Hot Topics of the Election Season Relating To

HOT TOPICS OF THE POLITICAL ELECTION SEASON REPORT 2016 RELATING TO... ■ AMERICAN INDIAN LAW AND POLICY ■ ANTITRUST AND COMPETITION ■ COMMUNICATIONS AND INFORMATION TECHNOLOGY ■ CYBERSECURITY AND ENCRYPTION ■ ENERGY AND ENVIRONMENT PRE-ELECTION EDITION ■ HEALTH CARE ANALYSIS SEPTEMBER 2016 ■ INTERNATIONAL TRADE ■ TAX ■ TRANSPORTATION AND INFRASTRUCTURE Contents

American Indian Law and Policy 2

Antitrust and Competition ...... 6

Communications and Information Technology ...... 10

Cybersecurity and Encryption 16

Energy and Environment 20

Health Care ...... 26

International Trade ...... 32

Tax 36

Transportation and Infrastructure ...... 40 AMERICAN INDIAN LAW AND POLICY 2 Fall 2016 American Indian Law and Policy American Indian Law and Policy

SUMMARY POINTS Republican Candidate Donald Trump and the • In an effort to reach out to the positions of Assistant Secretary Republican Platform as many communities as for Indian Affairs and Solicitor at Mr. Trump’s campaign has yet to possible, former Secretary the Department of the Interior, and propose specific Native American Clinton’s campaign has put tribal liaison positions at various policies, and it is impossible to together a Native American other federal agencies. A Trump determine what policies a Trump policy workgroup that has presidency is expected to take administration would ultimately adopt. advised her campaign on longer to fill such positions. However, the National Republican issues of importance to Native • The leadership of the relevant Party Platform does recognize the American individuals and committees of jurisdiction failure of the federal government to tribal governments. In addition, in the Senate and House of sufficiently honor trust responsibilities to Secretary Clinton developed a Representatives is expected to Native American tribal governments, platform describing her position change, with both the Republican the social and economic hardships on several issues of relevance and Democratic leaders of the experienced by Native Americans, to Native Americans and tribal Senate Committee on Indian and the resolve to remedy those governments. Affairs changing and the situations through the encouragement • Mr. Trump’s campaign has not Republican leadership of the House of economic self-sufficiency. shared or disclosed any proposed Natural Resources Committee Native American policies. Subcommittee on Indian, Insular The Republican Platform to encourage • Given Secretary Clinton’s level and Alaska Native Affairs economic development in Indian of interest in Native American changing. This will likely result country focuses on the development of issues, a Clinton presidency is in significant turnover in staff for tribal resources by tribal governments, expected to fill administration the entire Senate Committee on absent restrictive federal regulations, positions that are directly related Indian Affairs, but probably not and says that tribes should have to Native American issues in much change in staff for the House more opportunities to be consulted short order. These would include Subcommittee. before any new regulatory policy is implemented on tribal lands. Finally, Republicans aspire to provide greater Fall 2016 3

protections for tribal cultures and Democrats have pledged to enact Mitch McConnell has expressed languages, which are considered to be legislation to negate the effects of a willingness to include this bill “national treasures.” intergenerational trauma, protect tribes’ on a larger must-pass piece of cultural resources, enforce the Indian legislation. However, the vast Democratic Candidate Child Welfare Act as it was originally majority of Senate Democrats Hillary Clinton and the intended, strengthen Indian voting oppose such action. Enactment of rights and protect tribal resources from this bill will largely depend on the Democratic Platform climate change. number of Senate Democrats who Secretary Clinton’s campaign has will support it. a website that provides a statement Outlook for Remainder of 2016 • Efforts to reauthorize the of her positions on several issues of Native American Housing importance to Native Americans, and 2017 and Self-Determination Act including her previous work in Indian • While not much activity is have continued since the law country. In general, she will focus on expected to occur in Congress expired in September 2013. consulting; protecting tribal assets and prior to the November elections, Congress has continued to fund resources; resolving long-standing Congress is expected to take these programs, but the level of disputes with the federal government; up several issues of importance funding has failed to increase strengthening public safety and justice to Native Americans and due, in part, to the fact that the in Indian country; combating drug tribal governments in the lame- law has expired. The biggest and alcohol addiction; increasing duck session that occurs after problem facing reauthorization opportunities for youth; ensuring high- the November election with is Republican opposition quality education for youth; ensuring adjournment sometime in to reauthorizing the Native that tribal communities have improved December. Hawaiian housing programs. health care; and fighting for Native • Most of the tribal programs are American veterans. funded through the Department of the Interior Environment and In addition to the Clinton campaign, Related Agencies Appropriations the National Democratic Party bill, which also includes funding Platform includes a section on how for the Indian Health Service. the Democratic Party will fight for Congress is expected to fund these Native American issues. This Platform programs for fiscal year 2017 includes pledges to uphold, honor by an omnibus appropriations and strengthen the trust responsibility bill. Funding for tribal programs to tribal governments; enact laws is not expected to be cut, but and policies that will expand any increases in funding are also tribal jurisdiction in Indian country; expected to be nominal. streamline the land-to-trust process; • While the House passed the and fully fund the Indian Housing Tribal Labor Sovereignty Act Block Grant Program, the Bureau this year, the Senate has yet to of Indian Education and the Indian act. Republican Senate Leader Health Service. Additionally, the 4 Fall 2016 American Indian Law and Policy

• Efforts will continue to get a five • Congress will try to find a • The Democratic (Jon Tester, D-MT) percent set-aside for tribes in the compromise to help tribal and Republican (John Barrasso, annual Crime Victims Fund. The governments deal with the R-WY) leadership of the Senate Senate included this provision Affordable Care Act’s Large Committee on Indian Affairs is in its Commerce-Justice-Science Employer Mandate, which requires expected to change in 2017. Likely appropriations bill, but Indian tribes to offer all employees a replacements on the Republican country needs to get the provision minimum level of health care side are Lisa Murkowski (R-AK), in the omnibus appropriations coverage or pay a penalty. The John Hoeven (R-ND) and Steve bill. If successful, approximately mandate fails to account for those Daines (R-MT). Tom Udall (D-NM) $145 million will be available to employees who are covered by is likely to become the Democratic tribal governments in fiscal year the Indian Health Service. ranking member. 2017; this would be an increase in • Republican leadership of the • Republicans are expected to funding of about $142 million. House Natural Resources maintain the majority in the • A federal district court recently Committee will continue to push House, and minimal changes are ruled that the Department of the a bill that will reform the federal expected to occur on the House Interior cannot take lands into trust recognition process by providing Natural Resources Committee. for the Mashpee Wampanoag Congress with the sole authority However, the Ranking Republican Tribe because it was not under to grant federal recognition to on the House Subcommittee on federal jurisdiction as of 1934, tribal entities. Indian, Insular and Alaska Native citing the ruling of the U.S. • Any of these issues that do not Affairs Don Young (R-AK) will Supreme Court in Carcieri. get enacted by the end of 2016 likely have to relinquish his ranking The decision has Congress will likely be reintroduced in the position. Likely replacements are renewing efforts to find some first quarter of the next Congress, Paul Gosar (R-AZ) and Doug compromise to address the which begins in January 2017. LaMalfa (R-CA). Supreme Court ruling.

