March 23, 2018 Washington Update

This Week in Congress

. House – The House passed the “Omnibus Appropriations Bill” (H.R. 1625); the “Alleviating Stress Test Burdens to Help Investors Act” (H.R. 4566); the “Trinkett Wendler, Frank Mongiello, Jordan McLinn, and Matthew Bellina Right to Try Act of 2018” (H.R. 5247); the “Surface Transportation Security Improvement Act of 2018” (H.R. 5131); the “Strengthening Aviation Security Act of 2018” (H.R. 4467); and the “Strengthening Local Transportation Security Capabilities Act of 2018” (H.R. 5089).

. Senate – The Senate passed the “Omnibus Appropriations Bill” (H.R. 1625); the Secret Service Recruitment and Retention Act” (H.R. 3731); the “Veterans Health Administration Leave” (S. 899); the “Allow States and Victims to Fight Online Sex Trafficking Act of 2017” (H.R. 1865); and the “Childhood Cancer STAR Act” (S. 292). The Senate confirmed Kevin K. McAleenan to be Commissioner of U.S. Border Protections; Thomas E. Workman to be a Member of the Financial Stability Oversight Council; and Anne Marie White to be Assistant Secretary of Energy.

Next Week in Congress

. House – The House is in recess until April 10. . Senate – The Senate is in recess until April 9.

TAX

Congress Moves $1.3 Trillion Spending Bill . No timetable for decision on tax extenders. to President’s Desk, A Couple Tax Items Included Table of Contents

Taxes 1 Key Points: Financial Services 2 . Included is $11.43 billion for the IRS which Energy & Environment 6 includes $320 million for upgrades and $350 Defense 7 million for cybersecurity and other items. Health 9 . Republicans and Democrats made a deal to Transportation & Infrastructure 11 add corrective language for the “grain glitch” Technology 14 and add a provision that increases the low- Trade 22 income housing tax credit. ceiling by 12.5 percent.

______©2018 Williams & Jensen, PLLC 701 8th Street, N.W. Suite 500 Washington, D.C. 20001 Telephone: (202) 659-8201 Fax: (202) 659-5249 www.williamsandjensen.com Williams & Jensen – Washington Update March 23, 2018

Congress passed a $1.3 trillion spending bill Other TJCA technical changes were not early Friday morning with Thursday’s House included in the bill, though technical passage by a 256-167 vote and an early Friday corrections to prior tax bills were included. Senate of 65-32. Included in the omnibus is Likewise, temporary tax provisions known as $11.43 billion for the Internal Revenue tax extenders were not included in the omnibus Service– of which $320 million is allocated for bill. After hearing from industry groups during upgrades to schedules, forms, and systems a March 14 hearing, House Ways and Means necessary for implementing the recently passed Committee’s Tax Policy Subcommittee Tax Cuts and Jobs Act (TCJA). An additional Chairman Vern Buchanan (R-FL) will $350 million is appropriated towards IRS announce a strategy for analyzing the value of customer support, fraud prevention, and the extenders. cybersecurity. For more information about tax issues you may email Also included in the spending bill is corrected or call Christopher Hatcher at 202-659-8201. Nick language for the “grain glitch” related to Karellas, Henry Homans, and Ryan Schnepp cooperatives and the new passthrough 20% contributed to this section. deduction. The TCJA mistakenly gave a competitive advantage to farmers who sell to FINANCIAL SERVICES cooperative grain suppliers under the section 199A passthrough business income deduction. Congress Passes $1.3 Billion Omnibus The adjustment will allow farmers to continue Spending Package to get a 20 percent passthrough deduction without any change when selling to Key Points: independent operators. When selling to a . The omnibus spending package would fund the cooperative, farmers would now receive a 20 SEC at $1.652 billion and the CFTC at percent deduction reduced by amounts the $249 million for FY2018. farmer would have had to reduce it under the . The package also includes regulatory reforms former 199 deduction. Cooperatives can pass for business development companies, including through some or all of the deduction to increasing the leverage limit from 1:1 to 2:1. patrons, as they did with the former 199 deduction. This week Congress passed a $1.3 trillion omnibus spending package, which would fund The modified provision will increase revenue the federal government through September 30, by $108 million if FY 2018 through 2027 2018. The spending package would fund the according to the Joint Committee on Taxation Securities and Exchange Commission (SEC) at (JCT), which also provided a technical $1.652 billion for Fiscal Year (SEC) 2018, description of the changes. Democrats were which is $47 million above the FY17 level. The able to add a provision that boosts the state spending bill would fund the Commodity housing credit ceiling by 12.5 percent in the Future Trading Commission (CFTC) at $249 low-income housing tax credit for tax years million for FY2018, which is $1 million below 2018, 2019, 2020, and 2021. That LIHTC its FY17 level. provision reduces revenue by $2.72 billion in FY 2018 through 2027. The provision also The omnibus incorporates the Small Business adds a new form of average income test used to Credit Availability Act (H.R. 4267), which determine if one qualifies for the credit. passed the House Financial Services

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Committee on November 15, 2017, by a vote Drug Trafficking, and Organized Crime.” of 58-2. The legislation, introduced by Chairman Stevan Pearce (R-NM) noted that Representative Steve Stivers (R-OH), includes large transnational criminal organizations several regulatory reforms for business (TCOs) cross borders to further their profits development companies (BDCs), including and they generate over $870 billion annually, increasing the leverage limit from 1:1 to 2:1, which allows them to influence governments in and requiring the SEC to streamline the the most vulnerable countries. He thanked offering, filing, and registration processes for Representative David Kustoff (R-TN) for his BDCs. bill, the “National Strategy for Combatting the Financing of Transnational Criminal Additionally, the omnibus includes the Small Organizations Act” (H.R. 4768). Pearce Business Access to Capital After a Natural explained the bill would require the Disaster Act (H.R. 4792), which would direct development of a national strategy to combat the SEC’s Advocate for Small Business Capital TCOs. Ranking Member Ed Perlmutter (D- Formation to identify any unique challenges to CO) stated according to the United Nations small businesses in areas affected by hurricanes Office on Drugs and Crime, drug trafficking or other natural disasters when identifying accounts for all the revenue of TCOs. He problems that small businesses have with stated the opioid epidemic spans coast to coast securing access to capital. The bill, introduced and in 2016 there were over 4,200 opioid by Representative Nydia Velazquez (D-NY), related deaths in the U.S. Perlmutter suggested passed the House by voice vote on January 29, Congress must work to shut down those that 2018. are responsible for the availability of these drugs. The bill would also extend the National Flood Insurance Program (NFIP) through the end of Chairman Pearce noted he has received July 2018. briefings that ISIS is no longer getting as much money from the sale of oil. Celina Realuyo House Financial Services Examines (National Defense University) stated financial Transnational Criminal Organizations targeting has been successful in regards to ISIS, noting that by going after the entire supply Key Points: chain, there has been a decline of 80 percent in . Chairman Stevan Pearce (R-NM) explained ISIS profits. She stated this disruption has not that large transnational criminal organizations allowed ISIS to be able to pay their foreign (TCOs) earn over $870 billion annually, fighters. Chairman Pearce also asked about the which allows them to influence governments in need for coordination between the different the most vulnerable countries. agencies. Derek Maltz (Pen-Link, Ltd.) stressed . Representative David Kustoff (R-TN) has the need for basic cooperation between the introduced the “National Strategy for agencies and accountability when information Combatting the Financing of Transnational is not shared. Ranking Member Ed Perlmutter Criminal Organizations Act” (H.R. 4768). (D-CO) noted concern over the role Russia has been playing and he asked about the Russian On March 20, the House Financial Services Mafia. Louise Shelley (George Mason Committee’s Subcommittee on Terrorism and University) explained as drugs began to flow Illicit Finance held a hearing entitled out of Afghanistan Russia began to become “Exploring the Financial Nexus of Terrorism, more involved in the drug trade. She stated

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Page 3 of 24 Williams & Jensen – Washington Update March 23, 2018 there is an unusual confederation of political leaders and criminal organizations in Russia. Key Point: Realuyo expressed hope that more sanctions . The Committee favorably reported legislation will be levied against Russia and the “tentacles” related to the supplementary leverage ratio, the of the Russian Mafia investigated. Joseph Volcker Rule, SEC registration requirements, Humire (Center for a Secure Free Society) small bank examinations, and derivatives. explained that the Russian Mafia is “rampant” in Latin America. He stated the Department of On March 21, the House Financial Services Defense’s “four plus one” strategy could be Committee held a markup and approved the utilized in South America as well. following eight financial services bills.

