Major Policy Developments for the 114th Congress: appropriations/budget

Major Policy Developments for the 114th Congress: 

Many challenging issues await the 114th Congress. In the pages that follow we will attempt to give you a sense of what potentially lies ahead; we will sketch out our sense of what is in store in the areas of appropriations and budget  matters, defense and national security, energy and the environment, financial services , food and agriculture policy, healthcare, homeland security and cybersecurity, international policy issues, tax, technology and telecommunications, trade, and transportation and infrastructure.

APPROPRIATIONS/BUDGET

The recent bipartisanship on budget issues will be tested early in the 114th Congress. Another financial cliff looms in 2015 as the nation’s borrowing authority will lapse in late spring/early summer, requiring an increase in the debt  limit, and sequester-level budget caps are scheduled for reinstatement in FY 2016, which begins on October 1, 2015. The debt limit is the total amount of money that the U.S. Government is authorized to borrow to meet its existing legal obligations, including Social Security and Medicare benefit  military  salaries, interest on the national debt, and tax refunds. Congress must increase the nation’s debt limit periodically.  Failure to increase the debt limit would cause the government to default on its obligations, something the United States has never done. The debt limit has been addressed nearly 80 times since 1960, most recently in February 2014, when it was extended through March 15, 2015. This is a soft deadline, as the Department of Treasury typically employs “extraordinary accounting measures” to further extend the limit. Treasury has indicated that the current extension wills be sufficient until summer.

Sequestration is the “poison pill” included in the Budget Control Act of 2011 (BCA) that imposed discretionary spending caps through 2021 to achieve $1.2 trillion in deficit reduction required to offset an increase an increase in the debt limit. This provision was included in the BCA as a way to incentivize the Joint Committee on Deficit Reduction, also established through the BCA, to develop a compromise deficit reduction plan. The failure of the Joint Committee to come to a bipartisan agreement forced the implementation of sequestration in FY 2013, ultimately resulting in an eight percent reduction in defense discretionary funding and a fi percent reduction in non-defense discretionary funding for that fiscal year. The BCA also identified specific topline funding levels for defense and non-defense programs through 2021.

The FY 2016 budget process will commence this spring with the submission of the President’s Budget Proposal to Congress, in which he is expected to propose higher discretionary spending caps than those mandated by the BCA. The Senate and House Budget Committees will also work on preparing a budget resolution for FY 2016. A budget resolution represents an agreement between the House and Senate on a budget plan for the upcoming fiscal   year and several years going forward. A budget resolution is considered “concurrent” once it is agreed to by both the House of Representatives and the Senate, but is not enacted into law; rather, it serves as the framework for subsequent budget- related legislation.

If Republicans can work through philosophical fiscal differences within their own party, they should be able to approve a budget resolution for FY 2016, a component of the federal budget process that has been lacking for the past four years. The Senate requires a 60-vote threshold to end debate and advance legislation; hence, despite holding a slight majority, this requirement may limit the ability of Republicans to advance budget legislation that is too austere. Incoming Budget Committee Chairmen Senator Jeff Sessions (R-AL) and Representative Tom Price (R-GA) both share current House Budget Committee Chairman Paul Ryan’s vision to achieve a balanced budget within 10 years, although they may forgo some of Ryan’s more controversial methods, such as the privatization of Medicare, in order to secure sufficient  Republican support in the Senate. (Ryan’s most recent budget proposal received only 41 Republican votes in the Senate.) Both chairmen have stated they believe the BCA-mandated spending cap is the ceiling for FY 2016 discretionary spending.

A budget resolution can also include reconciliation instructions that direct certain committees to recommend changes to laws impacting revenue or spending within their jurisdiction that would be required to implement the proposals outlined in the budget resolution.  In addition to discretionary spending, reconciliation can incorporate revenue, entitlement reform, and debt limits provisions, as long as the measure does not increase the long-term deficit. Budget reconciliation requires only a simple Senate majority, allowing the majority party to bypass the typical 60-vote threshold to pass budget-related legislation. The reconciliation process was last utilized by Democrats in 2010 to help pass healthcare reform. However, lacking the necessary two-thirds majority to overcome a presidential veto, the use of reconciliation could backfire on Republicans, as it did in the mid-1990s when President Bill Clinton vetoed a reconciliation bill and congressional Republicans were blamed for the resulting government shutdown.

