Tag: congress

Congress Begins With Renewed Efforts to Repeal Insurer’s Antitrust Exemption

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Early into the 114th Congress, multiple bills have already been introduced that would repeal the insurance industry’s limited antitrust exemption granted by the McCarran-Ferguson Act (15 USC 1011 et seq.).

On January 6, Representative John Conyers (D-Mich.) introduced the “Health Insurance Industry Antitrust Enforcement Act of 2015,” (H.R. 99). The legislation would amend the McCarran-Ferguson Act, which currently provides the insurance industry with an exemption from the federal antitrust laws for conduct that is “the business of insurance,” is “subject to state regulation,” and does not constitute “an act of boycott, coercion or intimidation,” (15 USC 1013), by removing the exemption for health insurers and medical malpractice insurers. Notably, the bill would not eliminate the exemption with respect to other lines of insurance, and is similar to McCarran repeal bills that Representative Conyers has introduced in prior sessions of Congress. Representative Conyers has previously stated that his bill would “end the mistake Congress made in 1945 when it added an antitrust exemption for insurance companies.”

Subsequently, on January 22, Representative Paul Gosar (R-Ariz.), who was a practicing dentist for many years, introduced similar McCarran repeal legislation, entitled the “Competitive Health Insurance Reform Act of 2015” (H.R. 494). Representative Gosar’s bill would only eliminate the exemption as to health insurers. In introducing his legislation, Representative Gosar stated that “Since the passage of Obamacare, the health insurance market has expanded into one of the least transparent and most anti-competitive industries in the United States,” and that there is “no reason in law, policy or logic for the insurance industry to have a special exemption” from the antitrust laws.

Both H.R. 99 and H.R. 494 have been referred to the House Judiciary Committee for further action. Whether these bills will gain traction this Congress remains to be seen, but the fact that the bill has supporters on both sides of the aisle certainly increases the chances that the legislation will, at a minimum, be considered by the House Judiciary Committee (which failed to take up similar legislation in the 113th Congress).

ARTICLE BY

James M. Burns
OF
Dickinson Wright PLLC

Elementary and Secondary Education Act (ESEA) Reauthorization On The House Floor This Week

Squire Patton Boggs (US) LLP law firm

Legislative Activity

ESEA Reauthorization Bill to be Considered on the House Floor this Week

The education community continues to analyze H.R. 5, the Student Success Act, which the House Education and the Workforce Committee approved and reported to the House prior to the Congressional recess. Echoing the White House report criticizing H.R. 5 released last week, an estimate published by the Council of the Great City Schools also described the negative effect H.R. 5’s Title I portability measures would have on school districts.

In response to the White House’s report, Chairman John Kline (R-MN) accused the White House of using “scare tactics and budget gimmicks to kill K-12 education reform.” Rep. Kline believes his legislation provides states and families with greater flexibility to meet student needs.

The House Committee on Rules recently announced that it will meet next week to grant a rule that could limit the amendment process for floor consideration of H.R. 5. The announcement also stated that amendments to H.R. 5 are due to the committee by Monday afternoon. The bill will be brought to the floor for debate on Wednesday and Thursday and a final vote is scheduled for Friday.

Senate HELP Committee Will Hold Hearing on Burdensome Regulations

Last week, the Task Force on Federal Regulation of Higher Education published a report identifying 10 regulations/regulatory areas that are most burdensome to institutions of higher education due to cost, complexity, lack of relevance, and for having duplicative requirements. On Tuesday, the Senate Health, Education, Labor and Pension (HELP) Committee will hold a hearing on the report and will hear testimony from two members of the Task Force – William Kirwan, Chancellor of the University System of Maryland, and Nicholas Zeppos, Chancellor of Vanderbilt University. In addition to these witnesses, the Senate HELP Committee members that led this effort, including Chairman Lamar Alexander (R-TN), Barbara Mikulski (D-MD), Richard Burr (R-NC), and Michael Bennet (D-CO), plan to testify.

This is the first hearing of the 114th Congress related to HEA reauthorization. The Senate HELP Committee may hold other hearings on HEA this year before it drafts legislation. The House is expected to introduce a bill as early as March.