House Passes Legislation Exempting Non- . The Protecting Veterans Credit Act of Banks from Stress Tests 2017 (H.R. 2683), introduced by Representative John Delaney (D-MD), Key Point: which would amend the Fair Credit . The House passed a bill to exempt certain Reporting Act (FCRA) to exclude from non-bank financial institutions from stress consumer report information: (1) testing requirements. Certain medical debt incurred by a veteran if the hospital care or medical On March 20, the House passed the Alleviating services relating to the debt predates Stress Test Burdens to Help Investors Act the credit report by less than one year; (H.R. 4566), by a vote of 395-19. The and (2) A fully paid or settled veteran's legislation, introduced by Representative Bruce medical debt that had been Poliquin (R-ME), would exempt non-bank characterized as delinquent, charged financial institutions that are not under off, or in collection. The Committee supervision by the Federal Reserve from the favorably reported H.R. 2683, as Dodd-Frank Act’s stress testing requirements. amended, by a vote of 59-0. The House adopted an amendment by House . A bill to require the appropriate Federal Financial Services Committee Ranking Member banking agencies to recognize the Maxine Waters (D-CA) that would allow the exposure-reducing nature of client Federal Reserve to stress test non-bank margin for cleared derivatives (H.R. financial firms if the test is requested by a 4659), introduced by Representative majority vote of the Financial Stability Blaine Luetkemeyer (R-MO). The Oversight Council (FSOC), is conducted in a Committee favorably reported H.R. way that considers the company’s business 4659 by a vote of 45-15. model, and is not already required by the . The Volcker Rule Regulatory primary regulator. With the adoption of the Harmonization Act (H.R. 4790), amendment, Ranking Member Waters introduced by Representative French supported the bill. The bill was favorably Hill (R-AR), which would amend reported by the House Financial Services Section 619 of the Dodd-Frank Act Committee on January 17, 2018 by a vote of (DFA) to grant the Federal Reserve the 47-8. exclusive rulemaking authority over the Volcker Rule and identify the primary House Financial Services Committee federal agency for the sole examination Approves Eight Bills and enforcement authority over an

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entity. The Committee favorably attorney engaged in litigation activities reported H.R. 4790, as amended, by a in connection with a legal action in a vote of 50-10. court of law to collect a debt on behalf . The Ensuring Quality Unbiased Access of a client to the extent that such legal to Loans (EQUAL) Act of 2017 (H.R. action is served on the defendant 4861), introduced by Representative debtor, or service is attempted, in Trey Hollingsworth (R-IN), which accordance with the applicable statute would repeal the Federal Deposit or rules of civil procedure. The Insurance Corporation (FDIC) Committee favorably reported H.R. ‘‘Guidance on Supervisory Concerns 5082 by a vote of 35-25. and Expectations Regarding Deposit . The Derivatives Fairness Act (H.R. Advance Products’’ (78 Fed. Reg. 5323), introduced by Representative 70552; November 26, 2013). Warren Davidson (R-OH), which . The Public Company Registration Act would amend Title I of the Dodd- (H.R. 5051), introduced by Frank Act to add a new section 177 Representative Sean Duffy (R-WI), entitled “Credit Valuation Adjustment.” which would amend section 12(g) of The bill would exempt from the Credit the Securities Exchange Act of 1934 to Valuation Adjustment (CVA) capital raise the threshold for companies to charge non-cleared derivatives with register as a public reporting company “end-user” Counterparties. The with the Securities and Exchange Committee favorably reported H.R. Commission (SEC) from 500 non- 5323 by a vote of 34-26. accredited investors to 2,000, with the $10 million threshold indexed for FDIC Holds Open Meeting inflation. The Committee favorably reported H.R. 5051 by a vote of 34-26. Key Point: . The Small Bank Exam Cycle . The FDIC approved a final rule to implement Improvement Act of 2018 (H.R. 5076), an increase in the appraisal threshold for introduced by Representative Claudia commercial real estate transactions. Tenney (R-NY), which would amend the Federal Deposit Insurance Act to On March 20, the Federal Deposit Insurance increase the qualifying asset threshold Corporation (FDIC) held an open meeting and for insured depository institutions approved the following items: eligible for 18-month on-site . Update of Projected Deposit Insurance examination cycles from $1 billion to Fund Losses, Income, and Reserve $3 billion. The Committee favorably Ratios for the Restoration Plan. reported H.R. 5076, as amended, by a . Final Rule to Implement Increase in vote of 60-0. Appraisal Threshold for Commercial . The Practice of Law Technical Real Estate Transactions. Clarification Act of 2018 (H.R. 5082),

introduced by Representative Alex The final rule summary states: Mooney (R-WV), which would amend the Fair Debt Collection Practices Act The final rule increases the threshold to exclude from the definition of "debt level at or below which appraisals are collector" any law firm or licensed not required for commercial real estate

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transactions from $250,000 to PHMSA Regulation of Natural Gas $500,000. The final rule defines Pipelines: The Pipeline and Hazardous commercial real estate transaction as a Materials Safety Administration (PHMSA) will real estate-related financial transaction convene a meeting of its Gas Pipeline Advisory that is not secured by a single l-to-4 Committee (GPAC). The GPAC will consider family residential property. It excludes “the proposed rule titled, ‘Safety of Gas all transactions secured by a single 1-to- Transmission and Gathering Pipelines,’ which 4 family residential property, and thus was published in the Federal Register on April construction loans secured by a single l- 8, 2016, (81 FR 20722) and on the associated to-4 family residential property are regulatory analysis.” excluded. For commercial real estate transactions exempted from the April 5 appraisal requirement as a result of the Pipeline Safety Information-Sharing: The revised threshold, regulated institutions Pipeline and Hazardous Materials Safety must obtain an evaluation of the real Administration (PHMSA) will convene a property collateral that is consistent meeting of the Voluntary Information-Sharing with safe and sound banking practices. System Working Group. The meeting “will include briefings on topics such as mandate requirements, integrity management, data types UPCOMING EVENTS and tools, in-line inspection repair and other direct assessment methods, subcommittee April 5 considerations, geographic information system Agricultural Advisory Committee: The implementation, lessons learned, examples of Commodity Futures Trading Commission existing information-sharing systems, safety (CFTC) will hold a meeting of its Agricultural management systems, and more.” Advisory Committee meeting to discuss items related to price discovery and risk management April 12 in agricultural markets. Department of Energy Budget: The House Energy and Commerce Committee’s Energy April 9 Subcommittee will hold a hearing on the Fixed Income Market Structure Advisory Department of Energy’s Fiscal Year 2019 Committee: The Securities and Exchange budget. Secretary of Energy Rick Perry is Commission’s Fixed Income Market Structure scheduled to testify. Advisory Committee (FIMSAC) will hold its second meeting. April 17 FERC Budget: The House Energy and For more information about financial services issues you Commerce Committee’s Energy Subcommittee may email or call Joel Oswald at 202-659-8201. Alex will hold a hearing on the Federal Energy Barcham and Rebecca Konst contributed to the articles. Regulatory Commission’s (FERC) Fiscal Year 2019 budget. The five FERC commissioners ENERGY & ENVIRONMENT are scheduled to testify.