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Washington News – Obama Administration/Congress

Washington News – Obama Administration/Congress

The President announced last Thursday and Friday sweeping executive action on immigration. Most notably, his plan expands deferred action to an estimated 5 million undocumented immigrants. This group includes parents of US citizens and lawful permanent residents who have resided the US for more than five years. These individuals would have to agree to pay taxes and pass criminal background checks. If they meet these criteria, they would be granted legal status for three years through deferred action. The President’s action also includes provisions for high-skilled workers in the US legally (or for those planning on entering the US legally). The administrative reforms include job portability for immigrants with employment-based petitions but who are unable to get visas due to low caps, a review of the permanent labor certification program, and guidance on the L-1B intra-company transferee visas. Republicans have sharply criticized the President’s executive order. House Speaker John Boehner said that these actions have obliterated any hope of bipartisan legislation in the next Congress. Soon to be Majority Leader, Mitch McConnell has promised action against the President. While both have ruled out a shutdown or utilizing the debt ceiling to get the Administration to reverse its policy, defunding agencies that would deal with these programs continues to be seriously considered (although visa fees make these types of programs self-sustaining). A number of Republican governors have also made public their plans to sue the President.

In addition to the President’s executive action on immigration, DHS and USCIS are issuing a number of proposed and final rules for legal immigrants. US Citizenship and Immigration Services (USCIS) will publish final rules that grant work authorization to dependent spouses of H-1B guest-workers if they are in the process of obtaining permanent residence through employment (spouses hold H-4 visas and are presently not able to accept employment). DHS Secretary Jeh Johnson issued a memorandum last week where he directs USCIS employees to coordinate with the Department of State on the issuance of green cards so to improve the system of determining when green cards become available to applicants. He also is urging USCIS to reform regulations to allow employment-based visa petitions to remain valid even when the applicant changes jobs or employers. Finally, Johnson’s memo calls for reforms to the OPT program, programs for immigrant entrepreneurs, PERM, U visas, and T visas.

There are a number of agenda items that require attention during the lame-duck session of Congress. Most pressing is funding the government after the current CR (passed before the election) expires December 11. On the week of December 8, an omnibus budget is expected to be revealed although there is no guarantee yet that it will receive a floor vote. While an omnibus bill remains a possibility, it is also likely that some agencies will receive funding for the year while others will be temporarily funded through CRs. It is also possible that Congress passes a CR to extend government funding into the new year, when Republicans control both houses of Congress. Regardless, Republican leadership is intent on avoiding another shutting down. In terms of a national defense authorization bill, the original Senate and House versions had a significant number of differences. However committees are negotiating and nearly all of these differences have been resolved. The bill is not expected to reach the floor until after Thanksgiving. Also, 50 tax breaks are set to expire at the end of the year. While the Senate’s EXPIRE act would renew most of these breaks through 2015, the House’s bill would make some of the breaks permanent. An agreement has not yet been reached. Finally, the Internet access tax ban expires on December 11. The Terrorism Risk Insurance Act and STELA – the Satellite TV law expires December 31. Outgoing Majority Leader Harry Reid will try to get as many nominations through as he can before the end of the year, but Loretta Lynch’s nomination for Attorney General will be dealt with in 2015.

Democrats and Republicans have elected leadership for the next session of Congress, and many committee chairs have been selected. Below are changes to chairmanships in the House. Senate committees remains in flux.

 THE HOUSE

o   Agriculture: K. Michael Conaway (R-TX) will replace Frank Lucas (R- OK) as Chair

o   Armed Services: Mac Thornberry (R- TX) will replace Buck McKeon (R-CA) as Chair

o   Budget: Tom Price (R-GA) will replace Paul Ryan (R-WI) as Chair

o   Energy and Commerce: Frank Pallone (D-NJ) will replace Henry Waxman (D-CA) as the ranking member

o   Ethics: Charlie Dent (R-PA) will replace Mike Conaway as Chair (R-TX). Democrats have yet to select their ranking member.

o   Intelligence: Devin Nunes (R-CA) will replace Mike Rogers (R-MI) as chair

o   Natural Resources: Rob bishop (R-UT) will replace Doc Hastings (R-WA) as chair

o   Oversight and Government Reform: Jason Chaffetz (R-UT) will replace Darrell Issa (R-CA) as chair

o   Small Business: Steve Chabot (R-OH) will replace Sam Graves (R-MO) as chair

o   Transportation and Infrastructure: Peter DeFazio (D-OR) will replace Nick Rahall (D-WV) as the ranking member

o   Veterans’ Affairs: Corrine Brown (D-FL) will replace Mike Michaud (D-ME) as the ranking member

Secretary of Defense, Chuck Hagel is resigning from his position due to friction with the White House over its national security policy, including the Administration’s strategy in Syria and against ISIS/ISIL. Hagel will stay on until a successor is confirmed. Possible nominees include Ashton Carter (a former Deputy Defense Secretary), Michele Flournoy (a former undersecretary of defense), and Democratic Senator from Rhode Island – Jack Reed.

