Senate Passes ‘Clean’ $40B DHS Funding Bill

Today the U.S. Senate passed a “clean” $39.7 billion bill funding the U.S. Department of Homeland Security through 2015 after earlier resolving an immigration-related impasse, as the House of Representatives sought to buy more time for debate with a short-term DHS funding measure.

Senators voted 68-32 on the passage of H.R. 240, which will fund DHS through to the end of fiscal year 2015, after voting in favor of an amendment stripping out disputed language which would have defunded implementation of contentious recent immigration-related executive actions, as agreed under a bipartisan deal hashed out earlier in the week.

Following the vote on the DHS funding bill, senators rejected a cloture motion on proceeding to official debate on a separate bill regarding the executive actions, S. 534, the Immigration Rule of Law Act, falling just short of the necessary 60 votes to proceed, in a 57-42 vote.

With the Senate agreeing to the clean bill, the fate of the agency’s funding is now in the hands of House lawmakers, who had in January passed the funding bill with the immigration “rider” attached.

Some House lawmakers have publicly expressed reluctance to take on a funding bill without the immigration clause attached, and on Friday House leaders sought to buy time for further discussion on the legislation, beginning debate on a continuing resolution, or CR, extending DHS’ current temporary funding — set to expire at the end of the day on Friday — through to March 19.

The House will also seek to convene a panel to go to conference with the Senate to hash out their differences over the bill, which may lead to another stand-off, with Senate Democrats — having filibustered the legislation until the dispute clause was removed — having publicly indicated they will not support anything other than a clean bill.

DHS, the parent agency of subagencies including U.S. Citizenship and Immigration Services, U.S. Customs and Border Protection and U.S. Immigration and Customs Enforcement, was the only agency that did not receive full-year funding in December’s “cromnibus” appropriations bill, amid the dispute over President Barack Obama’s executive actions.

Under those executive actions, estimated to cover about 4.4 million undocumented immigrants, certain unlawful immigrants who are the parents of lawful residents would be granted temporary deportation amnesty and limited work privileges, after passing a necessary background check.

The Deferred Action for Childhood Arrivals program, which covers certain undocumented immigrants who came to the U.S. as minors, would also be expanded by removing its age cap and lengthening a deportation deferral under the program to three years.

In addition to the ongoing fight over the actions in Congress, the disputed actions have also been the subject of a court challenge, brought by 26 states in Texas federal court. The judge in that suit, U.S. District Judge Andrew S. Hanen, has issued a temporary injunction against the actions going into effect, which the federal government has asked him to stay.

Advertisements

Christie budget statement and charity care for hospitals

The charity care funds that hospitals use to defray the cost of caring for indigent and uninsured patients are being reduced by $148 million, to $502 million, in Gov. Chris Christie’s fiscal 2016 budget. However, the administration said it expects New Jersey’s successful Medicaid expansion under the Affordable Care Act to ease the demand for hospitals to provide uncompensated care.

In its budget statement, the Christie administration said 390,000 low-income New Jersey residents have enrolled in the state’s Medicaid program, known as NJ Family Care, since the ACA-funded nationwide Medicaid expansion began Jan. 1, 2014. According to state figures, there are now 1.67 million New Jerseyans enrolled in NJ FamilyCare, which is funded by both state and federal tax dollars.

The Christie Administration budget statement said: “As widely anticipated, Gov. Christie’s decision to expand NJ FamilyCare under the ACA has led to a dramatic increase in federally supported NJ FamilyCare enrollment, as well as a steep reduction in New Jersey hospitals’ documented claims for uncompensated care.”

Betsy Ryan, chief executive of the New Jersey Hospital Association, said the hospitals are now assessing the impact of the 22.8 percent charity care funding cut.

Ryan applauded Christie for increasing funds to the state’s teaching hospitals to train physician residents: Christie’s 2016 budget increases funding for graduate medical education from $100 million this year to $127.3 million in fiscal 2016, which begins July 1, 2015.

More details on the impact of the charity care cuts will be forthcoming once the state Department of Health announces how much charity care individual hospitals will receive in 2016.

Senate Reaches Deal On Compromise $40B DHS Bill

The U.S. Senate today voted to begin official debate on a “clean” $39.7 billion U.S. Department of Homeland Security funding bill, after Senate leaders agreed to strip out a clause blocking funding for certain contentious immigration-related executive actions that had led to a filibuster.

Senators voted 98-2 to invoke cloture on the motion to proceed to H.R. 240, after Senate Minority Leader Harry Reid, D-Nev., and Senate Majority Leader Mitch McConnell, R-Ky., reached a deal to take separate votes on DHS funding and the disputed executive actions that President Barack Obama announced on Nov. 20.