Upcoming Hearings and Events April 26 EPA Budget: The House Energy and March 26-28 Commerce Committee’s Environment

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Subcommittee will hold a hearing on the provides a total of $654.6 billion for the Environmental Protection Agency’s (EPA) Department of Defense. This includes Fiscal Year 2019 budget. EPA Administrator $589.5 billion in discretionary and $65.2 Scott Pruitt is scheduled to testify. billion in Overseas Contingency Operations (OCO)/Global War on For more information about energy and environment Terrorism (GWOT) funding. When issues you may email or call Frank Vlossak at 202- combined with fiscal year 2018 funding 659-8201. Updates on energy and environment issues previously approved by Congress, the are also available on twitter. overall Defense total for fiscal year 2018 is $659.5 billion, an increase of DEFENSE $61.1 billion over the 2017 enacted level, which is fully consistent with the FY 2018 Omnibus Boosts Defense Funding recently enacted budget agreement and the National Defense Authorization Key Points: Act of 2018. . Congress reached agreement on a final FY 2018 funding package that provides the most The “Bipartisan Budget Act of 2018” (P.L. funding for the DOD since FY 2010, 115-123) raised the cap on defense funding set resulting in increases in many DOD and in the “Budget Control Act of 2011” (P.L. 112- national security programs 25) by $80 billion in FY 2018 and $85 billion in . Both chambers passed the bill ahead of the FY 2019. The non-defense funding cap was expiration of government funding under the increased by $63 billion in FY 2018 and $68 current CR billion in FY 2019.

This week, Congress sent the “The The pre-Bipartisan Budget Act of 2018 for Consolidated Appropriations Act, 2018” (H.R. defense and non-defense discretionary funding 1625) to the White House less than 24 hours were: before funding for the federal government was . $549 billion and $515 billion for FY set to expire. The House passed the bill by a 2018 256-167 vote on March 22 and then early on . $562 billion and $530 billion for FY March 23, the Senate did the same by a 65-32 2019 vote. The omnibus appropriations bill for the current fiscal year makes available funds to The new caps are: meet the current caps on discretionary . $629 billion and $579 billion for FY spending even though the White House had 2018 publicly pushed for a lower level of non- . $647 billion and $597 billion for FY defense funding. On the defense side, the 2019 Department of Defense (DOD) and national security programs will receive the highest level The Congressional Budget Office (CBO) of funding since FY 2010. According to a released its cost estimate showing a total that House Appropriations Committee summary of FY 2018 appropriations meet the caps of $629 Division C of H.R. 1625 (the FY 2018 DOD billion and $579 billion for defense and non- Appropriations Act), the bill: defense funding. The CBO also projects a total $1.420 trillion in discretionary budget authority for FY 2018, which includes OCO, emergency

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and other discretionary funding not counted OCO/GWOT requirements – for against the caps. The CBO noted that the FY operation and maintenance. Funding 2018 total also “include[s] the fiscal year 2018 for base requirements is $20.4 billion budgetary effects of supplemental above fiscal year 2017. This funding appropriations for fiscal year 2017 that were supports key readiness programs to provided in the Supplemental Appropriations prepare our troops for combat and for Disaster Relief Requirements Act, 2017 peacetime missions, including flight (Division B of P.L. 115-56), as well as the time and battle training, equipment and supplemental appropriations and full-year facility maintenance, and base authorities provided for fiscal year 2018 by the operations. Additional Supplemental Appropriations for . Research and Development – The Disaster Relief Requirements Act of 2017 bill contains $89.2 billion – $88.3 billion (Division A of P.L. 115-72), the Department of for base requirements and $0.9 billion Defense Missile Defeat and Defense for OCO/GWOT requirements – for Enhancements Appropriations Act, 2018 research, development, testing, and (Division B of P.L. 115-96), the Further evaluation of new defense technologies. Additional Supplemental Appropriations for Funding for base requirements is $5.6 Disaster Relief Requirements Act, 2018 billion above the request and $16 (Subdivision 1 of Division B of P.L. 115-123), billion above the fiscal year 2017 level, and the Further Extension of Continuing and will help to support current military Appropriations Act, 2018 (Subdivision 3 of operations and to prepare our nation to Division B of P.L. 115-123).” meet a broad range of future security threats. . Equipment Procurement – The The House Appropriations Committee legislation provides a total of $144.3 provided additional detail on the DOD portion billion – $133.9 billion for base of the bill: requirements and $10.4 billion for . Overseas Contingency Operations OCO/GWOT requirements – for (OCO)/Global War on Terrorism equipment and upgrades. Funding for (GWOT) – The legislation includes base requirements is $19.9 billion above $65.2 billion in OCO/GWOT funding. the request and $25.4 billion above . Military Personnel and Pay – The fiscal year 2017. These funds support legislation includes $137.7 billion – our nation’s military readiness by $133.4 billion for base requirements providing the necessary platforms, and $4.3 billion for OCO/GWOT weapons, and other equipment our requirements – to provide for 1,322,500 military needs to train, maintain the active-duty troops and 816,900 Guard force, and conduct successful and Reserve troops. The bill includes operations. $221.7 million above the request for additional end strength, and fully funds For more information on defense issues you may email a 2.4 percent pay raise for the military. or call Michael Kans at 202-659-8201. . Operation and Maintenance – Included in the legislation is $238 billion – $188 billion for base requirements and $50 billion for

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HEALTH China and Mexico to reduce the supply of heroin and other illicit opioids. The initiative President Trump Announces Opioids Plan will also form the Department of Justice Prescription Interdiction and Litigation Task Key Points: Force which will expand Opioid Fraud and . President announced the Abuse Detection Unit’s efforts to prosecute Administration’s plan to address the opioids negligent doctors, pharmacies and distributors; epidemic. and deploy appropriate criminal actions to hold . The plan includes many elements addressing opioid manufacturers accountable. President prevention, treatment, and law enforcement. Trump’s plan will also strengthen criminal During his remarks, the President especially penalties for dealing and trafficking including focused on step law enforcement can take to seeking the death penalty where appropriate. stop the flow of illegal drugs. The initiative would also seek to help those On March 19, President Donald Trump suffering from addiction by supporting announced the Administration’s new plan to evidence-based treatment and recovery address the opioid epidemic at an event in New services. It will ensure first responders are Hampshire. The President’s “Initiative to Stop supplied with naloxone. It will incentivize state Opioids Abuse and Reduce Drug Supply and and local jurisdictions to improve nationwide Demand” focused on three main areas to overdose tracking system to ensure resources address the opioid crisis: reducing demand; are deployed to hard-hit areas. It will also cutting off the supply of illicit drugs; and support expanded access to evidence-based helping those struggling with addiction. treatment if every state, especially medication- assisted treatment. To reduce demand for opioids, the initiative will launch a nationwide campaign to raise Read the fact sheet on the plan here. public awareness on the dangers of opioid and other drug use. It will also support research HHS Secretary Names New CDC Director into new innovative technologies designed to prevent addiction and decrease the use of Key Point: opioids for pain management. It also sets the . Department of Health and Human Services goal of cutting nationwide opioid prescription Secretary Alex Azar announced Robert R. fills by one-third within three years; ensure 75 Redfield, MD will be named Director of the percent of opioid prescriptions reimbursed by Centers for Disease Control and Prevention. federal health care programs are issued using best practices; and ensure all federally- On March 21, Department of Health and appointed health care providers adopt best Human Services Secretary Alex Azar named practices for opioid prescribing within two Robert R. Redfield to be the Director of the years. Centers for Disease Control and Prevention (CDC). Redfield replaces former CDC Director A large portion of the President’s initiative Brenda Fitzgerald who resigned two months focuses on cutting off the supply of illicit ago. drugs. It will keep drugs out of the U.S. by securing borders; requiring advance electronic Redfield was the founding director of the data for all international mail; and engage with Department of Retroviral Research within the