Energy and the Environment

Keystone XL pipeline approval failed to pass the Senate by one vote. Republicans expect to have enough support in the Senate come January to pass the 60 vote threshold. Congressional approval of the Keystone pipeline will be a priority for the Republican majorities in the House and Senate in 2015. The President has yet to indicate whether he will support any such legislation next year, although approval could be a bargaining point between the Administration and Congressional Republicans.

The Obama Administration has decided to delay a decision on quotas for using renewable fuels in gasoline and other products. The EPA made the announcement Thursday and are now a year late in establishing mandates for 2014. The Agency will instead establish retroactive 2014 requirements under the Renewable Fuel Standards in 2015 – the same time it establishes 2015 and 2016 quotas. The EPA could also end up waiving requirements or accept what was produced as meeting the mandate this year. Due to these delays, Congressional and court action are likely. Legislatively, Congress has tried to revise the mandates although nothing has made it to a vote yet. From a legal perspective, the American Fuel and Petrochemical Manufacturers has filed a notice of intent to sue the EPA. They are urging the agency to “take prompt action to promulgate the 2014 standards.”

The EPA has expressed concern over the number of petitions surfacing that seek to withdraw a number of states’ authority over their Clean Water Act permit programs. Presently, the EPA has 19 petitions asking the agency to withdraw state authority to operate their National Pollutant Discharge Elimination System permit programs. 46 states presently have been delegated authority to run this program as they have demonstrated to the EPA their ability to meet minimum federal requirements. However, under the law, groups are able to petition the EPA to suspend said authority if these requirements are not being met. The EPA has publicly stated its preference to act as a co-regulator with states as opposed to withdrawing entire programs from state jurisdiction.

On Thursday, the EPA issued a proposed rule that would establish national emission standards for brick, structural clay product, and clay ceramic manufacturing facilities. The proposal targets hydrogen fluoride, hydrogen chloride and a number of other air toxics. The EPA hopes to reduce the emissions of these air toxics by 440 tons annually. This proposed rule comes amidst a court-ordered deadline following a ruling from the DC Circuit Court of Appeals that found the EPA’s methods of establishing floors and ceiling for emission standards violated the Clean Air Act and created standards that were not rigorous enough.

This January, the Department of Interior will auction the rights to construct wind turbines off the Nantucket and Martha’s Vineyard shores. This would be the federal government’s largest competitive lease sale of offshore wind development, encompassing 742,000 acres (that will be sold off in four lots) that could produce up to 5 gigawatts of wind power. The sale would effectively triple offshore acreage available for wind energy. 12 pre-approved companies will participate in the auction.

The Bureau of Land Management has, for the first time, rejected a solar power plant proposal in Southern California that would have fallen outside land already designated for such purposes. The proposal was put forward by Iberdrola SA. BLM stated that the project would adversely affect wildlife and the ecosystem in the area.

2014 Midterm Gubernatorial Elections – Political Wins and Losses for Public‑Private Partnerships (P3s)

2014 Midterm Gubernatorial Elections – Political Wins and Losses for Public‑Private Partnerships (P3s)

Republicans took control of the US Senate and strengthened their hold on the House of Representatives in the 2014 midterm elections. During these midterms, thirty-six states held gubernatorial elections, with Republicans gaining seats in Arkansas, Illinois, Massachusetts and Maryland and Democrats gaining one seat in Pennsylvania. The Alaska seat went to Bill Walker, an independent. As of this writing, the holder of the gubernatorial seat in Vermont is still undecided.

New gubernatorial leadership may influence the P3 atmosphere in affected states. A major characteristic of the US market is that P3 programs are initiated and directed at the state level. Thus, a governor who believes in P3s and is willing to throw his or her political muscle behind a program can make a major difference in whether a P3 program succeeds.

States in Which Representation Has Changed:

Pennsylvania

Pennsylvania has enjoyed P3 support in recent years under Republican Tom Corbett. In 2012, Corbett signed into law specific P3-enabling legislation. The legislation established P3 guidelines and a board to review potential projects. It also allowed for an $889M P3 initiative to replace 558 of the 4,500 structurally deficient bridges in the state (the “Rapid Bridge Replacement Project”) (InfraAmericas). Democrat Tom Wolf’s campaign rhetoric offers hope that he will also support P3s: according to his “Fresh Start” policy plan, Wolf intends to use P3s to tackle transportation projects. He believes P3s should help address the state’s infrastructure deficit. Wolf also wants to “engage the private sector”, leveraging private-sector dollars for projects. Such projects include building a high-speed rail line that will move products from Philadelphia to Chicago in three hours and a continuation of the Rapid Bridge Replacement Project.

