the FAA has made progress on manufacturers’ global competitiveness. all of the initiatives since the original release of the implementation plan in January 2013. She

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said that the FAA facilitates the use of foreign projected to be completed next month, which manufactured equipment in U.S. products, is eight months beyond the initial target date. while ensuring the safety of all aviation components and aircraft that operate in U.S. Senate Banking Committee Looks At airspace no matter where they are produced. Impact of Transit on Development She emphasized that the FAA has collaborated with industry partners to more efficiently Key Points: oversee the certification and production . Senate Subcommittee discussed how transit can process, using a risk-based approach focusing improve the quality of life for residents in on the highest-risk areas. She explained that the urban and rural communities designee system allows the FAA to certify the wide range of products in the aviation industry, On July 22, the Senate Banking Committee’s with over 5,000 designees and 85 organizational Subcommittee on Housing, Transportation, designations. She said the FAA could not and Community Development held a hearing ensure the safety of all products without the entitled “Building Economically Resilient designation system. Communities: Local and Regional Approaches.” Chairman Robert Menendez (D- Government Accountability Office (GAO) NJ) noted that the witnesses are representatives Director of Civil Aviation Issues Gerald of communities from across the country, and Dillingham stated that the GAO has done they will talk about what they have done to several reviews examining the efficiency of the build resilient local communities. He explained FAA’s aircraft certification and approval that to have a strong, livable community is a processes and industry’s concerns about goal shared around the country. He claimed inconsistent regulatory interpretation. He there is not one single approach to building an asserted that these concerns remain despite economically strong community. He said that it FAA actions to address these “long standing is critical to have federal support in the efforts issues.” He said that, in response to to create a resilient community. He noted that requirements in the “FAA Modernization and following the hearing, he plans to reintroduce Reform Act of 2012,” the FAA established the “Livable Communities Act of 2011” rulemaking committees to produce a series of (S.1621), originally introduced during the 112th recommendations to help the FAA solve these Congress. He stated that the goal of this problems. He said that a majority of the legislation is to support the economic initiatives outlined in the committee development work that is done in America’s recommendations on the certification process communities, work that is similar to what is will be implemented within three years; done by today’s panelists. however, he noted that FAA has only established performance metrics for five of the Menendez asked what the light rail line in 14 initiatives, with no defined way to measure Jersey City, New Jersey has done for housing the collective effect of the measures. He stated demand. Jersey City Mayor Steven Fulop that FAA has begun implementing explained that Jersey City will soon surpass recommendations to improve regulatory Newark as the largest city in New Jersey. He consistency, but has yet to deliver its final plan explained that housing is continually being built containing an implementation strategy and duty in the area, and these apartments are being assignments. He noted that the plan is filled as quickly as they are being built.

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Menendez asked what the panelists’ Senate Appropriations Subcommittee communities do to improve coordination Would Boost Army Corps Funding across agencies and organizations, and what some of the challenges associated with this are. Key Points: Greater Cleveland Regional Transit Authority . The Energy and Water Subcommittee would CEO and General Manager Joseph Calabrese provide funding above the Administration’s noted that agencies in Cleveland regularly meet request for water development projects with one another to coordinate how they can . The FY 2015 Appropriations bill would not best work leverage the available funding. implement WRRDA reforms Regional Transportation Commission of Washoe County Executive Director Lee This week, the Senate Appropriations Gibson explained that in Washoe County Committee released was the “Energy and agencies regularly work with outlying Water Development Appropriations Bill, 2015” communities to align goals and planning. He and the accompanying Committee Report, stated that the public and private sectors come which was reported out of Subcommittee on together to focus their energies. He noted the June 17. However, the full Committee has not local governments, regional agencies, and the announced plans to markup the bill and the private sector can come together because of a Committee does not typically release regulatory environment that encourages entities Subcommittee bills and committee reports. working together. Therefore, this may a signal that the Committee will not be marking up any other FY 2015 Senator Sherrod Brown (D-OH) asked about appropriations bills, the Energy and Water the process of economic development and the Development bill included. Nonetheless, the involvement of the private development. bill will likely serve as the Committee’s marker Calabrese explained that young people are in negotiations with the House Appropriations moving into downtown Cleveland and noted Committee on a FY 2015 continuing resolution there is a waiting list for the housing in the or omnibus appropriations bill. downtown area. He explained that young people today want to be able to be car free, and The package provides funding for the Cleveland is able to provide that for them. Department of Energy’s (DOE) national Brown asked how Cleveland’s transit system is defense programs. The Energy and Water addressing the needs of the elderly. Calabrese Subcommittee’s (Subcommittee) bill would stated that addressing these needs is a reason provide a total of $33.683 billion for FY 2015, why the federal transportation budget is so an increase of $525 million above the Obama critical. He explained that currently the transit Administration’s request and $146 million system is not able to address the needs of all above FY 2014 enacted levels. The Obama elderly citizens who live outside of the Administration requested $4.533 billion for the downtown area. He noted that an expanded Army Corps of Engineers (as compared to the transit system can only be done with the help FY 2014 enacted level of $5.467 billion) but the of federal funding. Subcommittee provided $5.134 billion.