Contributing Editors: Allison Binney, Jason Hauter and Michael Rossetti ANTITRUST AND COMPETITION 6 Fall 2016 Antitrust and Competition Antitrust and Competition

SUMMARY POINTS

• Since antitrust enforcement enforcement if she is elected, and owns The Washington actions and merger challenges including a focus on preventing Post. Additionally, through his tend to depend heavily on increased concentration and businesses, Mr. Trump has been specific facts, contrasting current understanding its relationship to involved in antitrust matters as antitrust enforcement with the stagnating personal incomes. a plaintiff and defendant and approach that will be taken • Mr. Trump has not articulated was once fined $750,000 in after the election is difficult. a general approach; antitrust a settlement with the Federal Still, there has been much enforcement could change in Trade Commission (FTC) for a rhetoric in the campaign about either direction if he is elected. failure to comply with a merger concentration and the system On the one hand, Republicans filing requirement. being “rigged,” the latter from are sometimes viewed as • Depending on the election candidates in both parties, as less interventionist antitrust results in November, a well as populist voter anger enforcers with respect to civil Democratic-controlled that could influence future antitrust matters. On the other Senate will generally be enforcement actions. hand, Mr. Trump has brought more active in congressional • The Democratic Platform and up the possibility of antitrust reviews of corporate Secretary Clinton’s proposals actions in his criticism of Jeffrey mergers and acquisitions, call for more aggressive antitrust Bezos, who controls Amazon including public hearings. Fall 2016 7

difference, particularly as to mergers, concentration in the first place Background since parties often choose not to by beefing up the enforcement incur the expense, risk and delay of agencies and directing more The issues that antitrust enforcement pursuing a matter to resolution in court resources to hire aggressive touches—from mergers to when a challenge by the government regulators to conduct in-depth anticompetitive conduct—may resonate is anticipated or filed. This can lead industry research to better with populist voter anger. But that to abandoned deals or consent understand the link between does not necessarily mean that there decrees even where there is a good market consolidation and will be a major increase in antitrust prospect of an agency loss. That stagnating incomes enforcement, given that the ability to alone can change the profile of what increase antitrust enforcement could be many companies consider and do. • will empower the agencies to tempered by the courts, and given that vigorously investigate mergers antitrust enforcers have been relatively Certain American and foreign and to oppose “pay-for-delay” aggressive under President Obama. parties who feel aggrieved by the agreements that keep prescription For instance, the Obama Department conduct of powerful U.S. companies, drugs artificially high and diminish of Justice (DOJ) reports that a total of particularly in the tech area, have patient choice 40 mergers have been blocked by found the European Union to be more court order or wholly abandoned by supportive of claims of monopoly • will protect free competition the merging companies in the face and anticompetitive conduct, and through net neutrality and of their investigation, as compared to there is always a possibility that the encourage pre-emption of only 16 in the prior administration. United States might become more state laws that unfairly protect The FTC has been similarly active and accommodating to such claims. incumbents against innovators prevailed in the U.S. Supreme Court (e.g., certain state regulations in 2013 on its challenge to “pay-for- On the other hand, should Mr. Trump pertaining to automobile delay” agreements as part of its push elect to take a significantly less dealerships and utility-pole access) for quicker generic drug entry into active enforcement approach to the pharmaceutical markets. antitrust laws, neither state antitrust • supports President Obama’s enforcers nor private parties seeking Executive Order directing agencies Traditionally, antitrust enforcement to enforce antitrust law are likely to to identify actions that they can under Republicans and Democrats fill all of the resulting gap. As a result, take to identify anticompetitive has seen relative consistency in the some transactions and conduct might activity and refer practices that policing of criminal cartel behavior, be allowed to proceed that would may violate the federal antitrust both domestically and internationally. otherwise have been challenged. laws to the DOJ and FTC. That said, differences have sometimes come into play with respect to merger Democratic Candidate If strong antitrust enforcement steps are enforcement and policing of civil not taken, expect certain Democratic nonmerger, anticompetitive conduct, Hillary Clinton senators, like Elizabeth Warren, who including monopolization. • will take steps to (1) stop has urged more aggressive antitrust concentration in any industry enforcement (as has the Democratic A more aggressive approach to where it is unfairly limiting Platform), to step up calls for action. enforcement can nevertheless make a competition, and (2) prevent 8 Fall 2016 Antitrust and Competition

Republican Candidate Donald Trump • has discussed the economy as being rigged, but has not made clear how and whether that view might affect antitrust enforcement • has said that large online retailer Amazon has “a huge antitrust problem” and that Jeffrey Bezos is using The Washington Post, which he owns, to influence politicians to Mr. Trump has had a variety of • From 1989-1993, Mr. Trump help Amazon on tax and antitrust experiences in business with antitrust defended private litigation issues. Mr. Trump declared that enforcement that might influence brought by an affiliate of a Bezos “thinks I’ll go after him for his views: gaming competitor claiming antitrust . . . because he’s got a monopolization of a portion of huge antitrust problem because • In 1988, Mr. Trump agreed to the Atlantic City casino gambling . . . he’s controlling so much, pay a $750,000 fine for failing market and conspiracy to suppress Amazon is controlling so much of to comply with the Hart-Scott- competition. Mr. Trump prevailed what they are doing.” Rodino (HSR) Act, which requires at trial. • may or may not align with the premerger notification of certain • Mr. Trump’s other major antitrust Republican Platform, which transactions followed by a waiting experience came against the NFL is largely silent on antitrust, period that allows the agency as a plaintiff. As an owner of the except perhaps to the extent to do an antitrust analysis and New Jersey Generals, in a case that it calls for less regulation to potentially challenge the brought by the USFL, he and (government should not be “a transaction before it closes. In that others charged the NFL with illegal meddlesome monitor”) and case, Mr. Trump purchased an monopolization. The jury found for more freedom for businesses. interest in two gaming companies the USFL, but awarded only $1 in in excess of an HSR threshold damages, trebled to $3. without providing the required notice and complying with the waiting period.

Contributing Editors: David Turetsky, Corey Roush and Ed Pagano COMMUNICATIONS AND INFORMATION TECHNOLOGY 10 Fall 2016 Communications and Information Technology Communications and Information Technology

SUMMARY POINTS Mr. Trump has said very little about communications and technology policy other than on the topics of • The policy issues in the directly in the FCC’s policy net neutrality and encryption. We communications and initiatives, though there are understand that he may publicly technology sectors described exceptions, as we witnessed announce his communications and below are those falling within in the recent net neutrality technology agenda prior to the first the jurisdiction of the Federal debate in which President presidential debate. Until then, we can Communications Commission Obama modified the approach make some predictions on his policy (FCC), an independent agency, that Democratic Chairman positions based on our understanding led by five commissioners, all Wheeler was proposing to of those positions he has taken and of whom are appointed by take and President Obama’s more generally on a review of positions the president and confirmed recent public support for FCC taken by the current Republican by the Senate. The winner of Chairman Wheeler’s proposal FCC commissioners and traditional this year’s presidential election on set-top box regulation. Republican policy in certain areas. will have the right to appoint Regardless of the degree of a three-person majority to a president’s activism, his or The following is a review of key the FCC, with the remaining her communications policy policy areas and the positions of the two members representing positions help shape the candidates where known: the other major party. The FCC’s agenda and priorities. chairperson of the FCC controls • In June, Secretary Clinton Democratic Candidate the FCC’s agenda, and the published her initiatives on Hillary Clinton policy issues are typically technology and innovation, • Consumer Privacy Protections: a reflection of the views of which provide some guidance Her tech agenda states that her his or her political party, as to what we can expect “policy approach to privacy as well as the chairperson’s in a Clinton-controlled will affirm strong consumer personal priorities. The FCC. A number of these protection values through effective president typically does not initiatives are summarized regulatory enforcement in an involve himself or herself on the following pages. adaptive manner, encouraging Fall 2016 11

high standards in industry idea for a national commission on • Streamline FCC Regulations: without stifling innovation.” As digital security and encryption to Secretary Clinton is likely to rely on a result, Secretary Clinton likely work with technology and public the FCC for development of rules will continue existing efforts by safety communities to address law and procedures that will further the the FCC to protect consumers’ enforcement needs while protecting following tech agenda: privacy through regulation (e.g., consumers’ privacy. She would §§craft rules to increase ownership by adopting broadband Internet encourage government agencies of media/telecommunications privacy rules presently proposed to consider innovative tools like outlets by minorities, women by Chairman Wheeler). bug bounty programs, modeled on and young entrepreneurs • Encryption and Cybersecurity: the Defense Department’s recent (e.g., media ownership rules, Whether the FCC in a Clinton “Hack the Pentagon” initiative, to auction bidding credits) encourage hackers to responsibly administration is involved likely §§work with the Department of disclose vulnerabilities they discover will depend on the outcome of the Agriculture’s Rural Utilities Service to the government. And she will commission’s findings. Secretary to develop rules and programs bolster the government’s ability Clinton was a proponent of for development of broadband to test its own defenses and fix the USA Freedom Act, and she infrastructure supports Sen. Mark Warner (D-VA) vulnerabilities before hackers and Rep. Mike McCaul’s (R-TX) exploit them. 12 Fall 2016 Communications and Information Technology