Massachusetts

Massachusetts Governor-elect Republican Charlie Baker, who narrowly beat Democrat Martha Coakley, purports to support P3s. Baker says he will “investigate opportunities for the state to partner with the private sector” (MASSCreative). He also notes “it is worthwhile to explore the possibility” of expanding passenger rail through P3s (MASSLive).

 Texas

Republican Governor-elect Gregg Abbott beat Democrat Wendy Davis and will succeed retiring incumbent Rick Perry. Abbott spoke during his campaign of providing additional transportation funding by not diverting highway funds to other uses. But, riding the wave of anti-tolling sentiment in Texas, Abbott said he does not want to add more toll roads. Nevertheless, Texas’ experience with P3 transportation projects may mean more P3s in other sectors, according to John Parkinson, executive director of the Association for the Improvement of American Infrastructure (AIAI). Parkinson noted that the San Antonio City Council recently approved a DBFOM for a water delivery project through a 142-mile pipeline (InfraAmericas).

Other States and Areas to Watch:

Colorado

Governor John Hickenlooper beat Republican Bob Beauprez in a down-to-the-wire decision. A P3 proponent, Hickenlooper is expected to continue advocating P3 projects in Colorado. Historically, he was a strong advocate for the Denver Fast Eagle P3 Light Rail Project as Mayor of Denver from 2003 to 2011. The project will be Colorado’s first highway DBFOM availability payment project. Further, among other projects, Colorado is expected to issue a Request for Qualifications to improve a portion of the I-70 East highway. Hickenlooper also vetoed a P3 transparency bill in June, noting to legislators that the bill, if passed, could have a “chilling effect on future transactions.” In addition, Hickenlooper claims he would like to work with legislators on establishing a P3 Center of Excellence in the state (InfraAmericas).

Maryland

The P3 industry will be keeping an eye on Republican Governor-elect Larry Hogan, who defeated Democrat Anthony Brown to replace term-limited Democrat Martin O’Malley as Maryland’s governor. The Maryland Transit Administration is soliciting bids for a 35 year P3 that would help finance construction of a 21 station light-rail Purple Line through the Washington suburbs. A preferred bidder is scheduled to be announced in spring 2015. Brown, a P3 advocate, had been a proponent of this $2.2bn, availability payment project. Hogan, however, has been accused of opposing mass transit and not supporting the Purple Line due to expense. There is concern he may cancel the project altogether. Though Hogan deflected Purple Line questions, he stated the project is “worth considering.” Nevertheless, as he noted during his campaign, Hogan may devote the Purple Line money toward improving Maryland’s state roads (Washington Post).

Illinois

P3s lost another advocate when Illinois’ Governor Pat Quinn lost to his Republican opponent, Bruce Rauner. Quinn had been a P3 proponent. He supported legislation that enabled a P3 procurement in 2013 (Bugle). Quinn also backed the South Suburban Airport (SSA) project and the Illiana Expressway (IE) project procured in conjunction with Indiana (InfraAmericas). The proposed SSA would be built in Peotone, Illinois, a suburb of Chicago, as a third airport serving Chicago. The IE would be a 47 mile access-controlled highway connecting Illinois south of Metropolitan Chicago to Northwest Indiana. Rauner has been non-committal about these projects. He is “skeptical” about the need for the SSA and wants to see an analysis to determine whether the project makes sense (Chicago Tribune). Rauner noted that a new airport should be self-sustaining and not reduce economic activity at other area airports. Similarly, he requires more information about the IE, which could, at the very least, lead to additional delays in the project (NWI Times).

Ohio

Ohio Republican Governor John Kasich’s easy re-election over his Democratic opponent, Ed FitzGerald, is similarly positive for P3 proponents. Kasich has supported various procurements by the Ohio Department of Transportation (ODOT). He also signed a P3-enabling bill in 2011, prompting the ODOT to consider a P3 procurement for the Portsmouth Bypass project. The state is currently considering a DBFOM approach via an availability payment mechanism (InfraAmericas).