Senators Question Department of Education’s Enforcement of Title IX

Last week, Senators Barbara Boxer (D-CA) and Kirsten Gillibrand (D-NY) sent a letter to Secretary of Education Arne Duncan asking for information on the Department of Education’s enforcement of Title IX and the Clery Act. Specifically, the Senators requested information on the number of complaints received over the past five years, the number of investigations conducted in response to those complaints, the average length of time it takes to complete investigations, the penalties the agency has imposed, and what procedures are used to protect students from sexual assault. Both Senators have been leaders on issues related to campus sexual assault and will likely reintroduce the Campus Accountability and Safety Act (CASA) in the 114th Congress. Additionally, Senator Boxer plans to reintroduce the Survivor Outreach and Support Campus Act (SOS Campus Act) this week.

This Week’s Hearings

  • Tuesday, February 24: The Senate Health, Education, Labor and Pensions Committee will hold a hearing titled “Recalibrating Regulation of Colleges and Universities: A Report from the Task Force on Government Regulation of Higher Education.”

Regulatory Activity

Federal Agencies Continue to Focus on Preventing Campus Sexual Assault

Last week, the Department of Education’s Office for Civil Rights (OCR) opened new Title IX investigations at the University of Connecticut and the State University of New York at Brockport. To date, OCR is conducting 102 Title IX sexual violence investigations at 97 colleges and universities.

Additionally, the Department of Justice’s National Institute of Justice (NIJ) and the White House’s Office on Violence Against Women recently announced that they are seeking applications for grants to research and identify “promising practices” in campus investigation and judicial decision making involving student sexual assault, both for “victim impact and offender accountability.” This is in response to a recommendation from the White House Task Force to Protect Students From Sexual Assault to improve understanding of policies and practices regarding investigation and adjudication of sexual assaults on college campuses. Grant applications are due April 6, 2015.

First in the World 2015 Priorities

The Fund for the Improvement of Postsecondary Education (FIPSE) has made available its proposed Priorities, Requirements, Selection Criterion and Definitions for the First in the World (FITW) program grants. The Department summarizes the proposal as follows:

These priorities, requirements, selection criterion, and definitions would enable the Department to focus the FITW program on identified barriers to student success in postsecondary education and advance the program’s purpose to build evidence for what works in postsecondary education through development, evaluation, and dissemination of innovative strategies to support students who are at risk of failure in persisting in and completing their postsecondary programs of study.

The proposal is scheduled to be published in the Federal Register Monday, with the deadline for submitting comments 30 days later. The FIPSE office hopes to review comments on the priorities, selection criteria, and definitions and finalize the application by the end of March or early April. Once these priorities have been set, the Department will make the FY 2015 FIPSE funding opportunity announcement as early as May.

ARTICLE BY

Amy Budner Smith
Dana T. Weekes
Amy F. Davenport
OF
Squire Patton Boggs (US) LLP

Sponsors of Net Neutrality Bill Receive Thousands from Internet Service Providers

MapLight, a nonprofit and political research organization

Late last month, Rep. Fred Upton (R-MI) and Rep. Greg Walden (R-OR) held a hearing to discuss congressional action on net neutrality.  The representatives, who chair House committees that oversee the Federal Communications Commission (FCC), also released an early draft of a bill to regulate the open flow of information on the Internet.

Rep. Greg Walden (R-OR) pictured in foreground
Rep. Greg Walden (R-OR) pictured in foreground. Image source: House GOP Leader/Flickr

Consumer advocates have argued the draft proposal fails to adequately regulate net neutrality, and instead voiced support FCC Commissioner Tom Wheeler’s efforts to regulate the internet like a utility.  The FCC isscheduled to vote on Commissioner Wheeler’s proposal on Feb. 26.

Campaign Contributions: MapLight analysis of campaign contributions from employees and political action committees (PACs) of the four largest internet service providers in the United States, AT&T, Comcast, Time Warner Cable, and Verizon Communications, to the campaign committees of Rep. Fred Upton (R-MI) and Greg Walden (R-OR) during the 2014 election cycle.

Member Amount Received
AT&T Comcast Time Warner Cable Verizon Communications Total
Rep. Fred Upton (R-MI) $10,000 $37,600 $21,500 $30,400 $99,500
Rep. Greg Walden (R-OR) $5,000 $32,050 $14,500 $5,250 $56,800
Total $15,000 $69,650 $36,000 $35,650 $156,300

  • The top four internet service providers, AT&T, Comcast, Time Warner Cable, and Verizon Communications, contributed $156,300 to Rep. Fred Upton (R-MI) and Rep. Greg Walden (R-OR) during the 2014 election cycle.

  • The four companies contributed $99,500 to Rep. Upton.

  • The four companies contributed $56,800 to Rep. Walden.

  • The top contributor, Comcast, contributed $69,650 to the two chairmen during the 2014 election cycle.