The bill, which passed the House of Representatives in mid-January, had stalled amid a Democratic filibuster, blocked from proceeding to official debate in four separate votes.

After the fourth failed vote, on Monday, McConnell indicated he would seek a different approach, saying he would move to consider separate legislation condemning the president’s executive actions, which Republican lawmakers have claimed is an unconstitutional overreach of his executive powers.

The majority leader did not explicitly state at the time that he would accompany that immigration funding bill with a “clean” DHS funding bill but eventually acquiesced on Wednesday, hashing out a deal with Reid to amend the bill to strip out the disputed clause in order to win Democratic support.

The Senate Republican caucus largely supported their leader on Wednesday, with only Sens. Jim Inhofe, R-Okla., and Jeff Sessions, R-Ala., voting against the motion to proceed. Assuming the bill passes the Senate, it will need to pass the House again in its amended form, which could have a tougher time, given vocal public opposition from a number of House Republicans to any alteration to the legislation.

The DHS, as the parent agency of subagencies including U.S. Citizenship and Immigration Services, U.S. Customs and Border Protection and U.S. Immigration and Customs Enforcement, was the sole agency not to get full-year fiscal 2015 funding in last year’s “cromnibus” appropriations bill, amid the immigration dispute.

Under the president’s disputed executive actions, estimated to cover about 4.4 million undocumented immigrants, certain unlawful immigrants who are the parents of lawful residents would be granted temporary deportation amnesty and limited work privileges, after passing a necessary background check.

The Deferred Action for Childhood Arrivals program, which covers certain undocumented immigrants who came to the U.S. as minors, would also be expanded by removing its age cap and lengthening a deportation deferral under the program to three years.

“Is Congress an endangering species?”

For businesses hoping to have an influence on the course of regulation, much of the action has moved from Congress to the executive branch. The last few years have seen an expansive exercise of federal power through the issuance of new regulations, the reinterpretation of existing ones, and the enforcement of both, as well as more novel regulatory approaches. The trend shows through in virtually every regulatory area, and it looks likely to continue through 2015 and beyond.

On the one hand, the Obama administration is proud of its assertive approach, pointing to progress even in the face of what it calls a “do-nothing” Congress. By contrast, congressional Republicans — and some constitutional scholars — have accused the administration of regulatory overreaching.

But one thing seems certain about this new wave of administrative activism: it spells new headaches for business.

More regulation means more compliance costs and challenges. More aggressive enforcement means harsher penalties and more intrusive sanctions for failure to comply. And more key decisions being made by the executive branch — rather than by Congress or the courts — means businesses have to be even more focused and strategic to make their views known and influence the outcomes.

Federal agencies have been testing the limits of their statutory authority. Like the president, agency leaders also see themselves as taking up the mantel that Congress dropped.

For example, no major environmental statute has undergone a major reauthorization since the 1990s. In the meantime, new environmental challenges — greenhouse gases, new findings about substance toxicity, and the like — have emerged. In some cases, there is broad agreement — among stakeholders, if not in Congress — that revisions are needed because the laws as currently written cannot be interpreted to address these newer concerns.

As the number and scope of administrative rules multiply, so do the penalties for non-compliance. If just measured in fines alone, these penalties are rising fast: more than $13 billion in 2014, up from about $7 billion in 2013, according to economist Brandon Garrett at the University of Virginia. (In 2008, the figure was closer to $2 billion.) And, in the realm of consumer protection, for example, the Federal Trade Commission has been increasingly willing to go to court to seek monetary damages or consumer redress rather than settling for an injunction- blocking future non-compliant behavior.

Moreover, enforcement actions are increasingly resulting in much more than a fine and an order to stop the violations. Prosecutors are demanding deep and very specific changes in management and embedding monitors in the company to ensure that they occur. Settlements are requiring corporate policy changes, staff training, remedial community training programs, and more.

Additionally, companies facing even the threat of enforcement actions have allowed regulators to influence their policies in new ways. For example, after a safety crisis, General Motors signed an accord with the National Highway Traffic Safety Administration in which it agreed to implement training policies that expressly disavow statements diluting the safety message in internal communications. The move is part of a growing trend of agencies trying to change corporate culture.

In another case, the Consumer Product Safety Commission is calling on retailers to pull products from their shelves when the agency cannot convince manufacturers to recall them. Retailers are increasingly willing to go along; now that the commission’s civil penalty cap has increased from $1.8 million to $15 million.

