NOVEMBER 5, 2014

GOVERNMENT STRATEGIES UPDATE

Top Seven Agenda Items for the Lame Duck Session

Republicans might have scored historic victories in this week’s midterm elections, but before these new Members of the House and Senate are sworn in on January 3, 2015, the current Congress – the Democratic Senate and the Republican House of Representatives – will return to Washington for a “lame duck” session to complete this year’s legislative work. The lame duck session will begin on Wednesday, November 12, and could last until late December. We believe that Congressional Republicans will push for a short lame duck session and then try to complete the unfinished business early next year when they control both Houses of Congress.

The following matters are likely to be addressed before the end of the year:

1. Nominations and Confirmations: In order to speed up the confirmations of President Obama’s key nominees in the executive branch and judiciary, Senate Democrats invoked the “nuclear option” last year, changing the vote threshold required to confirm presidentially-appointed nominees. With Republicans in charge of the Senate next Congress, confirmations will likely grind to a halt. As a result, before the conclusion of the 113th Congress, the Democratic-led Senate will likely try to confirm as many of the following Presidential nominees as possible. We also expect the Republicans to strenuously object.

. U.S. Attorney General: We expect that the President will nominate and the Senate will confirm a replacement for Eric Holder as U.S. Attorney General. The President could announce his choice as soon as this week, and Senate Judiciary Committee Chairman Patrick Leahy (D-Vermont) could move the nominee through his committee quickly in order to have the confirmation vote before the end of December. Possible nominees include the U.S. Solicitor General Don Verrilli, U.S. Labor Department Secretary Tom Perez and U.S. Attorney Loretta Lynch.

. The Courts: Sixteen nominees to fill judicial vacancies have had their nominations ratified by the Senate Judiciary Committee but are awaiting action by the full Senate. Because these positions come with lifetime tenure, filling these seats are likely to be a priority for Senate Majority Leader Harry Reid (D-Nevada).

. Executive Branch: There are 129 executive branch appointments pending in the Senate. These include a surgeon general, multiple ambassadors and assistant secretaries, undersecretaries and directors of various agencies and departments.

2. Ebola Oversight and Management: The Ebola crisis will continue to be a high priority of the Senate and House Committees with jurisdiction over health care. In his opening remarks during his press conference

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after the midterm elections, President Obama announced that he will request $6.2 billion in emergency funds from Congress to fight Ebola abroad and prevent the spread of the disease in the United States.

3. Continuing Resolution: Fiscal year 2015 began on October 1, 2014. In September, Congress avoided a government shutdown by passing a continuing resolution that funded most government programs until December 11, 2014. As a result, Congress must decide how long to extend fiscal year 2015 funding. Some Members have expressed interest in enacting an omnibus appropriations bill to provide funding for the remainder of the Fiscal Year; however, with the Republicans in control of Senate next year, it is probable that another short-term continuing resolution will be approved. The next Congress will then be tasked with setting funding levels for the remainder of fiscal year 2015.

4. Tax Extenders: The House and Senate have taken different approaches to tax policy this Congress. The Republican House has approved legislation that would make certain expired tax provisions part of the permanent tax code, while the Democratic Senate has passed shorter extensions. For example, the House passed a “permanent” research and development (R&D) tax extension without budget offsets. And House Republicans have drafted legislation that would make six of the 55 tax provisions which expired last year permanent with no offsets. The total cost for those bills is $310 billion over a decade. Meanwhile, the Senate Finance Committee unanimously passed the Expiring Provisions Improvement Reform and Efficiency Act (EXPIRE Act), “tax extender” legislation, renewing provisions that have expired or will expire at the end of this year. The Senate voted to formally begin consideration of this $85 billion package – which is not offset – but the legislation has stalled on the Senate floor.

Lawmakers overseeing tax policy have indicated that a final deal to extend all of the expired credits might not come until the lame duck session, if at all. Various budget watchdog groups – and the Obama Administration – have urged policymakers to extend the expired provisions; offset their cost to the federal budget; and then move to fully overhaul the tax code.

5. Terrorism Risk Insurance: The Terrorism Risk Insurance Act (TRIA) expires on December 31, 2014. Conservatives, led by House Financial Services Committee Chairman Jeb Hensarling, oppose a long-term reauthorization of the program. Chairman Hensarling has also sought significant reforms. The conservatives are not likely to prevail: the Senate passed a “clean” seven-year TRIA extension last July by a vote of 93 to 4. Ultimately, we anticipate the House will accede to the Senate.

6. Insurance Capital Standards: Federal Reserve lawyers have interpreted the “Collins Amendment” to the Dodd-Frank Wall Street Reform and Consumer Protection Act to require that it apply bank capital rules to the insurance companies it supervises. Both the House and Senate have passed measures to clarify that the Fed may apply insurance-based capital standards to the insurance portion of a business, while still keeping bank capital standards for the banking portion of a business. The Senate version passed as a stand-alone measure while the House bill was included in a broader package of Dodd-Frank reforms. We expect the House and Senate to satisfy the Constitution’s bicameralism and presentment requirements and pass this fix before the end of the year.

7. Congressional Oversight and Investigations: With Congress in session, Committee chairs will continue to hold oversight hearings and pursue investigations work. We anticipate hearings that examine implementation of the Affordable Care Act; the U.S. response to the Ebola epidemic; ways to combat ISIS,

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including whether to authorize force against it; and also the situation in Ukraine. Also, in October, the National Highway Traffic Safety Administration (NHTSA) issued a recall of nearly 8 million vehicles equipped with airbags made by Takata, a Japanese auto parts manufacturer. This recall has affected 10 different auto makers. Already, NHTSA has initiated an investigation and ordered Takata to provide documents and answer questions under oath. With the company’s airbags fitted into so many cars, Congressional hearings are a virtual certainty.

If you have any questions regarding this update, please contact the Sidley lawyer with whom you usually work or

Michael E. Borden Rick Boucher Patricia DeLoatche Peter M. Goodloe Counsel Partner Policy Advisor Counsel +1.202.736.8521 +1.202.73608290 +1.202.736.8862 +1.202.736.8305 [email protected] [email protected] [email protected] [email protected]

Dora Hughes Catherine Karen Daron Watts Senior Policy Advisor Counsel Partner +1.202.736.8653 +1.202.736.8368 +1.202.736.8528 [email protected] [email protected] [email protected]

The Government Strategies Practice of Sidley Austin LLP Sidley’s Government Strategies group works at the crossroads of law and policy, helping clients develop and implement strategies which protect and further their business interests. Multiple institutions influence the development of federal law and policy– including the Legislative, Executive and Judicial branches of government as well as the private and non-profit sectors. The professionals in our Government Strategies practice work with our clients to assist them in understanding and managing these multiple influences in a successful manner. Our group features a 28-year veteran of the US House of Representatives who chaired the Energy and Commerce Committee’s Subcommittee on Energy and Air Quality, a former chief counsel of the EPA and a former senior policy advisor to the EPA Administrator. These professionals provide services to a variety of energy clients.

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