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U.S. Military’s HIV Research Program. After This position does not require Senate retiring following 20 years of military service in confirmation. the U.S. Army Medical Corps, he co-founded the University of Maryland’s Institute of Energy and Commerce Holds Hearing on Human Virology and served as the Chief of Combating the Opioid Crisis Infectious Diseases and Vice Chair of Medicine at the University of Maryland School of Key Points: Medicine. Redfield made several contributions . The House Energy and Committee held the to early HIV research including the second of its three hearings to discuss legislation demonstration of the importance of to combat the opioid crisis. heterosexual transmission. He also oversaw a . This hearing was held over two days featuring clinical program providing HIV care and nearly 20 witnesses to discuss 25 bills focused treatment in the Baltimore and Washington, on prevention and public health solutions. DC communities. Redfield has served on a number of HIV advisory councils for the The Energy and Commerce Committee’s federal government including the President’s Subcommittee on Health held a two day Advisory Council on HIV/AIDS and the hearing entitled “Combating the Opioid Crisis: Office of AIDS Research Advisory Council at Prevention and Public Health Solutions,” the National Institutes of Health. which examined 25 bills designed to help combat the opioid crisis. The hearing included Azar emphasized Redfield’s experience in a total of 19 witnesses spread over four panels. promoting public health as well as providing The event marks the second hearing in a series care to patients. He said Redfield’s “scientific of three the Committee intends to hold on the and clinical background is peerless.” He noted crisis. In his opening statement, Chairman this experience will allow Redfield to “hit the Michael Burgess (R-TX) explained the hearing ground running” to address the CDC’s is the result of the Member Day the Health activities to combat the opioid crisis. Subcommittee held in October 2017. Representative Fred Upton (R-MI) emphasized Critics have raised questions about past stances there is time reserved to bring the bills to the Redfield took during the HIV crisis including House floor this spring. expressing support for mandatory HIV testing and identifying patients who tested positive by Day one of the hearing was dedicated to name. Others have suggested wrongdoing by witness panels I and II. Panel I included Redfield in his oversight of a failed AIDS testimonies from the Food and Drug vaccine project at the Walter Reed Army Administration (FDA) Commissioner Scott Institute of Research. Senate Health, Gottlieb; , Principle Deputy Education, Labor and Pensions Ranking Director of the Centers for Disease Control Member Patty Murray (D-WA) sent a letter to and Prevention; and Christopher Jones from President Donald Trump raising concerns the Substance Abuse and Mental Health about the appointment. She expressed concern Services Administration. The primary topics of about Redfield’s “lack of public health discussion included international mail facilities expertise and his failure to embrace the science and FDA inspection authority, abuse-deterrent underscoring critical public health work.” formulations of drugs, opioid-related infectious diseases, and prescription drug monitoring programs. Panel II included testimonies from

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John Holaday, Chief Executive Officer of FY 2018 Omnibus Passes With Significant DisposeRx; Jeffrey Francer, Senior Vice Increases For Transportation President of the Association for Accessible Medicines; Cartier Esham, Executive Vice Key Points: President for the Biotechnology Innovation . Congress opted to appropriate funds up to the Organization; and Sue Thau, Public Policy new, revised cap on non-defense discretionary Consultant for the Community Anti-Drug funding despite public opposition from the Coalitions of America. Panel II discussion was White House centered on prevention efforts, international . Many transportation programs were provided mail facilities, and drug disposal methods. significant increases, including transit and rail programs Panel III witnesses on day two of the hearing . The package carries a short-term extension of included, but were not limited to: William the FAA but not funding dedicated for the Banner, Board President for the American Gateway Project Association of Poison Control Centers; Eric Strain, Director of the Center for Substance This week, Congress sent the “The Abuse Treatment and Research for the Johns Consolidated Appropriations Act, 2018” (H.R. Hopkins University School of Medicine; and 1625) to the White House less than 24 hours Brad Bauer, Senior Vice President for Appriss before funding for the federal government was Health. Discussions from panel III of the set to expire. The House passed the bill by a hearing were primarily focused on patient 256-167 vote on March 22 and then early on privacy and 42 CFR Part 2, prescription drug March 23, the Senate did the same by a 65-32 monitoring programs, and infectious diseases. vote. The omnibus appropriations bill for the Panel IV witnesses included, but were not current fiscal year makes available funds to limited to: Alexis Horan, Vice President of meet the current caps on discretionary Government Relations for Clean Slate Centers; spending even though the White House had Jessica Hulsey Nickel, Founder, President, and publicly pushed for a lower level of non- CEO of the Addiction Policy Forum; and Mark defense funding. Rosenberg Chairman of Emergency Medicine and Chief Innovation Officer, St. Joseph’s Additionally, the package extends the expiring Healthcare System on behalf of the American authorities and funding of the Federal Aviation College of Emergency Physicians. Members Administration (FAA) until September 30, focused on community outreach and 2018, giving the House and Senate more time medication-assisted treatment, the workforce, to negotiate a long-term reauthorization. and sober living homes. However, there are not funds earmarked for the Gateway Project that will replace and For more information about healthcare issues you may expand the rail tunnels between New Jersey email or call Nicole Ruzinski Bertsch or George Olsen and New York despite pushing by Members of at 202-659-8201. those states’ delegations, including Senate Minority Leader Chuck Schumer (D-NY) and House Appropriations Committee Chairman TRANSPORTATION AND Rodney Frelinghuysen (R-NJ). Nonetheless, the INFRASTRUCTURE Federal Transit Administration’s (FTA) discretionary grant program to help fund transit projects received an historic increase in

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funding, come of which may ultimately be Defense Missile Defeat and Defense allocated for the Gateway Project. Enhancements Appropriations Act, 2018 (Division B of P.L. 115-96), the Further The “Bipartisan Budget Act of 2018” (P.L. Additional Supplemental Appropriations for 115-123) raised the cap on defense funding set Disaster Relief Requirements Act, 2018 in the “Budget Control Act of 2011” (P.L. 112- (Subdivision 1 of Division B of P.L. 115-123), 25) by $80 billion in FY 2018 and $85 billion in and the Further Extension of Continuing FY 2019. The non-defense funding cap was Appropriations Act, 2018 (Subdivision 3 of increased by $63 billion in FY 2018 and $68 Division B of P.L. 115-123).” billion in FY 2019. The House Appropriations Committee released The pre-Bipartisan Budget Act of 2018 for a summary of the Transportation and Housing defense and non-defense discretionary funding and Urban Development division of the were: omnibus: . $549 billion and $515 billion for FY . Infrastructure Funding – The bill 2018 provides an increase of $10.6 billion . $562 billion and $530 billion for FY above the fiscal year 2017 enacted level 2019 to begin to rebuild the nation’s aging infrastructure. This funding is targeted The new caps are: to our nation’s airports, roads, bridges, . $629 billion and $579 billion for FY rail, and community development, and 2018 will create jobs and spur economic . $647 billion and $597 billion for FY growth. 2019 . Department of Transportation (DOT) – The bill includes $27.3 billion The Congressional Budget Office (CBO) in discretionary appropriations for the released its cost estimate showing a total that Department of Transportation for FY 2018 appropriations meet the caps of $629 fiscal year 2018. This is $8.7 billion billion and $579 billion for defense and non- above the fiscal year 2017 enacted level. defense funding. The CBO also projects a total In total budgetary resources, including $1.420 trillion in discretionary budget authority offsetting collections, the bill provides for FY 2018, which includes OCO, emergency $86.2 billion to improve and maintain and other discretionary funding not counted our nation’s transportation against the caps. The CBO noted that the FY infrastructure. 2018 total also “include[s] the fiscal year 2018 . Air – The bill includes $18 billion in budgetary effects of supplemental total budgetary resources for the appropriations for fiscal year 2017 that were Federal Aviation Administration (FAA) provided in the Supplemental Appropriations – $1.6 billion above the fiscal year 2017 for Disaster Relief Requirements Act, 2017 enacted level. These investments will (Division B of P.L. 115-56), as well as the help ease future congestion and help supplemental appropriations and full-year reduce delays for travelers in U.S. authorities provided for fiscal year 2018 by the airspace. Additional Supplemental Appropriations for . Highways – The bill provides $45 Disaster Relief Requirements Act of 2017 billion from the Highway Trust Fund to (Division A of P.L. 115-72), the Department of be spent on the Federal-aid Highways