Regulators are also becoming more aggressive in their efforts to root out alleged misdeeds, largely through efforts to recruit insiders. For example, in 2013 the government enhanced whistleblower protections for employees of government contractors and extended the protections to subcontractors. When coupled with significant awards afforded to whistleblowers, the protections amount to deputizing the workers of America to blow the whistle on their employers and act as a partner in enforcement.

The recent regulatory expansionism will continue through 2015 — and likely beyond — thanks to a striking confluence of events.

  • Firstly, the third year of a president’s term tends to be the most aggressive in terms of policymaking. Midterm elections are over, political appointees are firmly in place, and the administration is acting with its legacy in mind. By contrast, in 2016, the administration may face pressure to pull back on rulemaking for the sake of pre-election politics or transitional smoothing.
  • Secondly, the 2013 decision by Democrats to strip Republicans’ ability to filibuster the president’s nominees has resulted, for the first time in a decade, in a federal appeals bench — including the all-important D.C. Circuit — in which judges appointed by Democrats considerably outnumber Republicans. These judges are generally thought to be more receptive to the regulators in legal challenges to the administration’s authority.
  • Thirdly, a U.S. Supreme Court ruling in 2013, City of Arlington v. FCC, appears to give agencies wide discretion in deciding the scope of its statutory authority. Arlington continues a tendency running back 30 years for courts to defer to agencies when there is ambiguity about whether the agency is allowed to act under its authority established by Congress. As a result, unless Congress clearly mandates otherwise, agencies can expand their authority as far as they see fit. And since their statutory authority tends to be quite broadly stated, agencies have a lot of leeway.

Companies struggling with compliance do have a range of options, however.  As they devise their compliance strategy, companies may want to seek guidance from agencies on how their rules might apply to them; seek waivers, exceptions and mitigating guidelines; and develop sound policy reasons to have the agency construe its rules in a manner that achieves the regulatory goal but is less onerous for a company.

Congress still has a role to play in affecting an industry’s regulatory burden. For one, a legislator can write letters or hold hearings in an attempt to influence agencies on important issues. Congress can constrain agency actions by appropriations riders or budgetary restrictions. And legislative wins are still possible for companies that can find issues that can be agreed by both sides of the aisle as job creators.

It is more important than ever to build and sustain relationships with relevant agencies. That means interacting with them regularly and educating them about issues important to your industry. The goal is to build your reputation and their comfort level well before any sensitive issues come up, such as potential enforcement actions or proposed regulations you want to fight.

As in the case of agency leaders, it’s important for companies to establish ongoing relationships with relevant members of Congress, rather than reaching out only when they need something from them.

Foreign Profits Plan Could Be Starter For Tax Reform

U.S. corporations are currently storing roughly $2 trillion in profits offshore and Obama wants to tap into that money through a one-time 14 percent repatriation tax and a 19 percent minimum tax on future foreign earnings. Republican lawmakers haven’t embraced  Obama’s foreign profits tax proposals warmly, but the plan’s similarity to ideas pitched by some in the GOP may set it as an opening bid for business tax reform, particularly since House Ways and Means Chairman Paul Ryan wants to start the reform process by summer’s end.

The similarity between Obama’s plan and one pitched by former Republican House Ways and Means Committee chairman Dave Camp shows there is some space for negotiation — space that will be crucial as Ryan tries to solidify reform efforts in the coming months.

Obama unveiled his international tax plan as part of his 2016 budget blueprint, which the White House released at the beginning of the month. Under the plan, U.S. companies will no longer be allowed to defer taxes on their foreign earnings until they are returned to the U.S. Instead, corporations would pay a one-time tax of 14 percent on so-far untaxed offshore profits and a minimum tax of 19 percent on future earnings.

According to the budget, the 14 percent repatriation tax could raise $268 billion to help pay for a $478 billion, six-year reauthorization of the Highway Trust Fund, which is expected to run out of money in June. The minimum 19 percent tax would raise $206 billion over 10 years, the budget says.

By way of comparison, Dave Camp proposed an 8.75 percent repatriation tax in a comprehensive tax reform proposal he released last year. Camp also wanted to place a minimum 15 percent tax on companies’ intangible earnings, regardless of where they were earned.

Meanwhile, Sens. Rand Paul, R-Ky., and Barbara Boxer, D-Calif., also support a repatriation tax, albeit at a much smaller 6.5 percent rate. At the end of January, the bipartisan duo introduced legislation that would give companies five years to bring their deferred offshore earnings back to the U.S. and would use that revenue to fill the Highway Trust Fund, much like the Obama proposal would.

Meanwhile, it does appear that both sides of the aisle are seriously considering some sort of comprehensive reform plan, which could be aided by the similarities in Camp and Obama’s international tax proposals.