Washington, DC

Washington, D.C. will bear watching in 2015, as Mayor-elect Muriel Bowser takes office. While serving as a member of the District Council, Bowser introduced a bill in 2013 that would establish a dedicated P3 office and establish set procurement procedures for P3s. The legislation allows P3s to be used for a wide range of projects, such as transportation, education and cultural or recreational facilities. The bill was approved once by the District Council on October 28, 2014 and is scheduled for final approval vote in late November (InfraAmericas).

Martin Milita, is licensed to practice law in New Jersey and Pennsylvania. He has successfully lobbied for statutes, agency rules, and agency permits in the United States, both state and federal governments, in Canada and within the Organization for Economic Cooperation and Development in Europe and North America.

Lame Duck and Beyond: whats ahead in 2015

Lame Duck and Beyond

 With voters having cast their ballots, President Obama and the Republican Congress should be able to accomplish a great deal if they seize the opportunity.

What might motivate them to work together? The President now has two remaining years in office, time in which he is expected to focus on legacy issues. As he has already demonstrated, the President is prepared to act unilaterally, through Executive Orders and through rulemakings underway or contemplated. But surely the President could reduce potential future litigation risks and advance his legacy by working with Congress, though that will require a change of approach and a willingness to compromise.

Republicans have reasons to offer an olive branch, not least to show the American public in the run up to the presidential elections in 2016 that they can govern. The 2014 Senate races were run in states that naturally favored Republican candidates, including several states in which Democratic incumbents were facing electorates that had voted for Mitt Romney by double digits in 2012. By contrast, Democrats will clearly be on the offensive in 2016, when 34 seats will be contested. Many Senate races will be fought in states much more historically receptive to Democratic candidates, and the party will have the benefit of a presidential race turnout model that boosts Democratic prospects in close races. Of the 34 Senate seats up in 2016, 24 feature Republican incumbents, while just 10 Democrats will be up for re-election. Unlike in 2014, none of the 2016 Democratic Senators up for re-election hail from states that President Obama lost in the 2012 election. The 2016 Senate Republicans, though, must defend six seats in states that President Obama carried in 2012 (Florida, Illinois, Iowa, New Hampshire, Ohio, Pennsylvania, and Wisconsin) and two he carried in 2008 (Indiana and North Carolina).

In this environment, many Senate Republicans will likely wish to demonstrate to their constituents that they can work with Democrats to move legislation forward that can be signed into law. Going from  being the party in control of only one chamber to being in control of both chambers will put the onus on Republicans to change the narrative of a “Do Nothing Congress” to one of a “Do Something Congress.” Since they remain well short of 60 votes and thus cannot easily overcome even a threatened filibuster  by Democrats, Senate Republicans will need to reach across the aisle to move legislation in which they have an interest. Congressional Republicans will no doubt consider using the Budget Reconciliation process, which requires a simple majority in both chambers, to advance major legislative priorities. (But given the limitations inherent to this procedural option, they may find that their options are limited.) Lacking 67 votes in the Senate, congressional Republicans cannot expect to overcome presidential vetoes if they go too far. The new majority no doubt will look for ways to send legislation to the President, giving him the opportunity to use a veto pen that he has only wielded twice in his first  six years. This strategy in particular may be used by Speaker John Boehner (R-OH) and Majority Leader Mitch McConnell (R-KY) as a pressure relief valve for conservatives who want to confront the President. Once vetoes have occurred and been sustained, the Republican leadership could then pursue more moderate legislative options that the President will sign into law. But even those who wish to get to yes will need to overcome the divisions within their own ranks.

History shows that the last two years of a lame duck President can be productive, even for one facing a Congress controlled by the other party. Presidents Ronald Reagan, Bill Clinton, and George W. Bush, the last three Presidents to serve two four-year terms, successfully worked with Congress to enact significant   legislation or to otherwise achieve landmark initiatives in their first two years in office President Reagan, for example, pushed back against conservatives in his base to negotiate an important arms reduction treaty with the Soviet Union that eliminated the threat of intermediate-range nuclear missiles. Notwithstanding opposition from his party, President Clinton reached agreement with China to normalize trade relations between our two countries. Even though he did not enjoy as much success as Reagan and Clinton, President Bush found common ground with Democrats on a major energy bill, the last “all of the above” energy bill to clear Congress, and signed into law legislation that was essential to dealing with the fallout of the collapse of Lehman Brothers, when the world economy also was at risk.

Finally, there is a real need to address the impact of “sequester” on future spending options, especially the adverse impact it will continue to have on military readiness.

Beyond these more contentious issues, Congress and the White House should be able to reach agreement on a new surface transportation bill, an aviation funding bill, and other bills that historically have enjoyed bipartisan support, such as education reform legislation.