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Program, which is $1 billion above the infrastructure, to help ensure the safety fiscal year 2017 enacted level. This of passengers and local communities. funding mirrors the FAST Act Consolidated Rail Infrastructure and authorized levels and will provide much Safety Improvements grants are funded needed growth and improvements at $593 million, an increase of $525 within America’s highway system. In million from the fiscal year 2017 addition, the bill provides an extra $2.5 enacted level, to fund capital and safety billion in discretionary highway funding improvements, planning, environmental – a total increase of $3.5 billion for work, and research. The bill also roads and bridges over fiscal year 2017. includes $250 million for grants to rail operators to install positive train . TIGER (National Infrastructure control (PTC) technologies, which will Investments) – The multimodal significantly improve the safety of our TIGER program is funded at $1.5 rail system. billion, a $1 billion increase over the . Transit – The bill provides $13.5 fiscal year 2017 enacted level. This billion in total budgetary resources for program will fund states’ and local the Federal Transit Administration communities’ most critical (FTA) – $1 billion above the fiscal year transportation projects, and language is 2017 enacted level and $2.3 billion included in the bill to ensure that at above the request. Transit formula least 30% of these funds go to rural grants total $9.7 billion – consistent communities. with the FAST Act – to help local . Rail –Federal investments in rail communities build, maintain, and infrastructure and safety programs are ensure the safety of their mass transit funded at $3.1 billion, which is $1.2 systems. Within this amount, $2.6 billion over the fiscal year 2017 enacted billion is included for Capital level. The bill provides a total of $1.9 Investment Grants transit projects. billion for Amtrak, of which $650 “New Starts” projects are funded at million is for Northeast Corridor grants $1.5 billion, Core Capacity projects at and $1.3 billion is to support the $716 million, and Small Starts projects national network. Also included is at $400 million. These programs funding for the Federal-State provide competitive grant funding for Partnership for State of Good Repair major transit capital investments – grants at $250 million, which is $225 including light rail, bus rapid transit, million above the fiscal year 2017 and commuter rail – that are planned enacted level. This funding will address and operated by local communities. critical rail investments nationwide and The bill limits the federal match for on the Northeast Corridor – needs that “New Starts” projects to 51 percent. must be addressed to sustain current The bill provides an additional $834 rail services. Rail safety and research million in transit infrastructure grants programs are funded at $287 million, compared to the fiscal year 2017 level. $29 million over the fiscal year 2017 This includes $400 million to help enacted level. This will fund inspectors communities modernize their bus and training, plus maintenance and systems, and $400 million for capital safety investments to the physical rail assistance to transit systems across the

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country to maintain a state of good . DHS cybersecurity programs would see repair. another year-over-year increase in funding . Maritime – The bill includes $980 along with new cyber-related programmtic million for the Maritime tasks Administration, $457 million above the . Lawmakers included the CLOUD Act, a fiscal year 2017 enacted level. This bill to address how U.S. law enforcement funding will continue to increase the agencies may access the stored electronic productivity, efficiency, and safety of communications of U.S. persons being held the nation’s ports and intermodal water overseas, mooting a case before the Supreme and land transportation. The Maritime Court Security Program is funded at the full authorized level of $300 million. In This week, Congress sent the “The addition, the bill provides $300 million Consolidated Appropriations Act, 2018” (H.R. for a new national security multi- 1625) to the White House less than 24 hours mission vessel and provides $121 before funding for the federal government was million for the Merchant set to expire. The House passed the bill by a Marine Academy, including $52 million 256-167 vote on March 22 and then early on for capital improvements and repairs. March 23, the Senate did the same by a 65-32 . Road Safety – The bill contains vote. The omnibus appropriations bill for the funding for the various transportation current fiscal year makes available funds to safety programs and agencies within the meet the current caps on discretionary Department of Transportation. This spending even though the White House had includes $947 million in total budgetary publicly pushed for a lower level of non- resources for the National Highway defense funding. On the defense side, the Traffic Safety Administration, an Department of Defense (DOD) and national increase of $36 million over the fiscal security programs will receive the highest level year 2017 enacted level, and $845 of funding since FY 2010. million for the Federal Motor Carrier Safety Administration, $201 million The House Appropriations Committee above the fiscal year 2017 enacted level. summarized the Department of Homeland Also included is $272 million for the Security division: Pipeline and Hazardous Materials Safety Administration, an increase of $8 In total, the legislation directs $47.7 million over the fiscal year 2017 billion in discretionary funding for enacted level. DHS, an increase of $5.3 billion above the fiscal year 2017 enacted level. In For more information on transportation issues you may addition, the bill includes $7.4 billion – email or call Michael Kans at 202-659-8201. $573 million above the President’s request – for disaster relief and TECHNOLOGY emergency response activities through the Federal Emergency Management Omnibus Increases DHS’ Cybersecurity Agency (FEMA). Funding The National Protection and Programs Key Points: Directorate (NPPD) would be provided

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$1.482 billion, including $722,908,000 applicable to its eleven statutory for Cybersecurity, $243,992,000 of cybersecurity functions and had yet to which is for the National Cybersecurity establish performance metrics for the and Communications Integration principles. Not later 90 days after the Center (NCCIC) and $173,909,000 for date of enactment of this Act, NPPD Computer Emergency Response Teams shall brief the Committees on its (CERT). specific plans to address these GAO recommendations. In the Joint Explanatory Statement, the Appropriations Committees explained The “Bipartisan Budget Act of 2018” (P.L. programmatic issues arising from cybersecurity: 115-123) raised the cap on defense funding set in the “Budget Control Act of 2011” (P.L. 112- NPPD shall brief the Committees not 25) by $80 billion in FY 2018 and $85 billion in later than 60 days after the date of FY 2019. The non-defense funding cap was enactment of this Act on its assessment increased by $63 billion in FY 2018 and $68 of election infrastructure vulnerabilities billion in FY 2019. and its work with election officials to prevent cyber intrusions. The pre-Bipartisan Budget Act of 2018 for Of the total provided, $3,000,000 is for defense and non-defense discretionary funding the establishment of pilot programs to were: explore and evaluate the most effective . $549 billion and $515 billion for FY methods for cybersecurity information 2018 sharing, focusing on regional . $562 billion and $530 billion for FY information sharing; communications 2019 and outreach; training and education; and research and development for the The new caps are: improvement of SLTT government . $629 billion and $579 billion for FY capabilities and capacity. NPPD is 2018 directed to provide a report on the . $647 billion and $597 billion for FY results of each pilot not later than 270 2019 days after its completion. The NCCIC is directed to continue The Congressional Budget Office (CBO) providing technical assistance to other released its cost estimate showing a total that federal agencies, upon request, on FY 2018 appropriations meet the caps of $629 preventing and responding to data billion and $579 billion for defense and non- breaches involving unauthorized access defense funding. The CBO also projects a total to personally identifiable information. $1.420 trillion in discretionary budget authority GA0-17-163 made several for FY 2018, which includes OCO, emergency recommendations designed to ensure and other discretionary funding not counted that the NCCIC is adhering to its nine against the caps. The CBO noted that the FY implementing principles under the 2018 total also “include[s] the fiscal year 2018 National Cybersecurity Protection Act. budgetary effects of supplemental Specifically, the report noted that the appropriations for fiscal year 2017 that were NCCIC had yet to determine whether provided in the Supplemental Appropriations those implementing principles are for Disaster Relief Requirements Act, 2017