To view lobbying data for AT&T, Comcast, Time Warner Cable, and Verizon Communication please click here.

Campaign Contributions Methodology: MapLight analysis of campaign contributions to Rep. Fred Upton (R-MI) and Rep. Greg Walden (R-OR) from PACs and employees of the AT&T, Comcast, Cox Communications, Time Warner Cable, and Verizon Communications, the four largest internet service providers in the United States, from January 1, 2013 to December 31, 2014. Contributions data source: Federal Election Commission

The Individual Taxpayer Implications of the Tax Extenders in H.R. 5771

McBrayer, McGinnis, Leslie and Kirkland, PLLC

Every year for the past several years, Congress has passed a series of what are referred to as “tax extenders” – reinstatements of tax deductions and credits that have expired before the current tax year. It did so again in 2014, renewing several key tax breaks for individuals that apply exclusively to the 2014 tax year.

  • Taxpayers with forgiven mortgage debt on their principle residence can now exclude up to $2 million of that discharged debt from gross income. Traditionally, discharged debt of any kind qualifies as income to the taxpayer and is taxed accordingly.

  • For tax purposes, mortgage insurance premiums are treated the same way as mortgage interest payments and are deductible.

  • Energy efficient improvements to homes qualify for a tax credit of up to $500 (a direct reduction in tax liability). Upgraded air conditioning and heat pump systems, new windows,

  • Residents in states without an income tax received a gift in the form of an extension of a provision that allows taxpayers to choose to deduct state and local sales taxes rather than state and local income taxes. This itemized deduction can be calculated using a calculator provided by the IRS to estimate sales tax paid throughout the year.

  • College students or parents of college students with income of up to $65,000 for a single taxpayer or $130,000 for taxpayers filing jointly who pay higher education expenses are eligible for an above-the-line deduction of up to $4000. That deduction drops to $2,000 for those with income between $65,000 and $80,000 (single) or between $130,000 and $160,000 (joint). Those with incomes above those amounts are not eligible for the deduction.

  • Individuals who are 70 ½ and older can make tax-free distributions to certain public charities from their IRAs. Distributions of up to $100,000 are eligible.

  • Elementary and secondary school teachers who purchased educational items out-of-pocket for their classrooms are eligible for a $250 above-the-line deduction.

ARTICLE BY

Matthew Koch
OF
McBrayer, McGinnis, Leslie and Kirkland, PLLC

This Week in Congress – February 2, 2015 re: 2016 Budget Proposal, DHS, and more

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President Obama will release his Fiscal Year (FY) 2016 budget proposal today, requesting roughly $4 trillion in spending for the upcoming year and specifying the Administration’s views on how and from what sources the federal government should be raising money and how and on what it should be spending it for the fiscal year beginning October 1.  The President’s budget sets off a fiscal showdown with the Republican-led Congress, whose members generally view the Administration’s proposals as higher taxes and higher government spending.  Many of President Obama’s cabinet members will be on Capitol Hill this week and in the coming weeks, testifying before House and Senate committees as to the merits of the budget proposal and highlighting areas of potential compromise as Congress develops its own budget for FY 2016.  Treasury Secretary Jacob Lew will be before the House Ways and Means and Senate Budget Committees on Tuesday, while IRS Commissioner John Koskinen will be before the Senate Finance Committee.  On Wednesday, Shaun Donovan, Director of the Office of Management and Budget, is scheduled to appear before the House Budget Committee and Sylvia Mathews Burwell, Secretary of the Department of Health and Human Services, appears before the Senate Finance Committee.  In addition, the Senate Armed Services Committee will hold the confirmation hearing this week for Ashton Carter to serve as Secretary of Defense.  With Committee Chairman John McCain’s strong desire for increased defense spending, the budget will no doubt be front and center in that hearing as well.

The House of Representatives returns to legislative business on Monday taking up three bills concerning programs at the Department of Homeland Security.  On Tuesday, the House will vote on H.R. 596, a bill that would repeal the Affordable Care Act while directing House committees to develop alternatives.  Since the Affordable Care Act was signed into law in 2010, Congress has voted 54 times on measures to repeal, revamp, or make technical changes to it.  On Wednesday, members will consider H.R. 50, the Unfunded Mandates Information and Transparency Act of 2015, sponsored by Rep. Virginia Foxx.  This legislation, which passed the House in 2014 by a vote of 234-176, would impose stricter requirements for how and when federal agencies must disclose the cost of federal mandates and equips both Congress and the public with tools to determine the true costs of regulations.  On Thursday, the House will vote on H.R. 527, the Small Business Regulatory Flexibility Improvements Act of 2015, sponsored by Representative Steve Chabot, which requires federal agencies to consider the economic effects of regulations on small business before imposing overly burdensome mandates that prevent growth and job creation.  This legislation has also passed the Republican-controlled House in the two previous Congresses.