However, little of this will be possible unless the President and the Republican Congress are prepared to give a little to get a lot. We remain optimistic about the prospects. As Senator Rob Portman (R-OH) recently put it, “It’s very possible to get a number of things done if the president is willing to come to the table, and I believe he will.”

In the posts that will follow, we offer our thoughts on major policy areas that will drive the agenda in Washington for the next two years in the run up to the 2016 presidential election and how they might affect you. The next Congress will face the need to extend or reauthorize the nation’s surface transportation and aviation programs, with funding and policy challenges involved in each. It will also need to address the debt limit.

Many other challenging issues await it as well. To give you a sense of what potentially lies ahead, we will sketch out our sense of what is in store in the areas of appropriations and budget matters, energy and the environment, and transportation and infrastructure in future articles.

2014 MID-TERM ELECTION ANALYSIS

INTRODUCTION

 Republicans gained a substantial majority in the U.S. Senate.

Republicans won eight formerly-Democratic held seats by defeating four incumbents and winning four open seats. They also retained all three “at-risk” Republican Senate seats (Georgia, Kansas, and Kentucky). (See below for a breakdown of the Senate elections.) The biggest surprise was the razor-thin Senate race in Virginia where incumbent Democrat Mark Warner held on to a narrow lead over Republican Ed Gillespie.

The U.S. House of Representatives retained a substantial Republican majority. The GOP reached their largest majority since 1931, when Herbert Hoover was president. Some Democratic Party leaders worry that they could be locked out of the House majority until the next round of redistricting in the 2020s.

In gubernatorial races, incumbent Republicans in Wisconsin (Scott Walker), Michigan (Rick Snyder), Ohio (John Kasich), Florida (Rick Scott), Kansas (Sam Brownback), and Georgia (Nathan Deal) were reelected, with Deal defeating Jason Carter, grandson of former President Jimmy Carter. In Wisconsin, in a setback for organized labor, overwhelming union opposition failed for a third time to unseat Governor Scott Walker—in 2010, in a 2012 recall vote, and now in Walker’s 2014 reelection—whom they considered the nation’s most blatantly anti-union governor in a historically pro-union state. In the closely-watched    race in Florida, incumbent Republican Governor Scott narrowly defeated former Governor Charlie Crist running as a Democrat. The biggest surprise was Republican Larry Hogan’s victory over Democrat Anthony Brown in predictably blue state Maryland. No one saw that coming.

 

What Do These Election Results Mean?

First, the election results mean the start of the 2016 presidential campaign. Leading potential candidates from both parties were omnipresent on the stump in the 2014 mid-term elections, especially in early presidential election-year states such as Iowa and New Hampshire. If you are fed up with this year’s political campaigns, get ready for 2016. In fact, since there will be more incumbent Republicans up for reelection in 2016 (just the reverse of this year), congressional majorities will once again be at stake, especially where voter turnout will be much higher with the White House at stake.

Second, the election results could redirect congressional attention to economic issues, which voters overwhelmingly proclaimed as their top concern. This could mean passage of legislation where both parties are able to make concessions, without compromising principles, on issues such as tax reform, infrastructure, the Keystone XL pipeline, and trade policy. Also, look for votes to repeal the Affordable Care Act, or at least to “fix” it.

However, other than possibly passing multi-employer pension plan reform and some form of immigration legislation, do not expect passage of major labor and employment legislation. Organized labor was the biggest loser in the mid-term elections. The result may also mean the start of debate on Republican proposals for major labor law reform.

Third, it means there will be more presidential executive orders, starting with immigration reform and climate change, as well as federal regulations where the administration cannot achieve its agenda through Congress.

Fourth, now that Republicans in both houses can set the congressional agenda and will have subpoena powers, it means much more aggressive oversight of agency actions at the U.S. Equal Employment Opportunity Commission (EEOC), the U.S. Department of Labor (DOL), and the National Labor Relations Board (NLRB). It also could trigger possible appropriations riders to prohibit or restrict funding to enforce certain regulations, such as the imminent NLRB “ambush election rules” and the Labor Department’s regulatory overhaul of the Fair Labor Standards Act’s Part 541 overtime exemptions for bona fide executive, administrative, professional, outside sales, and computer employees.

Fifth, with a Senate majority, it means much greater scrutiny of White House judicial and federal agency nominations, even in the face of the Senate’s “nuclear option,” which removed Senate filibusters. The Republican Senate majority will try to stop nominations of progressive judicial candidates to the federal courts of appeals.