§§expand E-Rate programs to technologies that rely on spectrum continue to enforce them.” In connect more “anchor institutions” for connectivity. addition, she would promote an to high-speed Internet. • Net Neutrality: In 2015, the FCC Open Internet agenda abroad • Deployment of 5G Technology adopted net neutrality rules that by opposing efforts to block or and Services: Secretary Clinton recently were upheld by the D.C. degrade Internet access or to shut would (1) accelerate the process Circuit. Rules were premised on down social media. She would also of identifying spectrum, including reclassification of broadband fight efforts to create an Internet run federal government allocations, Internet access services as by governments. for auction to the private sector; telecommunications services • Privatization of Government- (2) consider spectrum policies that and require (1) no blocking, (2) Controlled Spectrum: In connection permit unlicensed, nonexclusive no throttling and (3) no paid with her plan to speed deployment and shared uses; and (3) dedicate prioritization (i.e., fast lanes). of 5G services, Clinton commits federal research funding to test- Further appeals of the net neutrality in her tech agenda to “enhance bedding, field trials and other rules are pending. Secretary the efficient use of spectrum public-private endeavors to speed Clinton supports the rules adopted by accelerating the process of the deployment of 5G services to under Chairman Wheeler and identifying underutilized bands, support the Internet of Things, smart pledges in her tech agenda to including ones now used by the factories, driverless cars and other “defend these rules in court and federal government.” Fall 2016 13

• Minority and Young Entrepreneurs Republican Candidate change by the application of an Access: Secretary Clinton would objective cost/benefit analysis work to increase access for Donald Trump based on economic impacts, thereby minorities, women and young • Consumer Privacy Protections: providing reviewing courts with entrepreneurs to capital needed to If Mr. Trump follows traditional an easier means of determining participate in the tech economy. Republican policy in this the validity of such rules under the Her FCC would likely craft rules area, he might abandon the Administrative Procedures Act. FCC’s current efforts to use to increase ownership of media/ • Deployment of 5G Technology and its rulemaking processes to telecommunications outlets by Services: Given his pro-business regulate broadband privacy, restructuring the media ownership viewpoint, a Trump-controlled FCC and instead rely on industry self- rules and by providing auction might seek to accelerate actions to regulation to address consumer bidding credits or developing other adopt rules/policies to authorize privacy. Primary responsibility policies that promote opportunities. 5G services in the United States for privacy issues would revert • Closing the Digital Divide: Secretary in an effort to establish America’s back to the FCC’s case-by- Clinton has proposed ensuring leadership in this very important case enforcement paradigm that 100 percent of Americans area (i.e., to “Make America Great (coupled with judicial review). have access to broadband by Again”). Mr. Trump may call upon 2020. She plans to ensure that • Encryption and Cybersecurity: the FCC to explore additional funding is available for this effort Given his heavy focus on national spectrum bands to support 5G through the Connect America security, Mr. Trump may push the services, as well as to expand its Fund, which is the primary FCC to take action that would efforts to incent U.S. companies to source of funding for broadband force equipment manufacturers develop the technology and systems infrastructure managed by the to cooperate with national for the deployment of 5G services. FCC, as well as through grants security efforts, either through to develop “digital communities” individual enforcement actions where broadband is currently or via rulemakings of general lacking. She will also “direct applicability. federal agencies to consider the full • Streamline FCC Regulations: range of technologies as potential Because Mr. Trump is focused recipients—i.e., fiber, fixed wireless, first and foremost on economic and satellite—while focusing impacts, it is possible that the on areas that lack any fixed Trump FCC might initiate review broadband networks currently.” of all FCC regulations in an effort Her plan would also direct more to deregulate by eliminating investments to “anchor institutions” unnecessary regulations and — schools, libraries, transit streamlining those remaining to systems and other public spaces. minimize bureaucratic oversight and delays where appropriate. He might also require the FCC to justify each new rule or rule 14 Fall 2016 Communications and Information Technology

• Net Neutrality: Mr. Trump tweeted in 2014 that “Obama’s attack on the internet is another top down power grab. Net neutrality is the Fairness Doctrine. Will target conservative media”: §§Mr. Trump’s apparent anti-net neutrality position (though not his rationale) is consistent with the Republican viewpoint that (1) net neutrality regulations are not needed and (2) broadband Internet services should not be regulated. §§Mr. Trump’s ability to take action to change the regulations adopted under Chairman Wheeler’s regime likely will depend upon the outcome of the judicial appeal of the D.C. Circuit opinion upholding the rules. • Privatization of Government-Controlled Spectrum: A Trump-led FCC might seek to accelerate the reallocation of as much government-controlled spectrum as possible to private commercial users and to attempt to reduce the deficit through auction revenue generated by the sale of such spectrum. To the extent that spectrum is used for national security purposes, Mr. Trump would be less likely to favor reallocation to private uses.

Contributing Editors: Tom Davidson and Greg Guice CYBERSECURITY AND ENCRYPTION 16 Fall 2016 Cybersecurity and Encryption Cybersecurity and Encryption

SUMMARY POINTS

• Secretary Clinton is likely capabilities, criticized China's Clinton. For example, when to expand on Obama hacking and called for a the FBI sought access to the administration efforts. She has review of vulnerabilities in vital encrypted information on the offered a series of proposals infrastructure and then for a phone of the San Bernardino to improve the security of plan to address them. He has terrorists over Apple’s objection, government networks and also called for the execution of Mr. Trump called for a boycott collaborate with the private Edward Snowden. Secretary of Apple until it provided sector, and she also calls for Clinton has called for making access. Secretary Clinton has regulatory enforcement that it clear to Russia, China and supported legislation to create a would encourage high privacy North Korea that their hacking national commission that brings and security standards in the activities, whether direct or the tech and public safety private sector, consistent with outsourced, will cost them. communities together to find innovation. In this effort, she seeks to solutions that balance privacy • Secretary Clinton and enlist allies to promote strong and public safety. Mr. Trump have addressed rules and press and hold • Further legislative progress on national security elements of China accountable if it is not cybersecurity may be possible cybersecurity. Mr. Trump has cooperative. in the next Congress, regardless called the United States “so • In expressing a preference to of election results. Significant obsolete” in cyber and has “err on the side of security,” bipartisanship contributed to called for the prioritization of Mr. Trump arguably may passage last December of improving Cyber Command’s favor security over privacy in the Cybersecurity Information offensive and defensive more instances than Secretary Sharing Act of 2015. Fall 2016 17

with privacy groups, has been active in expand investment in cybersecurity Background the post-Snowden world in advocating technologies; empower a federal for strong encryption that protects chief information security officer; While not a leading campaign issue, privacy and security, notwithstanding and expand public-private cybersecurity touches on both national possible impacts on law enforcement. collaboration and information- security and economic issues and may It fights efforts to undermine the sharing to strengthen private resonate with popular voter anger that security of its innovative products, sector cybersecurity, promote is addressed to unfair treatment of the including the creation of backdoors best practices, etc., in order United States by foreign nations. It and sometimes selective unlocking, to strengthen cybersecurity for has also come up in connection with which it is concerned might harm both government networks and the election itself, with allegations of consumers and put the companies the private sector. Secretary meddling by hackers with Russian at a competitive disadvantage, Clinton is also likely to build government associations. Both particularly in other countries. on President Obama’s U.S. candidates want to project strength on Cybersecurity National Action cybersecurity to other nations. Democratic Candidate Plan and ongoing work by the The business community has supported Hillary Clinton President’s commission that is voluntary approaches to cybersecurity, looking at the challenges ahead. such as development of best practices • Secretary Clinton’s cybersecurity • Secretary Clinton supports and progress through public-private campaign proposals include steps advances in “big data” and the partnerships, rather than regulation. that are intended to improve the “Internet of Things” as promising The tech industry in particular, along security of government networks; transformative benefits, coupled 18 Fall 2016 Cybersecurity and Encryption