The Senate returns on Monday and is expected to vote on H.R. 203, the Clay Hunt Suicide Prevention for American Veterans Act, a bill that the House passed unanimously.  The bill would require annual evaluations of the Department of Veterans Affairs’ mental health and suicide prevention programs.  The Senate will then seek to turn to H.R. 240, an appropriations bill that will fund the Department of Homeland Security for the remainder of 2015; the current budget for DHS expires  Feb. 27. While the bill provides $40 in funding for DHS, it also blocks any of the funds from being used to carry out President Obama’s new immigration and deportation policy announced in an executive order last November.  President Obama has pledged to veto the measure if the immigration rider is included.  Leader McConnell is unlikely to be able to get the 60 votes needed on cloture on the motion to proceed to the appropriations bill.  Once the cloture vote fails, he will need to figure out an alternative means of considering the legislation.  He has put a clean Democratic DHS appropriations bill on the Senate Calendar under Rule 14, so moving to that bill after the failed cloture vote is one possibility.

In addition to the hearings focused on the President’s budget and on the Defense Secretary nomination, a list of other key congressional hearings this week is included below:

 Feb. 3

 House Committees

Global Threat Assessment
House Armed Services
Full Committee Hearing
Feb. 3, 10 a.m., 2118 Rayburn Bldg.

Flu Preparation and Prevention
House Energy and Commerce – Subcommittee on Oversight and Investigations
Subcommittee Hearing
Feb. 3, 10 a.m., 2123 Rayburn Bldg.

U.S. Interests in Western Hemisphere
House Foreign Affairs – Subcommittee on the Western Hemisphere
Subcommittee Hearing
Feb. 3, 11 a.m., 2172 Rayburn Bldg.

Immigration Law Assessment
House Judiciary
Full Committee Hearing
Feb. 3, 11 a.m., 2141 Rayburn Bldg.

Inspectors General Oversight
House Oversight and Government Reform
Full Committee Hearing
Feb. 3, 10:15 a.m., 2154 Rayburn Bldg.

NSF Research Facility Oversight
House Science, Space and Technology – Subcommittee on Oversight; House Science, Space and Technology – Subcommittee on Research and Technology
Committee Joint Hearing
Feb. 3, 10 a.m., 2318 Rayburn Bldg.

Energy and Transportation Issues
House Transportation and Infrastructure – Subcommittee on Railroads, Pipelines and Hazardous Materials
Subcommittee Hearing
Feb. 3, 10 a.m., 2167 Rayburn Bldg.

Fiscal 2016 Budget Issues – Treasury Secretary Jacob Lew
House Ways and Means
Full Committee Hearing
Feb. 3, 10 a.m., 1300 Longworth Bldg.

Airport Access Control Measures
House Homeland Security – Subcommittee on Transportation Security
Subcommittee Hearing
Feb. 3, 2 p.m., 311 Cannon Bldg.

Wounded Warrior Program
House Armed Services – Subcommittee on Military Personnel
Subcommittee Hearing
Feb. 3, 3:30 p.m., 2118 Rayburn Bldg.

Senate Committees

Military Compensation and Retirement Modernization Commission
Senate Armed Services
Full Committee Hearing
Feb. 3, 9:30 a.m., G-50 Dirksen Bldg.

Fiscal 2016 Budget – Treasury Secretary Jacob Lew
Senate Budget
Full Committee Hearing
Feb. 3, 10 a.m., 608 Dirksen Bldg.

U.S.-Cuba Relations
Senate Foreign Relations – Subcommittee on Western Hemisphere, Transnational Crime, Civilian Security, Democracy, Human Rights and Global Women’s Issues
Subcommittee Hearing
Feb. 3, 10 a.m., 419 Dirksen Bldg.

IRS Fiscal 2016 Budget Request – John Koskinen, Commissioner, Internal Revenue Service
Senate Finance
Full Committee Hearing
Feb. 3, 10:30 a.m., 215 Dirksen Bldg.

No Child Left Behind and Student Needs
Senate Health, Education, Labor and Pensions
Full Committee Hearing
Feb. 3, 10 a.m., 216 Hart Bldg.