Sixth, unions took it on the chin across the country, especially in gubernatorial races. In August, the AFL- CIO said it would take out six key anti-union governors: Rick Scott of Florida, Rick Snyder of Michigan, Paul LePage of Maine, John Kasich of Ohio, Scott Walker of Wisconsin and Tom Corbett of Pennsylvania. Only Corbett was defeated.

The reelections of embattled incumbent governors in blue states such as Wisconsin, in Governor Scott Walker’s race, and Michigan, in Governor Rick Snyder’s race, who faced the furies of an all-out union assault, will embolden other governors to take on public sector unions. There may even be an effort to pass a right-to-work law in Kentucky.

Finally, Republicans proved that primary elections are important in selecting qualified candidates. Now, having been elected, Republicans have two years to prove they can govern before facing a much more challenging 2016 election–when it will no longer be enough simply to attack a lame duck president.

To be continued.

Author Martin Milita, a Senior Director at Duane Morris Government Strategies, is a member of the New Jersey and Pennsylvania Bars and has lobbied state and federally and in Canada.

Duane Morris Government Strategies is a bipartisan government relations firm. Duane Morris Government Strategies represent clients before the federal government and in Pennsylvania, Delaware, Maryland, New York, New Jersey and Ohio. Duane Morris Government Strategies professionals offer a full complement of government-affairs services, including legislative and executive branch advocacy, policy analysis, assistance with government procurement and funding programs, and crisis management.

Duane Morris Government Strategies professionals have held high-level political positions in both Republican and Democratic administrations, and have run and played active roles in federal, state, and local political campaigns. They have also worked for members of Congress, congressional and state committees, and presidential and gubernatorial transition teams. Also at Duane Morris Government Strategies disposal are hundreds of seasoned attorneys from the Duane Morris law firm who have handled complex legal issues in the public and private sectors across a multitude of industries.

 

Practical Recommendations for Bidders: how to protect your information.

Government contractors should be aware that the information compiled in their proposals has grown increasingly more valuable in this time of shrinking budgets and shrinking contracting opportunities. Fortunately, often customer lists, sensitive marketing information, unpatented inventions, software, formulas and recipes, techniques, processes, and other business information that provides a company with a business edge are protected by federal and in 47 states, respective state laws . Those laws are tools contractors can use to protect their trade secrets.

Every day, hundreds of government contractors submit proposals in response to various government solicitations — the culmination of a process that may involve months, if not years, of research and planning, the expenditure of significant amounts of money, and the participation of multiple individuals.  One of the risks of such a process is that a former employee may misappropriate a contractor’s proposal information, either in whole or in part by, for example, refusing to return certain data when leaving the company, distributing such information without the proper permissions to her new employer, or subsequently using such information in a competitor’s proposal.

In such instances, the contractor’s options for legal recourse usually depend upon whether the contractor’s proposal qualifies as a “trade secret”. Under the Federal Uniform Trade Secrets Act, it likely does and, thus, the contractor may sue the former employee and his new employer for misappropriation of a trade secret.

New Jersey has a fairly representative state law that prohibits use of trade secrets by a company that “has reason to know” that the material constitutes a trade secret. This is known as constructive knowledge (versus actual knowledge). In other words, even if a New Jersey company was unaware it possessed purloined trade secrets; it can still be prosecuted under New Jersey law if it should have known.  In exceptional circumstances, an injunction may condition future use upon payment of a reasonable royalty for no longer than the period of time for which use could have been prohibited. A victim of trade secret theft can also seek financial compensation that measures the actual loss attributed to the theft or the profits (or “unjust enrichment”) acquired by the trade secret thief. In egregious situations, a New Jersey court can award punitive damages up to twice the amount of any award.

Both the federal law and most states define “trade secret” as:

[I]nformation, including a formula, pattern, compilation, program, device, method, technique or process, that: (i) derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use, and (ii) is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.

Indeed, courts have repeatedly recognized that compilations of business information comprised mostly of publicly available information and limited proprietary information nonetheless qualify for trade secret protection.

Proposals are compilations of Information. Because the compilation of information may qualify as a trade secret, the key for a government contractor is demonstrating that its proposal constitutes a compilation of information within the context of the legal definition of, and the courts’ interpretations of, trade secret.

Practical Recommendations:

  • Always mark proposal documents with restrictive legends;
  • Impose restrictions on subcontractors’ or consultants’ use of trade secrets;
  • Require each employee to execute a nondisclosure agreement; and
  • Carefully check to ensure former employees do not make unauthorized disclosures of trade secrets, including proposal information.