with an approach to privacy our security.” She has called out doing what and their capabilities, that affirms strong consumer China as a security threat, noting whether it is China or Russia, and protection values “through the investigation into Russia's this needs to play a prominent effective regulatory enforcement in interference with our election, and role in our thinking. He said that an adaptive manner, encouraging said that cybersecurity is “one we are neither as advanced high standards in industry without of the most important challenges as other countries nor moving stifling innovation. She will carry the next president is going to forward as rapidly. He says that through that approach globally to face” in light of the offensive he will prioritize the development support data flows essential to the advances of Russia, China, Iran of offensive and defensive digital economy.” and North Korea, and she says capabilities at Cyber Command, • Secretary Clinton says it is a that the United States must make including to disrupt enemies, “false choice” between privacy it clear that direct or outsourced such as terrorists; as one of his and keeping Americans safe. She hacking will exact a price. The first directives, ask the federal supported the USA Freedom Act United States will work with allies government and military to and supports the Sen. Warner/ on these and related issues. She thoroughly review cyber defenses; Rep. McCaul bipartisan proposal also supports efforts, such as and identify all vulnerabilities in for a national commission on “Privacy Shield,” to align national all vital infrastructure and then ask digital security and encryption, data privacy laws and protect for a plan to immediately protect which is intended to work with continued cross-border data flows. those vulnerabilities. the technology and public • Secretary Clinton calls for • Last year, he said that we should safety communities to address hardening federal networks, “err on the side of security.” He law enforcement needs, protect including specific steps like assumes that people are listening the privacy and security of prioritizing application of to his phone conversations. He Americans who use technology, cybersecurity tools, such as would be fine restoring provisions and assess effects on innovation multifactor authentication, of the Patriot Act that allow for and global competitiveness. She encouraging consideration of bulk collection. He urged a also supports a major initiative “bug bounty” campaigns and boycott of Apple until it provided to help law enforcement break fostering more elite teams, (e.g., the information sought by the FBI encrypted communications on cleared government expert from the phone used by the San their own. She does not support “red teams”) to find and fix Bernardino shooter. He has also legally requiring backdoors or the vulnerabilities. called for Bill Gates to work on provision of encryption keys to law Republican Candidate “closing the Internet in some way.” enforcement. • Mr. Trump called for Russia to • Secretary Clinton has spoken Donald Trump hack Secretary Clinton’s email against Snowden’s leaks and • Mr. Trump has said that we are servers and, in 2014, called has supported NSA reforms to “so obsolete in cyber” now after on hackers to look at Obama’s a point, noting that “collecting having been involved at creation college records for his place of information about what’s going and are “toyed with by so many birth. He has said that he was around the world is essential to different countries…” He says kidding about the former. that we do not know who is

Contributing Editors: David Turetsky and Ed Pagano ENERGY AND ENVIRONMENT 20 Fall 2016 Energy and Environtment Energy and Environment

Introduction While energy and environmental issues have not been highlighted as frequently during the 2016 presidential campaign as in years past, the candidate’s policy positions diverge sharply on key issues, including the extent to which there should be government regulation of developing energy and natural resources, and addressing climate change. Both candidates closely follow their parties’ traditional policy positions.

Meanwhile, Congress continues to SUMMARY POINTS work on energy policy legislation that Congress could possibly complete • The Democratic and Republican energy policy that eliminates before adjourning. Complicating the candidates for president are subsidies for renewable prospects for passage will be the generally aligned with the energy and supports shifting truncated legislative session remaining positions of their parties on environmental regulations from and the scope of differences between energy and environmental the Environmental Protection the Senate- and House- passed bills. issues. Agency (EPA) to the states. Congressional leaders in this effort have stated their intention to move • Secretary Clinton and • Secretary Clinton supports forward as quickly and as far as Mr. Trump have divergent international agreements to possible. A brief legislative update approaches to regulating address climate change and follows on the forthcoming chart. pollutants and establishing plans to commit the United national energy policies. States to carbon emission • Mr. Trump views climate reductions, including calling change as a nonissue, has for 500 million new solar called for an “all-of-the-above” panels by the end of her first term in office. Fall 2016 21

CANDIDATE POSITIONS SIDE BY SIDE

The candidates’ energy and environmental positions—as reflected in their public statements, campaign websites and national party platforms—are summarized below.

Issue Clinton Trump

CLIMATE • An urgent threat and defining challenge of • “Not a big believer” in manmade climate change CHANGE our time

Greenhouse Gas • Reduce GHG emissions by 80% below 2005 • Forbid EPA from regulating carbon (GHG) Emissions levels by 2050 dioxide as a pollutant • Price GHG emissions • No carbon tax/price on GHGs

International Climate • Meet pledge to keep temperatures from rising • Reject Paris Agreement and Kyoto Protocol Accords 3.6ºF degrees above preindustrial levels • Halt U.S. funding of United Nations Framework Convention on Climate Change

FEDERAL • Extend smart pollution and efficiency standards • Cut EPA ENVIRONMENTAL • Implement all of President Obama’s executive • Environmental problems best solved by REGULATIONS actions on climate incentivizing human ingenuity and new • Privatize environmental and climate technologies justice by eliminating lead poisoning within five • Shift responsibility for environmental protections years, cleaning up the more than 450,000 toxic from the EPA to the states brownfield sites, and creating an Environmental • Transform the EPA into a bipartisan commission and Climate Justice Task Force (similar to the Nuclear Regulatory Commission) to • Reduce American oil consumption by one-third avoid politicized science through cleaner fuels and more efficient cars, • Limit congressionally delegated rulemaking boilers, ships and trucks • End practice of “sue and settle,” whereby agencies settle lawsuits implementing future regulatory conditions or procedures without public input • Modernize National Environmental Policy Act (NEPA) and return National Ambient Air Quality Standards to “where Congress envisioned it”

Clean Power Plan • A “significant step forward” to address climate change • Eliminate Clean Power Plan

Waters of the • No public position • Eliminate EPA rulemaking interpreting the Clean United States Water Act 22 Fall 2016 Energy and Environtment

ENERGY & ENVIRONMENT CONTINUED FROM PAGE 21

CANDIDATE POSITIONS SIDE BY SIDE

Issue Clinton Trump

ENERGY • Federal government should use 100% clean • Calls for an “all-of-the-above” energy strategy electricity • American energy dominance will be declared a • Launch $60 billion Clean Energy Challenge to strategic economic and foreign policy goal partner with states, cities and rural communities

Energy Efficiency • Maintain efficiency standards, particularly for • Has not publicly discussed energy efficiency appliances and buildings • Cut energy waste in American homes, schools, hospitals and offices by one-third and make American manufacturing the cleanest and most efficient in the world

Renewable Energy • Install 500 million solar panels by the end of the • Supports renewable energy, but only with private first term (2020) capital and not to the exclusion of other forms of • Generate renewable energy sufficient to power energy that are working much better every American home by 2027

Renewable Fuels • Commit to getting the Renewable Fuels Standard • EPA should increase the amount of ethanol (RFS) “back on track” blended into gasoline consistent with statutory levels set by the RFS

Nuclear Energy • Nuclear has an “important role to play” in U.S. • Implement the Nuclear Waste Policy Act energy production • Allow for responsible development of nuclear energy and research alternatives, including thorium

Energy • Modernize electric grid • Request that TransCanada renew its permit Infrastructure • Opposes Keystone XL pipeline applications for Keystone XL pipeline and approve it • A portion of revenues from oil and gas transportation via pipeline should be redistributed to local, impacted communities Fall 2016 23

CANDIDATE POSITIONS SIDE BY SIDE

Issue Clinton Trump

PUBLIC LANDS • Increase fees on extraction companies operating • The federal government should convey public on public lands without abruptly halting activities lands to the states • Prioritize conservation and stewardship of our • Strike down Bureau of Land Management’s shared natural heritage, including conservation of hydraulic fracturing rule public lands and waters • Allow state regulators to determine extraction • Establish an American Parks Trust Fund to expand within their borders, even on public land local, state and national recreational opportunities • Expedite permitting for mineral production on and rehabilitate existing parks public lands • Double the size of America’s “outdoor economy” • Rescind moratorium on new federal coal leases

OIL AND GAS • Ensure that federal actions do not significantly • Open public lands and the Outer Continental Shelf EXTRACTION exacerbate global warming to oil and gas exploration • Ensure that existing fossil fuel production is safe • Favors hydraulic fracturing, but “understands” why and responsible, and that sensitive areas are taken states or municipalities want to ban off the table the practice • Give EPA the ability to regulate hydraulic • Encourage the free trade and exportation of fracturing, as well as states and localities liquefied natural gas (LNG) • Reduce methane emissions from hydraulic • Increase oil production to counter manipulation by fracturing by 40-45 percent below 2005 levels by OPEC and other nationalized oil companies 2025 • Oppose drilling in the Artic and off the Atlantic coast • Reform fossil fuel extraction leasing and phase down extraction on public lands

ENDANGERED • Oppose efforts to undermine the Endangered • Reform the Endangered Species Act SPECIES ACT Species Act • Endangered species will not be protected in one location if these species exist elsewhere 24 Fall 2016 Energy and Environtment