Joint Committees
Veterans Affairs Issues
House Veterans’ Affairs; Senate Veterans’ Affairs
Committee Other Event
Feb. 3 TBA, Veterans Affairs, 810 Vermont Ave. NW

Feb. 4

House Committees

Military Compensation and Retirement Commission
House Armed Services
Full Committee Hearing
Feb. 4, 10 a.m., 2118 Rayburn Bldg.

Fiscal 2016 Budget Issues – Shaun L.S. Donovan, Director, Office of Management and Budget
House Budget
Full Committee Hearing
Feb. 4, 10:30 a.m., 210 Cannon Bldg.

U.S. Schools and Workplaces
House Education and the Workforce
Full Committee Hearing
Feb. 4, 10 a.m., 2175 Rayburn Bldg.

HUD Ethical Oversight
House Financial Services – Subcommittee on Oversight and Investigations
Subcommittee Hearing
Feb. 4, 10 a.m., 2167 Rayburn Bldg.

U.S.-Cuba Policy Assessment
House Foreign Affairs
Full Committee Hearing
Feb. 4, 10 a.m., 2172 Rayburn Bldg.

Legal Workforce Act
House Judiciary – Subcommittee on Immigration and Border Security
Subcommittee Hearing
Feb. 4, 10 a.m., 2141 Rayburn Bldg.

Furthering Asbestos Claim Transparency Act
House Judiciary – Subcommittee on Regulatory Reform, Commercial and Antitrust Law
Subcommittee Hearing
Feb. 4, 1 p.m., 2141 Rayburn Bldg.

Palestinian Authority and International Criminal Court
House Foreign Affairs – Subcommittee on the Middle East and North Africa
Subcommittee Hearing
Feb. 4, 2 p.m., 2172 Rayburn Bldg.

Senate Committees

Secretary of Defense Nomination
Senate Armed Services
Full Committee Confirmation Hearing
Feb. 4, 9:30 a.m., G-50 Dirksen Bldg.

HHS Fiscal 2016 Budget Request – Sylvia Mathews Burwell, Secretary, United States Department of Health and Human Services
Senate Finance
Full Committee Hearing
Feb. 4, 10 a.m., 215 Dirksen Bldg.

Cybersecurity and Private Sector Issues
Senate Commerce, Science and Transportation
Full Committee Hearing
Feb. 4, 10 a.m., 253 Russell Bldg.

Implications of Immigration Action
Senate Homeland Security and Governmental Affairs
Full Committee Hearing
Feb. 4, 10 a.m., 342 Dirksen Bldg.

Vessel Discharge Regulations
Senate Commerce, Science and Transportation – Subcommittee on Oceans, Atmosphere, Fisheries and Coast Guard
Subcommittee Hearing
Feb. 4, 2:30 p.m., 253 Russell Bldg.

Indian Affairs Legislation
Senate Indian Affairs
Full Committee Markup
Feb. 4, 2:30 p.m., 628 Dirksen Bldg.

Loan Leveraging Issues
Senate Indian Affairs
Full Committee Oversight Hearing
Feb. 4, 2:30 p.m., 628 Dirksen Bldg.

Financial Exploitation of Seniors
Senate Special Aging
Full Committee Hearing
Feb. 4, 2:15 p.m., 562 Dirksen Bldg.

Joint Committees

Proposed Waters Rule
Senate Environment and Public Works; House Transportation and Infrastructure
Committee Joint Hearing
Feb. 4, 10 a.m., HVC-210 Capitol Visitor Center

Feb. 5

House Committees

Drinking Water Protection Act
House Energy and Commerce – Subcommittee on Environment and the Economy
Subcommittee Hearing
Feb. 5, 10 a.m., 2123 Rayburn Bldg.

Senate Committees

Treasury Fiscal 2016 Budget Request – Treasury Secretary Jacob Lew
Senate Finance
Full Committee Hearing
Feb. 5, 10 a.m., 215 Dirksen Bldg.

Joint-Employer Standard
Senate Health, Education, Labor and Pensions
Full Committee Hearing
Feb. 5, 10 a.m., 430 Dirksen Bldg.

Judiciary Issues

Senate Judiciary
Full Committee Business Meeting
Feb. 5, 10:30 a.m., 226 Dirksen Bldg.

Kaitlyn McClure, Covington & Burling LLP Policy Advisor, co-authored this post.

ARTICLE BY

Richard A. Hertling
OF
Covington & Burling LLP

Havana Hold Your Hand: Reaching Out to Cuban Entrepreneurs

Sheppard Mullin Law Firm

New regulations on Cuba enter into force today, only 29 days after President Obama promised them. The liberalized provisions focus on support for private sector actors in Cuba.