Employed as senior director of Duane Morris Government Strategies, LLC, based in Trenton, New Jersey, Martin Milita advises clients on private public partnerships and all forms of government procurement. Prior to joining Duane Morris Government Strategies, LLC, in 2012, he served as managing partner of Holman Public Affairs, LLC, which he cofounded in 2001.

Big changes in Lobbying from Big Changes in Congress

 

Big changes in Lobbying from Big Changes in Congress:

With the Republican Party taking the U.S. Senate on Tuesday, lobbying dollars will shift to areas such as health and energy to reflect GOP priorities says Martin Milita of Duane Morris Government Strategies. The Republican Party won control of the U.S. Senate in Tuesday’s midterm elections, taking seats held by Democratic incumbents in several key battleground states to secure the majority after holding onto and increasing its presence in the the U.S. House of Representatives earlier in the evening.

The GOP had needed to reel in six seats to retake the Senate following eight years of Democratic control, and by late Tuesday had done just that in Arkansas, Colorado, Iowa, Montana, South Dakota and West Virginia to push them to victory.

Expectations that the next Congress may have a hard time getting legislation passed because of the “threat of a White House veto, or may otherwise pursue an unambitious agenda”, should see lobbying spending shift away from routine “monitoring and reporting” efforts; “ lobbyist will rather focus on winning support for major projects and legislation, resulting in a potential boon for established, well-connected firms”, Milita said.

This will include large law firm lobbying arms, such as Duane Morris Government Strategies. Duane Morris Government Strategies professionals have worked for members of Congress, congressional and state committees, and presidential and gubernatorial transition teams. Also at Duane Morris Government Strategies disposal are hundreds of seasoned attorneys from the Duane Morris law firm who have handled complex legal issues in the public and private sectors across a multitude of industries.

“Particular industries, such as the energy industry and the defense industry, could also ramp up their spending to reflect perceived and stated GOP legislative priorities- like pressing for approval of the contentious Keystone XL crude oil pipeline” says Milita.

Milita went on to say, “Health care companies are especially likely to drive a tremendous amount of activity under a GOP-majority Senate, with likely Senate Majority Leader Mitch McConnell, R-Ky., expected to support a push to revisit aspects of the Affordable Care Act”.

DMGS clients’ included retailers and manufacturers, professional associations, municipalities, health care and pharmaceutical companies, transportation and oil companies, universities, and financial services firms, many of them in the top echelons of their respective industries.

According to Milita, the change in Senate majority is the sort of “realigning election” that typically ushers in an increase in lobbying spending in general, with both Republican and Democratic incumbents continuing to see significant lobbying spending directed at them. Meanwhile, lobbying firms and their clients will also be reaching out to newly elected senators, Milita says.

“It’s an great opportunity for those who get in first to communicate with new members,” he said.

More importantly, lobbying clients will seek to direct spending to secure or reinforce ties with new committee and caucus leaders, who hold significant influence over the legislation that will reach the Senate floor — efforts that in some cases can be like “starting anew,” Milita said.

“This is a fundamental change … clients have to start all over again in trying to establish relationships,” he said.

Despite some anti-lobbying rhetoric from the Obama administration, congressional lobbying spending has remained at a relatively stable, high level for a number of years, after ramping up during the 2000s, according to Allard.

Total federal congressional lobbying spending has remained about $3.3 billion for each of the past three years, after peaking around $3.5 billion in both 2009 and 2010, according to figures collated by the Center for Responsive Politics from Lobbying Disclosure Act-mandated filings. Spending first jumped to about $3.3 billion in 2008, from just under $2.9 billion in 2007, following a decade of steady year-on-year increases.

The largest industry sector for congressional lobbying spending in 2013 was finance, insurance and real estate, at just under $490 million, with the health industry close behind at a little more than $487 million. Communications and technology firms were next on the list, spending close to $394 million. Energy and other natural resources firms spent just more than $359 million, outspending the next nearest industry — transportation — by more than $130 million, CRP-collated figures show.

While its overall spending levels and relative positions within the group have changed over the past decade, this group of four industries has remained, as a bloc, the biggest lobbying spenders over that period.

But even these lofty figures don’t capture the full picture, Milita said. With much legislation around the world now having cross-border impacts, the increasing globalization of advocacy efforts is one of the most fundamental recent changes to the lobbying industry, and it is not reflected in federal LDA filings, the usual tracking tool, he said.

“The fact is, a lot is spent on lobbying, and that will continue,” he said. “The demand for expert advocacy will continue as government’s influence on our lives continues.”