Pending Energy Legislation Both the House and the Senate have passed significant energy policy legislation. The House passed the North American Energy Security and Infrastructure Act (H.R. 8) in December 2015 with only nine Democrats voting in favor. The White “While not hot-button House has issued a veto threat, objecting to a number of new restrictions on federal authority in the bill, including new provisions to broaden FERC authority issues in either campaign, to impose deadlines on other federal agencies and to curtail the Department of Energy’s ability to consider whether natural gas export projects are consistent with this election could have the public interest. The Senate adopted the Energy Policy Modernization Act (S. 2012) in April 2016 enormous consequences with bipartisan support. The legislation would streamline federal licensing for liquefied natural gas exports and approval of pipeline projects, improve electric grid reliability and security, and strengthen energy efficiency standards for for energy and commercial and federal buildings. environmental policy. The House and Senate both appointed conferees and will attempt to reconcile the differing bills in a joint House/Senate Conference Committee before Congress adjourns for the year. Conference Committee leaders expressed optimism that There are two candidates they will reach a compromise, but final action on the measure is not expected before a possible post-election lame-duck session of Congress. whose visions and beliefs are almost diametrically opposed, and who would take the United States down very different paths on energy and environmental issues.”

Contributing Editors: Charles Johnson, Hank Terhune, David Quigley, Paul Gutermann, Ian Shavitz and Chris Treanor HEALTH CARE 26 Fall 2016 Health Care Health Care

Introduction Not surprisingly, while both presidential candidates have released health care plans ahead of the November election, their proposals differ significantly in several key areas, especially on the Affordable Care Act (ACA). Democratic candidate Secretary Clinton’s proposals focus on expanding the ACA and reducing prescription drug prices, while Republican candidate Mr. Trump seeks to repeal the health law and replace it with “free-market” reforms. Both candidates would allow the importation of prescription drugs from overseas.

Even before the new president takes office, Congress could act on several outstanding health care priorities during a lame-duck session, although activity in this period is highly contingent on the results of the November elections. Fall 2016 27

Republican Candidate supports protecting those with pre- • providing all Americans with existing conditions “100%.” To date, the choice of a “public-option” Donald Trump he has not outlined any proposals insurance plan and allowing a Republican candidate Mr. Trump that would guarantee coverage for Medicare “buy-in” for people over outlined his plan for “Healthcare this population. Mr. Trump has also 55 years old Reform to Make America Great Again” spoken out against cuts to Medicare, • limiting out-of-pocket costs like on March 2, 2016. The plan centers suggesting that economic growth copays and deductibles on a call for Congress to immediately under a Trump administration would • lowering the cost of prescription and completely repeal the ACA (aka strengthen the program. In January drugs “Obamacare”) and replace it with 2016, Mr. Trump called for allowing a number of free market policies. Medicare to negotiate drug prices. This • incentivizing states to expand His proposals reflect key traditional proposal is not listed on his campaign Medicaid to more low-income Republican policy priorities, including: website, nor is it included in the 2016 Americans Republican Party Platform. • allowing families to buy coverage • allowing individuals to make on the ACA exchanges regardless tax-free contributions to Health The Republican Platform calls for the of their immigration status Savings Accounts (HSAs) that full repeal of the ACA along with • expanding health care access to could accumulate and become reforms to health-care entitlement rural Americans by making more part of the estate of the individual programs, including making premium providers eligible for telehealth • requiring price transparency from support optional for future Medicare reimbursement all health-care providers enrollees under age 55 and • defending access to reproductive • converting Medicaid into a block- transforming Medicaid into a block- health care grant program grant program. The plan includes support for the growth of HSAs and • doubling funding for primary-care • allowing the sale of health Health Reimbursement Arrangements services at Federally Qualified insurance across state lines that “empower patients and advance Health Centers. • making individual health insurance choice in healthcare.” The Clinton campaign’s priorities premium payments fully deductible would address a number of health from taxes Democratic Candidate care challenges, including Alzheimer’s, • reviewing options for Medicaid Hillary Clinton autism, mental health and substance to “ensure that those who want Secretary Clinton’s core identity has abuse, public health infrastructure healthcare coverage can have it” long been defined by her interest in and the Zika virus. Secretary • allowing the importation of universal, quality, affordable health Clinton also strongly supports the prescription drugs from overseas care for everyone in America. Some Cancer Moonshot Initiative. • implementing “promising reforms” specific tenets of herproposals include: Secretary Clinton’s agenda for lowering in the mental health system. • expanding coverage under the prescription drug costs stands out as Mr. Trump has espoused a number of ACA and preserving the Children’s one of her most detailed proposals. other positions that were not included Health Insurance Program She proposes to eliminate tax breaks in his formal plan. In February 2016, for direct-to-consumer advertising for instance, Mr. Trump said that he 28 Fall 2016 Health Care

TRUMP VS. CLINTON ON HEALTH CARE

Issue Trump Clinton

ACA • repeal and replace with “free market” reforms • “defend and expand” coverage • expand the use of HSAs • limit out-of-pocket costs for families • make individual health insurance • double funding for community health centers premium payments fully deductible over 10 years • extend exchange coverage to families regardless of immigration status • repeal the Cadillac tax

PUBLIC OPTION • does not support a public option • supports a public option insurance plan in every state

MEDICARE • pledges to “save” Medicare “without cuts” • supports a Medicare buy-in for Americans over 55 years old while preserving traditional Medicare

MEDICAID • proposes state block grants for Medicaid • supports new incentives to encourage Medicaid expansion nationwide

PRESCRIPTION • allow the importation of prescription drugs from • allow the importation of prescription DRUG PRICES abroad drugs from abroad • in early 2016, suggested that Medicare should • allow Medicare to negotiate drug prices be allowed to negotiate drug prices • require companies to invest in research and development • eliminate subsidies for direct-to-consumer drug company advertising • cap out-of-pocket drug costs • highly critical of soaring EpiPen costs

PRICE • require price transparency from • expand disclosure requirements and broaden the TRANSPARENCY all providers ACA’s transparency provisions MENTAL HEALTH • supports bipartisan mental health reforms under • fully enforce mental and behavioral congressional consideration health parity laws

SALE OF HEALTH • supports the sale of insurance across • in early 2015, supported the sale INSURANCE ACROSS state lines of insurance across state lines STATE LINES Fall 2016 29

CONTINUED FROM PAGE 27 and require drug companies that receive federal support to invest a sufficient amount of revenue in research and development. Her proposals would also allow Americans to import drugs from foreign countries with sufficient safety standards. Secretary Clinton’s plan would let Medicare negotiate drug prices.

The Democratic Party’s Platform aligns closely with Secretary Clinton’s proposals on health care. Notably, it includes a full repeal of the Cadillac tax, but with the caveat to find revenue to offset the repeal to “contain the long-term growth of health care costs.” In September 2015, Secretary Clinton called for the tax to be repealed, saying that her reforms would “more than cover the cost” of eliminating the levy on high-cost health plans.

“The health sector should anticipate that regardless of who is in power in the Administration or Congress, one way or the other by legislation or regulation, policymakers will move again to restrain health care costs.”

—Akin Gump Health Policy Team 30 Fall 2016 Health Care

Congressional Outlook Oversight and “messaging” hearings and some congressional committee action on health care bills may occur prior to the election. Adequate funding for Zika emerges as the top congressional appropriations action item. The soaring costs of lifesaving EpiPens caught congressional attention over the summer recess period and further ignites debates around pharmaceutical pricing.

The House and Senate may seek to address a number of other open health care issues during a post-election lame-duck session. On the House side, the Ways and Means Committee may consider post-acute-care payment reforms, in addition to a hospital bill and other “extender” items. On the Senate side, the Finance Committee may introduce chronic-care legislation. The Senate also has yet to take up its mental health reform bill, which passed out of the Health, Education, Labor and Pensions (HELP) Committee in March. Passage of the 21st Century Cures Act remains a priority to the House Energy and Commerce and the Senate HELP committees.

Stay vigilant—miscellaneous health care provisions that enjoy bipartisan support remain potentially ripe for congressional action, either before or after the elections.