As we described here, the President announced on December 17, 2014 that his administration would release regulations liberalizing the rules on travel, financial services, remittances, and other areas. Today those provisions are a reality. Both the U.S. Departments of Commerce and Treasury issued regulations today. The Commerce Federal Register notice is available here; OFAC’s notice is available here.

CubaAs a result, the United States is now “one step closer to replacing out-of-date policies” on Cuba, said Treasury Secretary Jacob Lew. Specifically, the new regulations include these provisions:

  • New general license for exports of goods to entrepreneurs. The newly created License Exception SCP (for “Support for the Cuban People”) includes specific authorization to export to Cuba the following items so long as the items are designated as EAR99 or are controlled on the U.S. Commerce Control List for antiterrorism reasons only:

(1) Building materials, equipment, and tools for use by the private sector;

(2) Tools and equipment for private sector agricultural activity; or

(3) Tools, equipment, supplies, and instruments for use by private sector entrepreneurs.

  • General license for telecommunication equipment. License Exception SCP also permits export of items for telecommunications, including access to the Internet, use of Internet services, infrastructure creation and upgrades.

  • Financial transactions. Accepting payment for authorized exports is permitted. Under existing OFAC regulation, all transactions ordinarily incident to lawful exports are authorized.

  • Travel to Cuba: Transactions incident to travel within 12 categories are permitted, including travel for educational activities (including people-to-people travel), journalistic and religious activities, professional meetings, and humanitarian projects. The travel must fulfill all the explicit provisions of the general licenses set forth in the regulations. Travel for tourist activities remains prohibited by statute, and will not be permitted under these general licenses.

  • Travel services: Travel agents and airlines may provide authorized travel and carrier services.

  • Credit and Debit Cards: U.S. credit and debit cards may be used in Cuba for travel-related and other transactions, and U.S. financial institutions are permitted to enroll merchants and process such transactions.

  • Per Diems: The per diem limitation on authorized travelers’ spending in Cuba has been eliminated.

  • Imports: Authorized travelers may import into the United States up to $400 worth of goods from Cuba (including up to a total of $100 in alcohol or tobacco products).

  • Microfinancing: Microfinancing projects for humanitarian purposes are permitted, so long as they do not violate the existing ban on certain loans involve Cuban-government confiscated property.

  • Family remittances:  Remittances of up to $2,000 in any consecutive three-month period are now permitted.  Authorized travelers to Cuba may carry up to $10,000 in total remittances. Additionally, banking institutions, including U.S.-registered brokers or dealers in securities and U.S.-registered money transmitters, are authorized to provide services in connection with the collection or forwarding of remittances to Cuba.

  • Correspondent Accounts: U.S. depository institutions are authorized to open correspondent accounts at Cuban financial institutions to facilitate the processing of authorized transactions.

  • “Cash in Advance” Interpretation: The regulatory interpretation of “cash in advance” is revised from “cash before shipment” to “cash before transfer of title or control” to allow expanded financing options for authorized exports to Cuba.

  • Telecommunications: Transactions to provide commercial telecommunications services that link third countries to Cuba and within Cuba are generally authorized.

  • Transactions with Cuban Nationals Outside of Cuba: U.S.-owned or -controlled entities in third countries may provide, with some limitations, services (and goods) to Cuban nationals in third countries.  The accounts of Cuban nationals who have permanently relocated outside of Cuba are unblocked.

  • Insurance: A new interpretation permits the provision of health insurance, life insurance, and travel insurance and related services to authorized travelers.

Some critics in Congress have questioned the legality of the President’s actions, citing the myriad statutes that constitute the Cuban embargo (including things like the Trading with the Enemy Act, the LIBERTAD Act, and the Cuban Democracy Act). But all the new provisions published today appear carefully crafted to stay within the President’s powers, and not to fall afoul of those many statutory boundaries of the decades-old embargo. For more fundamental change, we must await legislative action.

ARTICLE BY

J. Scott Maberry
Fatema K. Merchant
OF
Sheppard, Mullin, Richter & Hampton LLP

Senator McCain Renews Focus on Ending Cost-Plus Contracts

Covington_NL

A longtime and well-known proponent of defense acquisition reform, Senator John McCain assumed the chairmanship of the U.S. Senate Armed Services Committee (“SASC”) on January 6.  Sen. McCain has been particularly outspoken concerning cost overruns on major systems procurement projects.  He has characterized the “cost-plus” contract structure as among the key causes of these overruns, and has described implementing a ban on “cost-plus” contracts as among his top three priorities for the 114th Congress (along with countering cyber-threats and addressing sequestration).