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(Division B of P.L. 115-56), as well as the Senators Orrin Hatch (R-UT), Chris Coons (D- supplemental appropriations and full-year DE), Lindsey Graham (R-SC), and Sheldon authorities provided for fiscal year 2018 by the Whitehouse (D-RI) introduced the Senate Additional Supplemental Appropriations for version, and Representatives Doug Collins (R- Disaster Relief Requirements Act of 2017 GA), Hakeem Jeffries (D-NY), Darrell Issa (R- (Division A of P.L. 115-72), the Department of CA), Suzan DelBene (D-WA), Tom Marino (R- Defense Missile Defeat and Defense PA), John Rutherford (R-FL), and Val Enhancements Appropriations Act, 2018 Demings (D-FL) introduced the House (Division B of P.L. 115-96), the Further version. Additional Supplemental Appropriations for Disaster Relief Requirements Act, 2018 Senate Intelligence Committee Holds (Subdivision 1 of Division B of P.L. 115-123), Hearing On Election Security and Releases and the Further Extension of Continuing Draft Recommendations Appropriations Act, 2018 (Subdivision 3 of Division B of P.L. 115-123).” Key Points: . With its investigation into Russian interference The “Clarifying Lawful Overseas Use of Data in the 2016 election ongoing, the Committee (CLOUD) Act” (S. 2383/H.R. 4943) was heard from the current and former DHS folded into the FY 2018 omnibus (i.e. Division Secretaries and other witnesses on how state V), which is legislation that addresses data held and local governments may better protect and overseas by multinationals that law secure their election systems from nation-state enforcement agencies want to access. The bill hacking would moot the issues presented in the United . The Committee also released its draft States v. Microsoft (i.e. the case before the recommendations Supreme Court regarding the communications of a U.S. person being stored on a Microsoft On March 21, the Senate Intelligence served in Ireland the U.S. government wants to Committee held an open hearing entitled: access) because federal law would be amended “Election Security.” Topics discussed in the to require technology companies to comply first panel included: (1) Pre-Election Warnings; with U.S. legal process for U.S. persons whose (2) Department of Homeland Security electronic communications are being held Cooperation with States; (3) Cybersecurity; (4) overseas. However, there would be judicial Federal Government Action; (5) Department procedures under which U.S. companies could of Homeland Security Risk Assessments; (6) seek to quash or modify legal process to Critical Infrastructure Designation; (7) Media compel disclosure of electronic Outlets; and (8) U.S. Retaliation. Topics communications for non-U.S. persons outside discussed in the second panel included: (1) the country under some circumstances, Federal Government Interaction; (2) particularly if the company may violate the laws Communication with States; (3) Russian of some other countries. There would also be a Interference; (4) Cybersecurity; (5) Help new process by which U.S. technology America Vote Act; (6) Swing State Targeting; companies could comply with the warrant (7) Public Notification; (8) Election Vendors; requests of some foreign nations without fear and (9) Department of Homeland Security of violating U.S. law. Funding.

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Chairman Richard Burr (R-NC) said many stated that the problem is not a partisan issue struggled to understand the Russian attack on and he applauded Republicans for offering the 2016 election. He asserted that since then, various recommendations. He stated the work the Department of Homeland Security (DHS) in securing funding in the omnibus would has made strides to address the issue. He noted improve cybersecurity efforts. He advocated that DHS’s ability to understand the problem for a standardized cybersecurity policy. He remains an open question. He stated that emphasized the need to expedite the security Secretary of Homeland Security Kirstjen clearance process. Nielsen and the support she provides is completely voluntary as election security lays in Secretary of Homeland Security Kirstjen the hands of the states. He said the issue is Nielsen said recent elections around the globe urgent but argued that the problems may not have been disrupted by foreign actors. She be solved for the 2018 and 2020 elections. He stated that there is no evidence that votes in the stated it is his understanding that appropriators 2016 election were changed by Russian have included money in the fiscal year (FY) attempts although she said it is evident that 2018 omnibus appropriations bill for grants there were Russian efforts to influence the and funding recommended by the Committee. election. She asserted that the administration of elections is the responsibility of state and local Vice Chairman Mark Warner (D-VA) said the officials. She said states can choose whether to Committee remains in the midst of its on-going use DHS’ services and that not all efforts are bipartisan investigation into the attacks during utilized by state and local officials. She the 2016 election. He stated that it was explained that DHS offers a range of technical important for the Committee to release the services – adding that more than half of the initial recommendations of its investigation the states have signed up for cyber hygiene 2016 election. He argued that the main goal is services. She stressed the importance of to protect the 2018 elections. He also noted information sharing and noted the creation of that Russian actors were able to hack Illinois an Election Infrastructure Information Sharing election databases along with 20 other states. and Analysis Center (ISAC). She said a He added that it is clear that 2016 will not be collective defense approach makes all elections the last of Russian attempts to disrupt more secure. She stated that there has been a American elections. He said the Putin regime learning curve for information sharing as many was behind a recent assassination attempt in states have different approaches and systems. Europe. He argued that elections at every level She explained that there have been steps taken are central to democracy. He expressed to share information more accurately and disappointment with how DHS approached the rapidly. She said state and local governments issue early on. He said officials were caught must be prepared for any election breach. She flatfooted and the response by the new stated that DHS is committed to working with Administration was not much better. He stated election administrations and noted that DHS that despite evidence of interference, officials knows who to contact in every state to share on the Federal level and the State levels did not information. She said there is a technology communicate. He referenced the issue of how deficit across state and local election systems. campaigns practice basic cyber security but said She argued that it will take a comprehensive the matter will not be discussed during this approach to solve this matter. hearing. He also called for the President to take a hard stand against Russian interference. He

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Former Secretary of Homeland Security Jeh noted this was the second Subcommittee Johnson said that the Russian government hearing this year for the Continuous orchestrated cyberattacks on the U.S. with the Diagnostics and Mitigation (CDM) program. purpose of influencing the 2016 election. He He said CDM has potential for improving both stated that the incident was a wake-up call for cybersecurity and the efficiency of information the entire nation. He explained that the key technology (IT). He asserted CDM can drive question is what the response will be. He progress on network visibility, data-centric agreed with the Committee’s draft security, and the role of increased automation recommendations. He said that he is pleased of security tasks and artificial intelligence (AI). that state election officials are taking steps to He stated Congress needs to roll out CDM secure their election infrastructure. He asserted improvements to match the increasing threat that as a nation, the U.S. must resolve to level. He argued the federal government has a strengthen its cybersecurity generally and its checkered past on IT investments, and federal election system cybersecurity specifically. agencies have issues providing adequate Johnson declared that nothing less than the cybersecurity. He stated Chief Information U.S.’s system of democracy depends on these Officers (CIOs) are the point of accountability, efforts. but that all stakeholders have some responsibilities. He noted damaging data House OGR/House Homeland Security breaches have plagued agencies. He stated this Joint Hearing On CDM hearing would attempt to discover lessons from the initial rollout of CDM Phase 1, assess plans Key Points: to move to Phase 2, and examine a long-term . Two subcommittees conducted an oversight vision for CDM. He stressed that Congress hearing on the DHS’ capabilities to help needs to determine the resources necessary for federal agencies achieve better visibility into, investment and developing a strategy for that situational awareness of, and security of their investment. He said proper metrics are needed IT systems to evaluate the success of the CDM program. . Many agencies are still lagging in utilizing He emphasized providing the authorities, tools, DHS’ help to hit defined milestones and resources that CIOs need to meet their obligations and get CDM correct. On March 20, the House Oversight and Government Reform Committee’s Information Representative Gerald Connolly (D-VA) stated Technology Subcommittee and the House the CDM program provides agencies with Homeland Security Committee’s Cybersecurity hardware and software to strengthen the and Infrastructure Protection Subcommittee security of federal networks. He said CDM has held a hearing entitled “CDM: Government great potential to secure networks and provide Perspectives on Security and Modernization.” data on network attack surfaces. He Topics discussed in the hearing included but emphasized the need to determine who has were not limited to: (1) Continuous Diagnostics access to networks. He noted Russian attacks and Mitigation; (2) OPM Breach; (3) Veterans on the energy grid within the previous week. Affairs; (4) Power Grid Safety; and (5) CDM He expressed concern about inadequate Dashboard Data. funding for CDM and noted the $237 million requested in FY 2019 gets dispersed between Cybersecurity and Information Technology oversight and agency implementation at the Subcommittee Chairman John Ratcliffe (R-TX) Department of Homeland Security (DHS). He