Contributing Editors: Martie Kendrick, John Jonas, Dick Thompson, Todd Tuten, Heide Bajnrauh, Karen Thiel, Eli Tomar, Kendall Hussey and Sean Feely INTERNATIONAL TRADE 32 Fall 2016 International Trade International Trade

It is perhaps one among many surprises this election season that international trade appears to have become such a potent political issue. Not since the 1992 election of Bill Clinton has trade played such a prominent role in a presidential election. While both candidates have expressed opposition to President Obama’s signature deal, the Trans-Pacific Partnership (TPP), there are important differences in how the candidates approach that issue and trade more generally. Donald Trump Mr. Trump’s approach to trade is an essential rejection of the bipartisan approach that presidents of both parties have followed since 1934. He views trade as a zero-sum, Manichean endeavor in which the United States has been on the losing side for a long time, allowing foreign countries—most notably China—to steal U.S. jobs. He believes that, through “tougher” trade measures, he can help rebuild America’s manufacturing base and, in his words, “Make America Great Again.” As reported by International Trade Daily, Mr. Trump recently gave a speech in which he discussed an eight-point plan to tackle the U.S. Fall 2016 33

trade deficit and restore American and lead to other countries similarly In sum, most trade observers believe manufacturing strength: pulling back from the international Mr. Trump’s policies would be trading system, at least with respect very harmful to the U.S. economy. • withdraw the United to the United States. The conventional Many would-be-presidents talk of States from the TPP wisdom is that shrinking export tough unilateral measures during • hire the “toughest and markets for U.S. products would hurt the campaign, but those who win smartest” to negotiate trade U.S. workers, farmers and producers later realize the complexity of our deals for the country of all types. Mr. Trump’s approach relationships with our trading partners • direct the Commerce Secretary to also seems to ignore the geopolitical and that some of the tough measures identify every violation of trade aspect of trade agreements, which, they advocated would likely hurt the agreements by country in some cases, is the most important United States more than any other aspect of striking an agreement. country. Mr. Trump, were he to be • renegotiate the terms of the North elected, may moderate his positions as American Free Trade Agreement There is no doubting the political many previous presidents have done, (NAFTA)—or “we will walk away” potency, however, of Mr. Trump’s but that can be hard to imagine when • direct all federal agencies to use message. In communities all across listening to him on the campaign trail. every tool appropriate to end America where people have lost their trade abuses—particularly China, manufacturing jobs, trade agreements Hillary Clinton which he called the worst abuser can be a contributing cause, but they Unlike Mr. Trump, Secretary Clinton’s of all are more often a convenient scapegoat. approach to trade does not represent Improvement of technologies that • instruct the Treasury Secretary a wholesale rejection of American replace factory workers, increased to label China a currency leadership of the existing trading worker productivity, the plummeting manipulator system. She has advocated a new cost of shipping goods internationally • tell the U.S. Trade Representative approach to trade, but most believe and the Internet are, in the view of to bring trade cases against China that approach will likely focus not just many, far more important factors through its domestic authority on changes to trade policy, but also in changes in U.S. manufacturing or within the World Trade on changes in the social safety net that employment than international trade Organization (WTO) exists to help Americans in the modern, agreements. Mr. Trump—like many globalized economy. As such, her • use every lawful legislative power Americans—conflates trade agreements views do not represent a fundamental to remedy trade abuses—including with trade. As he correctly notes, the break with the ebbs and flows of trade raising tariffs. largest U.S. trade deficit is with China, policy dating back more than 80 years. To most economists and long-time but the United States has no special trade observers, some of these trade agreement with China. The Many trade observers were proposals reflect existing policy, and United States trades with China on the disappointed when Secretary some are outright heresy. While these same basis as every other country in Clinton came out against the TPP, an proposals may sound like muscular the world, as a fellow member of the agreement she once championed as ideas to reassert American leadership WTO. There is no trade agreement Secretary of State. But this position in trade, in fact, many believe that with China that we can “rip up,” as he appeared inevitable once trade they would relinquish American seems to suggest. became a prominent campaign issue. leadership—most ironically to China— 34 Fall 2016 International Trade

Pressure from Sen. Sanders and his believe that the TPP will not be ready allows for the contemplation of how supporters during the primary, as to consider in a lame-duck session, trade, in fact, can benefit America. well as Mr. Trump’s rhetoric, made and Senate Majority Leader Mitch supporting TPP an untenable political McConnell (R-KY) has stated that TPP Despite their differences, Secretary position. While Mr. Trump has warned “will not be acted upon this year.” Clinton and Mr. Trump have some that Secretary Clinton would sign TPP common ideas on trade. Like Mr. if elected, the Clinton campaign has While in the Senate, Secretary Trump, Secretary Clinton has called made clear that she would neither sign Clinton had a mixed record on trade, for renegotiating NAFTA, for more it nor renegotiate it. It has claimed supporting some agreements while action on currency manipulation and that Secretary Clinton wants a “new opposing others. She insisted that she for more aggressive trade enforcement, approach to trade” that ensures a level took each agreement on its own merits. even calling for the creation of a new playing field. That is consistent with what many have position of “Chief Trade Prosecutor.” commented is her generally substantive But overall, Secretary Clinton promises More recently, the political left has approach to issues—she wants the a more nuanced approach to trade been pressuring Secretary Clinton to facts, and she will decide on a course policy without the retrenchment and oppose even holding a vote on the of action after examining those facts. abandonment of American leadership TPP during a lame-duck session of This approach is one that most trade of the world economy that Mr. Trump Congress. The point may be moot, observers would welcome, since it appears to favor. however, since many observers

Contributing Editors: Brian Pomper and Devry Boughner Vorwerk TAX 36 Fall 2016 Tax Tax

SUMMARY POINTS

• With the 2016 election campaign in full swing, both presidential candidates are advancing numerous tax proposals with few common features. • Secretary Clinton’s proposals focus primarily on middle- class tax relief, while Republican Mr. Trump’s proposals center on tax cuts for businesses, as well as an individual tax cut. • While there is a general consensus that tax reform will not occur this year, both tax-writing committees will be active in laying the foundation for action on tax reform and other deferred priorities in the remaining months of this year. The expected lame-duck session could yield action on tax provisions expiring this year. Fall 2016 37

income taxpayers and companies that • retention of the current estate tax Introduction move their business operations outside with a 45 percent top rate, and As the November 8 election draws the United States. Her plan is generally $3.5 million exemption level. near, both presidential candidates aligned with the Democratic Party Republican Candidate have advanced comprehensive tax Platform released at the Democratic reform proposals. Democrats, led by Convention in July. Secretary Clinton’s Donald Trump former Secretary of State Clinton, focus major tax proposals include: Republican candidate Mr. Trump has primarily on middle-income tax relief released a variety of tax proposals, while proposing to raise revenue from • imposition of a 30 percent tax rate reflecting tax policy positions that higher-income earners. Secretary Clinton on individuals with incomes above are both fluid and subject to change. has also proposed to close various $1 million and a 4 percent surtax Further, many of his proposals appear business tax “loopholes” and curb on individuals with incomes above to be at odds with those contained corporate inversions. The tax proposals $5 million in the House Republican Tax Reform of Republican presidential candidate • a sliding-scale capital gains tax Blueprint. The primary similarity Mr. Trump are somewhat at odds with that rewards long-term investments between Mr. Trump and the Blueprint those presented by the Republican • imposition of a cap on itemized relate to the proposed significant Party Platform, as well as the tax reform deductions of upper-income reduction in tax rates for both “Blueprint” released by Speaker Paul individuals individuals and businesses. Mr. Trump’s Ryan (R-WI) and House Ways and major tax proposals include: • elimination of the favorable tax Means Committee Chairman Kevin treatment of carried interest and Brady (D-PA). • significant reduction in individual executive compensation tax rates (with a top rate of 33 While there is a general consensus • imposition of an “exit tax” on percent) and collapsing the that tax reform legislation will not be the accumulated earnings of existing seven individual income considered in 2016, much activity companies that move their tax tax brackets to three while is expected in the two tax-writing residency outside the United increasing the standard deduction committees to lay the foundation for States, as well as a “clawback” of and personal exemptions for legislative efforts in 2017. Extensive tax incentives for companies that lower-income individuals (and activities anticipated in both tax move jobs abroad eliminating such tax provisions for committees in the remaining months of • imposition of a financial upper-income individuals) 2016 will present both opportunities and transaction tax for high- • retention of the mortgage interest vulnerabilities that should not be ignored frequency trading and charitable contribution as the legislative table is set for 2017. • standard deduction for smaller deductions companies, much like the one • elimination of the favorable tax Democratic Candidate used by individuals treatment of carried interest Hillary Clinton • elimination of fossil fuel tax • reduction in the top corporate tax Former Secretary Clinton has made incentives and other unspecified rate to 15 percent middle-income tax relief a hallmark of business tax “loopholes” • imposition of a one-time 10 percent her campaign, coupled with proposals tax on unrepatriated earnings held to significantly increase taxes on upper- by U.S. businesses abroad 38 Fall 2016 Tax