Sen. McCain’s antipathy toward cost-plus contracts is nothing new:  during the 2008 presidential campaign, he made waves in the contracting community by declaring during a debate with then-Senator Barack Obama that “particularly in defense spending, which is the largest part of our appropriations – we have to do away with cost-plus contracts.  We now have defense systems [in which] the costs are completely out of control. So we need to have fixed-cost contracts.”

Sen. McCain renewed his criticism of cost-plus contracts in a recent public appearance:  “I’m continuing to try to ban them [a]ll. . . If you don’t ban them, here’s what happens:   [contractors] come in with a lowball contract, so they can get the contract, and then . . . the costs mount.”  By way of analogy, the veteran lawmaker highlighted the faulty incentives he believes are created by such an arrangement:  “If you had a roof that leaked would you ask a guy to come and fix it with a cost-plus contract?!”

At the time of Sen. McCain’s 2008 high-profile criticism of cost-plus contracts, many experts in the contracting community expressed skepticism that an outright ban was desirable or even possible.  They posited, for example, that cost-plus contracts can be the best tool for the job in certain circumstances, such as high-risk research and development projects where the requirements (and thus the expected costs) are ill-defined.  A prominent contracting official even contended, as summed up by one think tank’s analysis of the issue, that “contractors would simply not bid on high-risk endeavors . . . if they were operated under fixed-priced contract structures.”

While the merits of cost-plus contracts remain a subject of vigorous debate, the Arizona senator’s SASC chairmanship and his party’s control of the Senate better position him to pursue this issue in 2015.  In addition, other key stakeholders appear favorably disposed toward defense acquisition reform.  Representative William “Mac” Thornberry, the new chairman of the U.S. House Armed Services Committee, has been studying the issue and collaborating with industry on recommendations.  Additionally, Ashton Carter, President Obama’s pending nominee to be the next Secretary of Defense, is a former chief acquisitions official at the Pentagon and a proponent of reform.

Acquisition reform figures to play a prominent role in Carter’s upcoming confirmation hearing, although the most likely forum for a specific proposal on cost-plus contracts is the FY2016 National Defense Authorization Act (“NDAA”).  One factor to watch as the NDAA process gets underway is whether Sen. McCain is able to build bipartisan support in Congress – and identify key allies across the aisle, and across the Hill – for the reform or elimination of cost-plus contracts.  Outgoing SASC Chairman Carl Levin, who co-authored a symposium-style report on defense acquisition reform with Sen. McCain in October 2014, has retired from Congress.  Also recently departed from the Hill is Representative Henry Waxman, whose proposal to require agencies to minimize cost-plus contracts passed the House in 2008.

It thus remains uncertain how Sen. McCain plans to realize his vision of ending cost-plus defense contracting.  However, given the emphasis that the new SASC chairman has consistently placed on the issue, cost-plus contracts will likely remain a prominent topic within the broader and seemingly dynamic context of acquisition reform in the 114th Congress.

ARTICLE BY

Scott L. Glabe
Jennifer L. Plitsch
Kathy Brown
OF
Covington & Burling LLP

Senate Approves Energy Tax Extenders

Mcdermott Will Emery Law Firm

On Tuesday, December 16, 2014, the U.S. Senate passed the tax extenders bill by a vote of 76-16, extending a number of energy tax incentives through the end of the year.  The Senate’s passage of H.R. 5771 followed the U.S. House of Representatives’ (House) approval earlier this month (see our post on December 8), and the bill is expected to be signed into law by President Obama as early as this week.

The $42 billion bill includes extensions through the end of the year of nearly $10 billion in energy tax incentives, including the New Market Tax Credit in Section 45D, the Production Tax Credit in Section 45 (the PTC), and the bonus depreciation rules in Section 168(k).

Many were disappointed that some of the tax incentives – including the PTC – were extended retroactively only through the end of the year, meaning that tax payers have just a few weeks left to take advantage of them. There would have been far more certainty for companies looking to invest in renewable energy projects if the tax incentives were extended for one or more years beyond the end of 2014.  Several lawmakers suggested that the two week extension was better than nothing, but the short extension period means that Congress has merely punted the need for greater tax reform in this area into 2015.  As it stands, the energy tax incentives extended by this bill will have expired by the time Congress returns to Washington, D.C., on January 6, 2015, following its winter break.  That means that Congress may be in the same place again next year under pressure to pass a year-end bill – instead of focusing on more comprehensive reform and a possible phase-out of the PTC.