House Sends Keystone Approval Bill To President Obama

The U.S. House of Representatives on Wednesday passed a bill that would force the federal government to approve TransCanada Corp.’s controversial Keystone XL oil pipeline, a move President Barack Obama has warned he will Veto.

Republicans in the House with some Democratic support pushed through the bill, that the Senate passed two weeks ago. The Senate’s road was much tougher, with the passage process drawn out as Democrats fought unsuccessfully to stall it. As the Keystone bill now now heads to Obama’s desk, it is doubtful the Senate will be able to muster the 67 votes needed to override the president’s veto.

The measure passed by a 270-152 vote, with 29 Democrats joining 241 Republicans in voting for passage and one Republican joining 151 Democrats who opposed it.

Obama has based his opposition to the pipeline on a variety of issues, including state court litigation and the U.S. State Department’s ongoing review of TransCanada’s application.

Comments from various federal agencies recently have been submitted to the State Department, including from the U.S. Department of Defense, which said it has no problems with the pipeline. The U.S. Environmental Protection Agency, however, said the State Department should reconsider its supplemental final environmental impact statement. And the State Department previously found that approving the pipeline would not have much of an effect on GHG emissions.

The Keystone bill dominated the first few weeks of the new Congress and prompted a wide-ranging discussion of its benefits and drawbacks. Before the Senate voted, it took up a dozen amendments to the legislation, passing only one concerning energy retrofitting for schools. Democrats had refused to end debate on the bill until all pending amendments had been voted on.

Some of the other failed amendments included removing land from consideration as wilderness areas unless Congress acts on them within a year; campaign finance disclosure requirements for companies that stand to make more than $1 million from the tar sands; removing the lesser prairie chicken from the threatened species list and speeding up the approval process for liquefied natural gas exportation to World Trade Organization members.

Keystone XL is intended to carry tar sands crude oil from Alberta, Canada, to the Gulf Coast, with a southern 485-mile portion of the proposed span running from the crude market hub at Cushing, Oklahoma, to refineries near Port Arthur, Texas, having already been approved.

The pipeline still faces a snag in South Dakota, where a project permit expired last June. TransCanada is currently pursuing a recertification of the permit but has been met with firm opposition by local environmental and community groups.

New Jersey Gov. Chris Christie Absolute Veto- “Made in America Bill”.

New Jersey Gov. Chris Christie on Thursday vetoed a package of bills that would have required the use of U.S.-manufactured goods for a greater number of public contracts, including 50% US. sourced components, contending that the measures would hurt international development and increase costs for the public.

New Jersey already requires U.S.-manufactured goods for public works contracts, local public contracts, state construction contracts and local school contracts, but S1881 — which the state Legislature sent to the governor in December — would have covered all state contracts, including those of state universities. Companion bills sought to impose similar requirements on four bi-state agencies: the Port Authority of New York and New Jersey, Delaware River Joint Toll Bridge Commission, Delaware River Port Authority, and Delaware River and Bay Authority.

Christie said in his veto messages that the bills would “constrain purchasing decisions by setting artificial thresholds of reasonableness based almost exclusively on price.”

As a strong indicator where he stands on corporate inversions, Christie also had kind words for foreign-headquartered companies, which he said are responsible for more than 225,000 jobs in the state.

“These global companies seek global marketplaces that will support their investments. Those companies, in turn, infuse billions of dollars into New Jersey’s economy, not only in direct investment and jobs, but indirectly to thousands of other New Jersey businesses that provide goods and services to support their operations,” the governor said. “In stark contrast, these bills will chill international development and increase costs borne by taxpayers.”

While lawmakers tried to build flexibility into the proposed requirements by allowing public entities to secure waivers if U.S.-made products weren’t available or were too expensive, Christie said the end result would have been a more-complex bidding process and more-burdensome reporting requirements.

“Rather than helping Americans, these bills will simply drive up the price of doing business, and threaten job creation,” the governor said. “Building economic walls around our state, or our nation, will not improve the lives of our citizens.”

In a statement, Senate President Steve Sweeney, D-Gloucester, stated that  the veto was  a missed opportunity to support domestic businesses.

“The ‘made in America’ bills are more than an expression of economic patriotism. They could have been an effective way of boosting the state’s economy,” said Sweeney, a sponsor of the measures. “The recovery in New Jersey has lagged behind other states, so we should be doing all we can to generate economic growth and to promote economic opportunity.”

But the governor’s action won praise from the New Jersey Business and Industry Association.

“Governor Christie made the right decision,” NJBIA President Michele Siekerka said in a statement. “The bill would be unworkable given the nature of modern global supply chains, which make it difficult to find goods with U.S.-sourced components.”