• elimination of deferral on foreign simpler benefits: a larger standard many of so-called “tax extenders” will earnings while retaining the deduction and an enhanced child expire at the end of 2016. A decision current foreign tax credit tax credit will have to be made whether to allow • imposition of a “reasonable” • retention of the current Earned the expiring provisions to, in fact, cap on the deduction for Income Tax Credit expire or to extend them for some brief period of time in anticipation of a business interest • elimination of all itemized more thorough review in the tax reform • repeal of the current estate tax deductions, except the mortgage context anticipated in 2017. and the alternative minimum interest deduction and the tax (AMT). charitable contribution deduction, The prospect for legislative action It should be noted that, in May 2016, while retaining tax incentives for on tax reform in 2017 depends Mr. Trump indicated that his tax health care and retirement savings significantly on the outcome of the proposals would be a “starting point • repeal of the estate and November elections. While the in negotiations with Congress and that generation-skipping transfer taxes, prospects for these elections cannot some tax increase on the wealthy is as well as repeal of the individual be predicted, important tax policy likely.” and corporate AMT changes are now probable in 2017. • reduction in the top corporate Significant tax policy proposals are House Republican Tax Blueprint tax rate to 20 percent, with being advanced by both presidential On June 24, 2016, House Speaker a 25 percent top tax rate contenders, by the chairmen and Ryan and Ways and Means Chairman for small businesses and members of both tax committees, and Brady released a tax reform Blueprint, pass-through entities by congressional leaders themselves, portending significant legislative action intended to be a policy framework to • adoption of a territorial tax in 2017. In addition, important policy be used by Republican House members system that would allow U.S.- issues deliberately deferred beyond in their fall campaigns, as well as based companies to repatriate the 2016 elections (such as the debt legislative action in 2017. The major foreign earnings without ceiling and various infrastructure provisions in the Blueprint include: additional tax cost programs) will confront the new • reduction in individual tax rates • elimination of the deduction for president and Congress in the early (with a top rate of 33 percent) business interest, but retention of stages of 2017. The combination of and a consolidation of the current an R&D credit congressional interest and preparation seven tax brackets to three • restructure of the Internal Revenue for tax reform, and the immediacy of (12, 25 and 33 percent) Service to modernize and the deferred policy issues, are likely to • provision of a 50 percent exclusion streamline tax administration and present innumerable opportunities and for an individual’s investment taxpayer service. vulnerabilities for tax policy change income, effectively reducing Outlook and will require experienced advice the tax rate on such income to and counsel to secure successful While neither chairman of the two tax 6, 12.5 and 16.5 percent outcomes in what promises to be a very committees has indicated an intention active, yet unpredictable, legislative • consolidation of the five current to advance tax legislation in the lame- environment. family tax deductions into two duck session, it should be noted that

Contributing Editors: Robert Leonard, Jayne Fitzgerald and Matthew Thomas TRANSPORTATION AND INFRASTRUCTURE 40 Fall 2016 Transportation and Infrastructure Transportation and Infrastructure

SUMMARY POINTS

• Both campaigns have identified is able to move a tax bill that has provided details regarding the deterioration of the nation’s addresses repatriation of oversees their positions. Federal roads, bridges, rails, waterways, earnings and those tax revenues Aviation Administration (FAA) ports and airports, and the are used for infrastructure as has reauthorization returns next year as need to have a world-class been discussed in the past. What a result of Congress passing only a transportation system as a key to may be more telling is how the short-term extension, which expires our economic success. Secretary Department of Transportation September 30, 2017. Major issues Clinton has proposed to invest (DOT) would exercise its include whether to move Air Traffic an additional $275 billion over regulatory authority under the Control (ATC) services outside of five years on infrastructure, two candidates. the FAA, whether to allow airports while Mr. Trump has said that • While Secretary Clinton has to increase Passenger Facility he will spend twice that amount. talked about cutting red tape, Charges, whether to make changes Secretary Clinton said she will Mr. Trump has made bolder to the FAA’s certification processes pay for her plan with revenues pronouncements about rolling for aircraft, and how to address generated from business tax back regulations. It is more safety innovation and facilitation reform, whereas Mr. Trump said likely that Secretary Clinton will of highly automated operations he will borrow the money at continue on a similar path as beyond the visual line of sight. a low interest rate. While the President Obama in terms of • Neither candidate has addressed focus on infrastructure is notable regulating the transportation current and future controversies and may influence Congress, sector; however, a Trump involving DOT rulemakings to only Congress can authorize presidency could see a more provide additional protections spending. Considering the fact streamlined project approval to airline passengers, Open that Congress passed a five- process, fewer consumer Skies issues involving allegations year, $305 billion transportation regulations and less onerous of state subsidies and flag-of- bill last year, a proposal to raise regulation of the trucking convenience operators, a decision taxes or increase the national industry, among others. whether to continue approving debt may not be well received • While both candidates have airline mergers (where the DOJ by Congress. One potential spoken about investment in has authority) and immunity for avenue for more transportation airports, neither candidate international code-sharing. funding could be if Congress Fall 2016 41

Democratic Candidate Roads, Bridges, Ports, Transit and transportation projects, she has not Rail Investment. Secretary Clinton said whether she would attempt to Hillary Clinton has spoken of investment across advance projects more quickly under Infrastructure Spending. Secretary the transportation modes. She has the planning process and/or the Clinton has pledged to introduce in noted the importance of intermodal NEPA review process or identify other her first 100 days a detailed legislative connections and investment. She has approaches for expediting projects. proposal to boost infrastructure said that she will focus on relieving spending by $275 billion over five bottlenecks and congestion on Airports. Secretary Clinton has also years, with $250 billion in direct highways, freight railroads and at said that she will invest in “building spending and $25 billion to stand up a seaports by upgrading 25 of the world-class American airports.” She national infrastructure bank that could most costly freight rail and highway has spoken of ensuring that “airports make $225 billion in loans and loan bottlenecks and deepening ports and have the funding they need to create guarantees and provide “other forms of upgrading aging tunnels and bridges, world-class air hubs for the 21st credit enhancements.” investing in public transportation to century, with reliable and efficient get people to jobs, and building a connections to mass transit.” Read Secretary Clinton has said that she world-class passenger rail system and in context, this could indicate that will reauthorize the Build America bicycle and pedestrian infrastructure. Secretary Clinton would seek to Bonds (BABs) program, which was She has said that she will invest in improve current hub airports, rather part of the Recovery Act of 2009, but intelligent transportation systems across than building new airports. She does was not extended. The BABs program various funding programs. She also not identify the source of new funding provided a direct subsidy payment has expressed her support for merit- for airports—whether it would come of 35 percent of the interest costs to based competitive grants, which have from an increase in the Passenger state or local government bond issuers replaced earmarks. Facility Charge; an increase in Airport and thus attracted new investors, such Improvement Program funding; or as as pension funds, that do not benefit While Secretary Clinton has said that part of a National Infrastructure Bank from the tax exemption of traditional she will “cut red tape” to expedite grant, loan or loan guarantee. municipal bonds. 42 Fall 2016 Transportation and Infrastructure

the spinoff to a nonprofit corporation and congressional appropriators and House and Senate Democrats generally opposing it. With the FAA bill set to expire on September 30, 2017, the next president will be able to weigh in on the issue, with the outcome potentially hinging on the composition of Congress and the position of leadership.