ARTICLE BY

Heather Cooper
OF
McDermott Will & Emery

The New Balance of Power: What the 114th Congress Means for Business

Mcdermott Will Emery Law Firm

As the now-lame-duck U.S. Congress convenes for its final legislative session of 2014, the 114th U.S. Congress is gearing up for action.  Officeholders on both sides of the aisle are preparing for the shift to Republican control of both the Senate and House of Representatives, and are anticipating renewed debate on a broad range of issues.  This collection of On The Subject articles examines what we can expect from the new Congress and how upcoming legislative efforts may—and may not—affect businesses in the United States and around the world.

Following the election of November 2014, here are the before and after numbers:

BEFORE THE ELECTION

AFTER THE ELECTION

HOUSE

      234 Republicans

      201 Democrats (includes 1 currently
vacant R seat, 2 currently vacant D
seats)

HOUSE

     At least 244 Republicans (net gain of at
least 12, largest R majority since 1928)

     At least 184 Democrats
7 races still pending

SENATE

       55 Democrats (including 2 Independents
who caucus with Ds)

       45 Republicans

SENATE

     53 Republicans (net gain of at least 8,
more likely 9)

     46 Democrats
Still pending – Louisiana runoff on
December 6

The Democrats were delivered a serious and important rebuke by the voters.  Even attractive, younger incumbent Democratic senators, such as Senator Kay Hagan of North Carolina or Senator Mark Begich of Alaska, who ran “perfect” races lost their seats.  Rising stars, including Senator Mark Warner of Virginia, barely returned.

The new Senate will be solidly controlled by the Republicans and the House will have a much larger Republican majority.  For Speaker John Boehner (R-OH), who previously could be held hostage by a dozen of his own members, the larger majority will allow him to lead more and follow less.

But the Senate Democrats, diminished in number, will remain a brake on Republican legislative ambitions.  Under current legislative rules, it still requires 60 votes on most contentious legislative issues.  This requires the Republicans to maintain their party discipline, and pick up the remaining votes on the Democratic side.  For many reasons, Democrats historically have demonstrated they are unlikely to exhibit the same remarkable level of party discipline that Republicans were able to achieve while in the minority from 2012 through 2014.  A handful of Democrats represent “red states,” such as Senator Joe Manchin of West Virginia, and often can be approached by Republican counterparts.  Former Democratic governors, including the above-mentioned, now-chastened Senator Warner and Senator Tom Carper of Delaware, are by temperament and deportment willing to find common cause to legislate.

For these and many other reasons, now that roles are reversed we believe Republicans will have more success in legislating and avoiding Democratic filibusters, the Republican versions of which so frustrated Senate Democrats in the last Congress.  But as the 2014 election becomes more remote, those Senators who “cross over” most often will have an even more complex task, especially if Republican hardliners stop most or all Senate confirmations, as some have threatened.

So what does this mean for business?  While oceans of ink and terabytes of data are being spilled over the answer, here are 10 areas where you should look for change:

  1. Oversight and Investigation

  2. Attorney General and Judicial Nominations and Confirmations

  3. Tax Reform

  4. Financial Services and Banking

  5. Health Care

  6. Energy and the Environment

  7. Immigration Reform

  8. Transportation

  9. International Trade

  10. Conclusion: The Next Election

ARTICLE BY

Steven A. Baddour
Daniel Connelly
Arthur J. DeCelle
Carolyn B. Gleason
W. Kam Quarles
David Ransom
OF
McDermott Will & Emery

House Passes Bill to Prevent EPA Overreach

Varnum LLP

The U.S. House of Representatives recently passed legislation prohibiting the U.S. Army Corps of Engineers and the Environmental Protection Agency (EPA) from developing, finalizing, adopting, implementing, applying, administering, or enforcing the EPA rule defining what constitutes “waters of the United States” under the Clean Water Act.

This Waters of the United States Regulatory Overreach Protection Act of 2014, H.R. 5078, comes as a response to a move by the EPA in April of this year that proposed changes to how the EPA will define “waters of the United States.” The EPA’s update uses scientific terms from hydrogeology to define which waters are covered under the Clean Water Act.

Farmers, however, have criticized the EPA update as 80 pages of technical and legal jargon. After Congressional hearings, the House passed The Waters of the United States Regulatory Overreach Protection Act of 2014. This bill will go to the Senate next for consideration.

ARTICLE BY

Aaron M. Phelps
Sherry X. Lin
OF
Varnum LLP