The Subcommittee noted “the enactment of the “Water Resources Reform and Development Act of 2014” (WRRDA) on June

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10, 2014…[which] provides for changes in the Rogoff was confirmed to be Under Secretary of ways that the Corps of Engineers does business Transportation For Policy. Mendez will and authorizes at least $16,000,000,000 in new succeed former Deputy Secretary of projects and authorities while proposing to Transportation John Porcari who stepped deauthorize $18,000,000,000 of previously down in December 2013, and Rogoff succeeds authorized projects.” The Subcommittee former Under Secretary of Transportation For observed that “[e]nactment of the WRRDA, Policy Polly Trottenberg left in January to serve while providing considerable opportunities for in New York Mayor Bill de Blasio’s new water resources investments, does not administration. On July 24, the Obama provide any additional funding for water Administration nominated FTA Deputy resources projects.” The Subcommittee stated Administrator Therese McMillan to be the next that “[t]he Committee has not yet had the FTA Administrator, and McMillan has been opportunity to determine the full effects of the acting Administrator. As of yet, the reforms of the WRRDA since it is unclear how Administration has not named a nominee to the Administration will interpret the head the FHWA. language…[and] [a]s the Administration’s decisions for the fiscal year 2015 budget Upcoming Hearings and Events request were made in the absence of the July 29 WRRDA, few of the WRRDA provisions will Truck Safety: The Senate Commerce, Science, be a part of this appropriations bill. and Transportation Committee’s Surface Implementation guidance for the WRRDA will Transportation and Merchant Marine be developed by the Administration in the Infrastructure, Safety, and Security coming months and it is anticipated that the Subcommittee will hold a hearing to discuss provisions from this WRRDA bill will be more improving the safety of trucks on the nation’s fully integrated into the fiscal year 2016 budget highways. request.” July 30 Mendez and Rogoff Confirmed GSA Tenant Agencies: The House Transportation and Infrastructure Committee Key Points: will hold a hearing to discuss measures to . Senate confirms the second and third ranking reduce costs in leased space. positions in the Department of Transportation . The Administration nominates new FTA For more information on transportation issues you may head email or call Michael Kans at 202-659-8201. Tim Hooge and Greg Frink contributed to this section. On July 24, the Senate confirmed by unanimous consent two Department of TECHNOLOGY Transportation officials to officially fill the positions in which they have been serving in an House To Consider Cyber Bills acting capacity. Federal Highway Administration (FHWA) Administrator Victor Key Points: Mendez was confirmed as the Deputy Secretary . The House to take cybersecurity bills next of Transportation, and Federal Transit week that are more targeted than CISPA or Administration (FTA) Administrator Peter CISA