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stated agencies also cover funding shortfalls by government and private sector. He expressed shifting funds from other IT priorities. He support for the collaborative efforts of agencies noted the high costs for agencies to maintain like DHS and expressed concern that many legacy systems. He expressed support for agencies view CDM as an imposed mandate. finding net new investment in CDM. He He said visibility is just the first step and the asserted the “Modernizing Government next is identifying actionable information. He Technology (MGT) Act” (P.L. 115-91) could noted the example of using CDM-like help by allowing agencies to establish working capabilities to find unmanaged cloud services capital funds to reinvest IT savings and which present risk. He expressed support for transition to cloud computing. He stated the the working capital funds and the TMF in the MGT Act also authorized the Technology MGT Act. He stated DOE submitted five Modernization Fund (TMF) at $250 million for proposals to the Office of Management and FY 2018 and FY 2019. He said once the TMF Budget (OMB) for using the TMF. is established agencies will be able to borrow from the TMF to finance IT projects and Department of Veterans Affairs Acting Chief enhance the CDM process. He expressed Information Officer Scott Blackburn said that concern about the shortage of qualified federal the Department of Veterans Affairs (VA) is employees to implement CDM. He stated replacing the Veterans Information Systems freezing civilian pay and demeaning the and Technology Architecture (VistA) with a workforce discourage potential new employees. modern electronic health record that will be interoperable with the VA, the Department of Department of Energy (DOE) Chief Defense (DOD), and ultimately the health care Information Officer Max Everett said that as system. He said the VA has not signed the final the DOE’s CIO, he reports directly to the deal to develop this system but hopes to Secretary and Deputy Secretary. He stated announce it soon. He stated two weeks ago VA DOE has made cybersecurity a priority for the announced a beta version of Lighthouse Lab, agency’s internal networks and to fulfill their an application programming interface (API) role as the sector specific agency (SSA) for the management platform that will allow energy sector. He stated the Secretary and developers to build out a standard set of APIs. Deputy Secretary fully support the DOE He asserted Lighthouse will be the API enterprise plan of action and have directed him gateway which will connect the disparate to move forward with implementing CDM systems to allow information exchange and across the agency’s networks. He stressed that innovation. He noted the VA Open API CDM is being implemented at DOE National Pledge that 11 major health care systems have Laboratories, sites, and Power Marketing signed that will to accelerate the mapping of Administrations (PMA). He said the new health data to industry standards, including the model of managed services and automation has current and future versions of Fast Healthcare presented challenges in the federal workforce. Interoperability Resources (FHIR). He stated He emphasized the need to find employees VA is expanding tele-help and online with the technical and business processing skills scheduling to better serve veterans and is to operate within this new model. He said supporting priority efforts and the Forever G.I. CDM can drive modernization by identifying Bill (P.L. 115-48). He said VA is pursuing a buy and prioritizing legacy systems to be first strategy to use commercial off-the-shelf modernized. He stated it is essential that secure solutions and is launching cloud-based software network incentives are aligned across the to streamline internal processes. He said VA is

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improving data center consolidation by closing . Data, accountability, and existing data centers. He emphasized that the transparency initiatives must provide VA’s enterprise cybersecurity strategy program the tools to deliver visibly better results (ECSP) is helping to guard against cyber to the public, while improving threats. He said as of December 2017, VA has accountability to taxpayers for sound secured of 90 percent of medical devices with fiscal stewardship and mission results. vulnerabilities and achieved 100 percent Investments in policy, people, enforcement of two-factor authentication for processes and platforms are key privileged users. He noted CDM is a piece of elements of this transformation and VA’s ECSP, and current efforts include the require cross-agency cooperation to documenting and defining of hardware ensure an integrated Data Strategy that application security products and settings encompasses all relevant governance, deployed across the agency. standards, infrastructure and commercialization challenges of President’s Management Agenda Released operating in a data-driven world. . The workforce for the 21st Century Key Point: must enable senior leaders and front- . As promised in the FY 2019 budget request, line managers to align staff skills with the Trump Administration released its evolving mission needs. This will Management Agenda that will implement new require more nimble and agile CAP goals to drive IT modernization, to management of the workforce, achieve greater data transparency, and to including reskilling and redeploying develop a 21st Century workforce existing workers to keep pace with the current pace of change. This week the Trump Administration released the President’s Management Agenda (Agenda) The Trump Administration is looking to that “lays out a long-term vision for implement these policy changes through the modernizing the Federal Government in key Cross-Agency Priority (CAP) Goals areas that will improve the ability of agencies to mechanism, including: deliver mission outcomes, provide excellent . Overview service, and effectively steward taxpayer dollars . Key Performance Indicators on behalf of the American people.” The Trump . Key Drivers of Transformation Administration articulated the three pillars that o IT Modernization will modernize the government for the 21st o Data, Accountability and Century: Transparency . Modern information technology o People - Workforce for the 21st must function as the backbone of how Century Government serves the public in the . Cross-Cutting Priority Areas digital age. Meeting customer o Improving Customer expectations, keeping sensitive data and Experience systems secure, and ensuring o Sharing Quality Services responsive, multi-channel access to o Shifting From Low-Value to services are all critical parts of the High-Value Work vision for modern Government. . Functional Priority Areas o Category Management

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o Results-Oriented Accountability implementation.” The agencies stated that for Grants “[d]ue to the rapidly changing technology and o Getting Payments Right scale of the implementation, OMB and GSA o Federal IT Spending intend to pursue a phased implementation to Transparency benefit from the use of commercial e- o Improve Management of Major commerce portals while continuing to identify Acquisitions ways that acquisition can be improved through . Mission Priority Areas evolving technology.” o Modernize Infrastructure Permitting GSA stated that “[i]n support of this initiative, o Security Clearance, Suitability, the plan recommends the following legislative and Credentialing Reform changes to simplify and streamline the COTS o Lab-to-Market item buying experience: . Raise the micro-purchase threshold GSA and OMB Release E-Commerce from $5,000 for DOD and $10,000 for Portal Plan civilian Federal Agencies to $25,000 for purchases through GSA-approved Key Points: portals, while requiring transactional . The two agencies tasked with developing and data be recorded and shared across the establishing a portal through which federal Government; agencies will be able to buy e-commerce goods . Revise the statutory definition of have submitted their initial implementation ‘commercial e-commerce portal’ to plan to Congress ensure that GSA can include a variety . The plan’s timeline depends on three statutory of electronic procurement business changes in the short-term models, while enabling a more dynamic and competitive marketplace Late last week, the Office of Management and environment; and Budget (OMB) and the General Services . Amend the application of statutory Administration (GSA) submitted the initial competition requirements to include implementation plan for the e-Commerce the procedures established by the Portals as directed by Section 846 of the FY Administrator of General Services for 2018 National Defense Authorization Act purchasing through the commercial e- (NDAA) (P.L. 115-91). The initial commerce portals. A second change is implementation plan is dependent on three recommended to increase GSA’s statutory changes GSA and OMB are flexibility when awarding contracts for recommending that Congress include in the commercial e-commerce portals. next NDAA, and without these changes, the timeline the agencies present is not feasible. GSA stated that “[a] key assumption is that the recommended legislative proposals are passed GSA explained the initial implementation plan into law in the FY19 NDAA to allow for the “was developed by GSA in close consultation initial rollout to occur later in FY19.” with OMB, identifies opportunities, recommends legislative changes that allow GSA claimed that “[t]he statutory relief migration to more commercial practices, and described above is necessary to ensure fully defines the approach and timeline for successful implementation of this effort and