Drones. Neither candidate has taken a position on drones. Congress included Republican Candidate Transportation and Infrastructure several drone-related provisions in the Donald Trump Committee Chair Bill Shuster (R-PA) has short-term extension of FAA programs, endorsed Mr. Trump and expressed and it is expected to be urged in the On the campaign trail, Mr. Trump his view that Mr. Trump will be the FAA reauthorization debate to enact has decried the nation’s “crumbling “greatest infrastructure President.” additional provisions to advance the roads and bridges” and “dilapidated industry while ensuring safety. airports.” In May, he stated, “We Unaddressed Issues have to rebuild our infrastructure—our Smart Vehicles and Transportation Airline Consolidation, Competition, and bridges, our roadways, our airports.” Technology. Secretary Clinton has Passenger and Consumer Protection. In his nomination acceptance speech, spoken of her plan for investing Secretary Clinton makes a nod to Mr. Trump complained that “our in technology, including intelligent promoting competition in the airline airports are in Third World condition.” transportation systems. In light of the industry, but neither candidate has addressed the policy to approve airline Mr. Trump recently said that he will explosion in technological advances mergers and antitrust immunity for spend twice as much as what Secretary with self-driving cars, connected international code share agreements. Clinton has proposed on transportation vehicles and smart sensors, Congress Also, neither candidate has addressed infrastructure. He has said that he and DOT will likely continue to grapple whether passengers and consumers will borrow money to pay for his with how to regulate the industry. need additional legal protections, as plan from investors by establishing Secretary Clinton may continue to contemplated in DOT rulemakings. a fund and issuing bonds, and that advance the Smart Cities initiative that President Obama initiated. he will benefit from low interest rates Open Skies. Neither candidate has to rebuild our infrastructure. He also ATC. Neither campaign has committed taken a position on whether the said he will roll back regulations, to a position on whether it supports United States should continue to which could expedite and lower the spinning off the ATC system in an push for liberal bilateral air transport cost of infrastructure projects. While effort to modernize it and make it agreements, such as with China, Japan Mr. Trump has not offered details quicker and more efficient. The debate and Cuba, or should revisit its policy regarding his plan for spending, he is prevented passage of a long-term FAA with respect to current agreements assembling a transportation transition bill this year, with Chairman Shuster because of allegations of state team who likely will do that. House and many of the airlines supporting subsidies to foreign carriers.

Contributing Editors: Susan Lent, Gregory Walden and Ian Shavitz For more information on these subjects contact:

HEIDE BAJNRAUH SMITH DAVIS DARIO FROMMER Senior Policy Advisor Partner Partner Washington, D.C. Washington, D.C. Los Angeles T +1 202.887.4206 T +1 202.887.4098 T +1 213.254.1270 [email protected] [email protected] [email protected]

ALLISON BINNEY MICHAEL DROBAC JOHN GILLILAND Partner Senior Policy Advisor Consultant Washington, D.C. Washington, D.C. Washington, D.C. T +1 202.887.4326 T +1 202.887.4043 T +1 202.887.4166 [email protected] [email protected] [email protected]

DEVRY BOUGHNER VORWERK FMR. REP. VIC FAZIO MERRILL GODFREY Senior Policy Advisor Senior Advisor Senior Counsel Washington, D.C. Washington, D.C. Washington, D.C. T +1 202.887.4212 T +1 202.887.4090 T +1 202.887.4195 [email protected] [email protected] [email protected]

KATIE BROSSY JAYNE FITZGERALD KAREN GOLDMEIER GREEN Senior Counsel Senior Counsel Senior Counsel Washington, D.C. Washington, D.C. Washington, D.C. T +1 202.887.4005 T +1 202.887.4581 T +1 202.887.4015 [email protected] [email protected] [email protected]

WENDY CUTLER ANYA LANDAU FRENCH GREG GUICE Senior Policy Consultant Senior Policy Advisor Senior Counsel Washington, D.C. Washington, D.C. Washington, D.C. T +1 202.887.4000 T +1 202.887.4226 T +1 202.887.4565 [email protected] [email protected] [email protected]

SEAN D'ARCY FRANCINE FRIEDMAN PAUL GUTERMANN Partner Senior Policy Counsel Partner Washington, D.C. Washington, D.C. Washington, D.C. T +1 202.887.4291 T +1 202.887.4143 T +1 202.887.4088 [email protected] [email protected] [email protected]

TOM DAVIDSON AL FROM FMR. SEN. KAY HAGAN Partner Consultant Senior Policy Consultant Washington, D.C. Washington, D.C. Washington, D.C. T +1 202.887.4011 T +1 202.419.3961 T +1 202.887.4000 [email protected] [email protected] [email protected] Contacts cont.

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CHRISTINE HESSE SUSAN LENT ZACHARY PAULSEN Consultant Partner Senior Intl Policy Advisor Washington, D.C. Washington, D.C. Washington, D.C. T +1 202.887.4217 T +1 202.887.4558 T +1 202.887.4061 [email protected] [email protected] [email protected]

JOHN JACOB ROBERT LEONARD FMR. REP. WILLIAM PAXON Partner Senior Policy Consultant Senior Advisor Washington, D.C. Washington, D.C. Washington, D.C. T +1 202.887.4582 T +1 202.887.4040 T +1 202.887.4297 [email protected] [email protected] [email protected]

JOEL JANKOWSKY RODNEY LEWIS BRIAN POMPER Partner Consultant Partner Washington, D.C. Washington Washington, D.C. T +1 202.887.4082 T +1 202.255.4950 T +1 202.887.4134 [email protected] [email protected] [email protected]

CHARLES JOHNSON FMR. REP. TOM LOEFFLER DONALD PONGRACE Partner Senior Counsel Partner Washington, D.C. Dallas | Washington, D.C. Washington, D.C. T +1 202.887.4295 T +1 214.969.2738 T +1 202.887.4466 [email protected] [email protected] [email protected]

JOHN JONAS KENNETH MARKOWITZ DAVID QUIGLEY Partner Consultant Partner Washington, D.C. Washington, D.C. Washington, D.C. T +1 202.887.4205 T +1 202.887.4513 T +1 202.887.4339 [email protected] [email protected] [email protected]

MARTHA KENDRICK JEFFREY MCMILLEN HANS RICKHOFF Partner Partner Senior Counsel Washington, D.C. Washington, D.C. Washington, D.C. T +1 202.887.4215 T +1 202.887.4270 T +1 202.887.4145 [email protected] [email protected] [email protected] STEVEN ROSS FMR. SEN. JOHN SUNUNU TODD TUTEN Partner Adjunct Senior Policy Advisor Senior Policy Advisor Washington, D.C. Washington, D.C. Washington, D.C. T +1 202.887.4343 T +1 202.887.4140 T +1 202.887.4203 [email protected] [email protected] [email protected]

MICHAEL ROSSETTI HENRY TERHUNE GEOFFREY VERHOFF Partner Partner Senior Policy Advisor Washington, D.C. Washington, D.C. Washington, D.C. T +1 202.887.4311 T +1 202.887.4369 T +1 202.416.5012 [email protected] [email protected] [email protected]

COREY ROUSH KAREN SMITH THIEL JOSE VILLARREAL Partner Senior Counsel Consultant Senior Advisor Washington, D.C. Washington, D.C. San Antonio | Washington, D.C. T +1 202.887.4115 T +1 202.887.4225 T +1 202.416.5058 [email protected] [email protected] [email protected]

HAL SHAPIRO RICHARD THOMPSON GREGORY WALDEN Partner Consultant Senior Counsel Washington, D.C. Washington, D.C. Washington, D.C. T +1 202.887.4053 T +1 202.887.4207 T +1 202.887.4213 [email protected] [email protected] [email protected]

IAN SHAVITZ RYAN THOMPSON VALERIE MORSE WHITE Senior Counsel Senior Policy Advisor Consultant Washington, D.C. Houston | Washington, D.C. Washington, D.C. T +1 202.887.4590 T +1 512.499.6282 T +1 202.887.4395 [email protected] [email protected] [email protected]

ARSHI SIDDIQUI JAMES TUCKER JR. LADD WILEY Partner Partner Consultant Washington, D.C. Washington, D.C. Washington, D.C. T +1 202.887.4075 T +1 202.887.4279 T +1 202.887.4083 [email protected] [email protected] [email protected]

BARNEY SKLADANY DAVID TURETSKY Consultant Partner Washington, D.C. Washington, D.C. T +1 202.887.4132 T +1 202.887.4074 [email protected] [email protected] akingump.com

ABU DHABI FRANKFURT HOUSTON LOS ANGELES SAN ANTONIO BEIJING FORT WORTH IRVINE MOSCOW SAN FRANCISCO DALLAS GENEVA LONDON NEW YORK SINGAPORE DUBAI HONG KONG LONGVIEW PHILADELPHIA WASHINGTON, D.C.

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