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The House Homeland Security Committee has Next week, the House is set to consider a pair released a one-page summary of H.R. 3696, of cybersecurity bills, the “National which explained that bill: Cybersecurity and Critical Infrastructure . Prohibits new regulatory authority at Protection Act of 2013” (H.R. 3696) and the DHS and is budget neutral; “Critical Infrastructure Research and . Codifies and strengthens the National Development Act” (CIRDA) (H.R. 2952). Both Cybersecurity and Communications of these bills are narrower in scope than Integration Center (NCCIC), a federal cybersecurity bills that have received more civilian, transparent interface to scrutiny, such as the “Cyber Intelligence facilitate real-time cyber threat Sharing and Protection Act” (CISPA) (H.R. information sharing across critical 624) and the “Cybersecurity Information infrastructure sectors; Sharing Act of 2014” (CISA) (S. 2588), both of . Establishes an equal partnership which would authorize information sharing by between private industry and DHS, and the intelligence community and liability ensures that DHS properly recognizes protection. By contrast, H.R. 3696 would industry-led entities to facilitate critical provide statutory authority for the Department infrastructure protection and incident of Homeland Security’s National Cybersecurity response; and Communications Integration Center . Codifies and strengthens the successful (NCCIC), an existing entity. Moreover, the bill aspects of the National Infrastructure would further clarify DHS’s authority to be the Protection Plan (NIPP), a public- primary cybersecurity entity for the federal private partnership framework that has government’s non-national security networks. been supported by the private sector The bill explicitly excludes the intelligence since 2003; community and Department of Defense from . Codifies the Cyber Incident Response its ambit. H.R. 2952 would direct DHS to Teams to provide timely technical formulate a strategic plan to “guide the overall assistance, crisis management, and direction of federal physical security and actionable recommendations on cyber cybersecurity technology research and threats to critical infrastructure owners development efforts for protecting critical and operators on a voluntary basis; infrastructure.” . Ensures that the National Cybersecurity Incident Response Plan is regularly If the House passes H.R. 3696, there may be an updated and exercised in coordination opportunity for Congress to pass a more with federal, state, local, and private targeted cybersecurity bill because a sector stakeholders; comparable Senate bill was reported from . Codifies DHS operational information committee last month. On June 25, the Senate security activities to protect and ensure Homeland Security and Governmental Affairs the integrity and resiliency of all federal Committee reported out the “National civilian information systems and Cybersecurity and Communications Integration networks (.gov); and Center Act of 2014” (S. 2519), which is . Amends the SAFETY Act to establish narrower than H.R. 3696 but would also codify a threshold for qualifying cyber the NCCIC. incidents so private entities can

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voluntarily submit their cybersecurity For more information on technology issues you may procedures to the SAFETY Act Office email or call Michael Kans at 202-659-8201. to gain additional liability protections in the event of a qualifying cyber incident. This Week in Congress was written by Rebecca Konst.

During a February 5 markup, Cybersecurity, Infrastructure, Protection, and Security Technologies Subcommittee Subcommittee Ranking Member Yvette Clarke (D-NY) succeeded in adding her bill, the “Homeland Security Cybersecurity Boots-on-the-Ground Act” (H.R. 3107) to H.R. 3696. She explained that explained that H.R. 3107 requires DHS to establish cybersecurity occupation classifications, assess its cybersecurity workforce, and develop a strategy to address identified gaps in its cybersecurity workforce. She argued that DHS is increasingly dependent on temporary contractors. She said cybersecurity is a complex mission and requires a wide range of talent at all levels. She emphasized that DHS needs to have multiple levels of cybersecurity occupation classification.

Upcoming Hearings and Events July 29 Broadband: The House Agriculture Committee will hold a hearing to discuss future broadband investments.

Nanotechnology: The House Energy & Commerce Committee’s Commerce, Manufacturing, and Trade Subcommittee will hold a hearing to discuss nanotechnology and innovation.

July 30 The Wireless Phone Industry: The Senate Commerce, Science, and Transportation Committee will hold a hearing to review consumer protection practices in the wireless phone industry.

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