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Page 21 of 24 Williams & Jensen – Washington Update March 23, 2018 would allow for GSA to implement this ahead On Thursday, President Trump announced of the timelines identified in the legislation.” tariffs on China based on a Section 301 The agencies stated that “GSA and OMB look investigation into Chinese intellectual property forward to continue working with the (IP) and technology transfer practices. He Department of Defense (DOD) (the largest directed the U.S. Trade Representative (USTR) purchaser of COTS items) and agency partners, to publish a proposed list of Chinese goods the supplier community, commercial e- that should be subject to tariffs. These tariffs commerce portal providers, and other will not go into effect until a 30-day notice and interested stakeholders in the implementation stakeholder comment period has been of this effort.” completed. A senior official suggested the tariffs will apply to roughly $50-$60 billion of GSA stated that it “will meet or exceed the Chinese goods and roughly 1,300 tariff lines, outlined phases identified in the NDAA which are likely to be announced in the Federal legislation, which include: Register as early as next Tuesday. The USTR fact • Phase 1 (90 days): Implementation plan sheet says there will be 25 percent additional and policy assessment tariffs on products from the “aerospace, • Phase 2: (90 days + 1 year) Market information communication technology, and Research & Consultation machinery” sectors. The President’s • Phase 3: (90 days + 2 years) memorandum also directs the USTR to pursue Implementation Guidance dispute settlement in the World Trade • Phase 4: (by end of FY19) Potential Organization (WTO) “to address China’s Initial Rollout discriminatory licensing practices.” That • Phase 5: (by end of FY20) Assess and process began today, as the USTR challenged Scale Rollout certain trade practices and sought WTO consultation with China. For more information on technology issues you may email or call Michael Kans at 202-659-8201. Henry The memorandum also directed Treasury F. Homans, Thomas McGrath Riyad Carey, and Secretary Steven Mnuchin to “propose Rebecca Konst contributed to this section. executive branch action… to address concerns about investment in the United States directed TRADE or facilitated by China in industries or technologies deemed important to the United President Trump Announces Section 301 States.” The Secretary is required to report his Tariffs on China progress within 60 days.

Key Points: Ross and Lighthizer Testify Before . President Trump directed USTR Congress, Discuss NAFTA, 232, and 301 Lighthizer to publish, within 15 days, a list of Chinese goods that should be Key Points: subject to tariffs. . USTR Lighthizer announced, and the . He also directed Treasury Secretary White House later confirmed, that Mnuchin to make recommendations on Canada, Mexico, Korea, the EU, investment restrictions that could go Australia, Argentina, and Brazil will be beyond the authority of CFIUS. temporarily exempt (through May 1)

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from 232 tariffs until permanent deals prolonged and unnecessarily cumbersome.” can be made. Ranking Member Wyden was more supportive . Secretary Ross provided clarity on the of President Trump’s 301 tariff announcement process by which specific products can and said he was “encouraged that the be exempted from 232 tariffs. Administration is focused on protecting the . Lighthizer suggested the three NAFTA technologies that China publicly targeted.” parties are starting to “converge” on Senator Lindsey Graham (R-SC) also endorsed auto rules of origin. the 301 announcement: “I think it’s long overdue, I congratulate the President for calling USTR Robert Lighthizer testified before the China out… His first series of tariffs were too House Ways and Means Committee on broad… I think these are very much warranted Wednesday and the Senate Finance Committee and specific.” Other Senate Republicans on Thursday. Ways and Means Chairman expressed concern about the possibility of a Kevin Brady (R-TX) pressed Lighthizer about trade war with China, specifically regarding the his proposal to make the North American Free impact this could have on U.S. agriculture. Trade Agreement (NAFTA) investor-state USTR Lighthizer also told the Senate Finance dispute settlement (ISDS) optional for the Committee that USTR will begin considering three parties. Chairman Brady said, “[w]ithout which countries it will pursue bilateral trade ISDS, Americans’ property is left unprotected agreements with; he suggested Japan, Vietnam, against discrimination, foreign seizure, and an African country could be USTR’s first regulatory abuses and other forms of unfair targets for a trade deal. action… This is a key part of passing a strong NAFTA agreement that we’re convinced you’ll Commerce Secretary Wilbur Ross also testified negotiate.” USTR Lighthizer repeatedly stated before the House Ways and Means Committee that U.S. sovereignty is compromised by ISDS on Thursday and provided information on the and suggested it encourages companies to 232 product exclusion process. “We will be outsource to Mexico. Other lawmakers noted looking for demonstrated manufacturing that ISDS was included as a negotiating capability meeting the technical parameters for objective in the 2015 TPA and argued that not the specific article in question,” he testified. including it in NAFTA “would be a direct Secretary Ross went on to explain, “[t]his could rebuke to Congress’ explicit direction.” include idled capacity that is being brought Chairman Brady also urged the Administration back online as a committed thing – not as a to only impose 232 tariffs for “the absolute prospect, not as a possibility – but as a minimum period” and argued they should commitment by the U.S. company as well as sunset after one year. [one that] will include new, expanded capabilities.” Secretary Ross also confirmed During the Senate Finance Committee hearing, that the Administration is prepared to pursue Chairman Orrin Hatch (R-UT) and Ranking additional antidumping and countervailing Member Ron Wyden (D-OR) were critical of duties (AD/CVD) against countries that the Administration for the rollout of the 232 attempt to circumvent the tariffs. steel and aluminum tariffs. Chairman Hatch said the tariffs are a “significant step in the President Trump Requests an Extension to wrong direction,” and observed, “[t]here is no Trade Promotion Authority clarity on country exemptions, and the recently announced process for product exclusions is Key Points:

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. President Trump requested a 3-year For more information on trade issues you may email or extension to the Administration’s Trade call Christopher Hatcher at 202-659-8201. Riyad Promotion Authority (TPA), which is Carey contributed to this section. set to expire on June 30. . Extension is somewhat automatic and is expected, though Congress may use This Week in Congress was written by Ryan Schnepp. the occasion to remind the Administration it must adhere to TPA objectives.

On Tuesday, President Trump requested that Congress extend the Administration’s fast-track trade authority until 2021. He cited the Administration’s “determination to use the leverage available to us as the world’s largest economy to open foreign markets, and to obtain more efficient global markets and fairer treatment for American workers” as a reason to extend the authority. Under TPA, a request for an extension is granted unless Congress affirmatively passes a motion of disapproval in one body; and such a resolution of disapproval may not be considered unless it is reported out of either the House Ways and Means or Senate Finance Committees. That procedural step will allow the committees to weigh in on how TPA obligations should be met by the Administration, but actual disapproval appears unlikely at the point, suggested TPA will be extended.

To that point, at a meeting with the Business Roundtable and Farmers for Free Trade, Senate Finance Chairman Hatch stressed the importance of the Administration “ensuring that a modernized NAFTA reflects the negotiating objectives [in TPA].” He said, “Congress will use the extension disapproval process under the Trade Promotion Authority law to emphasize that the Administration must adhere to the TPA negotiating objectives and to encourage the President to seek new agreements with our trading partners.”

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