NJ Blockchain Legislation: Licensing for Digital Asset Services Businesses

New Jersey is moving closer to passing a law that will regulate cryptocurrency services. A new Senate bill introduced last week, known as the “Digital Asset and Blockchain Technology Act,” would require licensing of all businesses involved in digital asset services.

The bill tracks one introduced in the New Jersey General Assembly in February.  The legislation would regulate cryptocurrency service providers under the New Jersey Department of Banking and Insurance. Unlicensed businesses operating in the state would be subject to a $500 per day penalty until filing an application for a license.

The Senate version states, “The bill provides that a person may not engage in a digital asset business activity, or hold itself out as being able to engage in a digital asset business activity, with or on behalf of a resident unless the person is licensed in this State by the Department of Banking and Insurance, or has filed a pending license with the department, or licensed in another state to conduct digital asset business activity by a state with which this state has a reciprocity agreement.”

New York has required licensing for businesses involved with digital currencies since 2015. Their are presently 25 entities licensed through the New York State Department of Financial Services (NYSDFS) to engage in a digital asset business. After the law took effect, 15 companies ceased operations in the state.

Other states regulating cryptocurrency companies include Nevada, which last year passed legislation requiring crypto businesses and proprietors to possess a relevant transmission license before operating a digital currency ATM kiosk.

The state of New Jersey is proceeding towards regulating those wishing to engage in a digital asset business – those companies that begin a dialogue with the legislature and regulators now will position themselves much more favorably for success upon codification of a digital asset and blockchain technology law.

House Considers Sweeping Energy Bill

Republicans on the House Energy and Commerce Committee released a long-awaited comprehensive energy bill late Monday that implicates pipelines, the electric grid and energy efficiency.

The panel’s Energy and Power subcommittee on Wednesday will mark up the 95-page bill that is designed to mirror a similar effort in the Senate.

Republicans and Democrats have thus far avoided loading the bill with partisan provisions that risk derailing the legislation- it steers clear, for example, of calling for an end to the 40-year-old ban on exporting crude oil, language that might lead many Democrats to reject the bill if it were included.

A committee aide expected broad bipartisan support for the bill when the subcommittee votes. (Credit AP).

Still, the legislation addresses a number of policy areas that have long been simmering on Capitol Hill.

The bill seeks to streamline permitting decisions for interstate natural gas pipelines, a move that proponents say is necessary to ramp up infrastructure that’s failed to keep pace with the boom in shale gas production.

On electric reliability, the bill would give broad discretion to power plants to relax environmental rules “to meet the emergency and serve the public interest” if federal regulators deem electric reliability is severely threatened.

The bill also amends a 1978 federal law by directing electric utilities to develop a plan to withstand power outages, using as smart grid technology to remotely locate and repair problems, distribute power systems and self-sustaining “microgrids,” that exist largely apart from the traditional electric grid, by linking disparate energy sources. The change also implores state regulators to consider approving rate increases so utilities can pass costs onto customers to pay for those investments.

Another provision would give the Energy secretary authority to step in to declare emergency measures when the electric grid is under cyberattack. The move has been long sought by federal regulators and lawmakers on both sides of the aisle to clear up confusion the locus of authority of the nation’s electric grid infrastructure in such situations.

The nation’s emergency energy supplies and how they’re distributed also would get a revamp, as natural disasters such as Hurricane Sandy in 2012 exposed shortcomings. The bill  calls for submitting a plan to create a “Strategic Transformer Reserve” to place backup electric infrastructure in various locations in case major electric grid assets are damaged, a concern that’s mounted following an armed attack at a San Jose electric substation in 2013.

Lastly, the bill calls for studying regional electricity systems that might inform how best to build new energy infrastructure such as natural gas pipelines and transmission lines to connect renewable power to the grid.

—By Martin J. Milita, Jr., Esq. Senior Director

Visit his blog at: https://martinmilita1.wordpress.com

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Please feel free to contact the author or your other Duane Morris Government Strategies LLC contact to learn more about this article and what it may mean to you.

About Duane Morris Government Strategies, LLC (DMGS):

Comprised of 19 experienced professionals representing U.S. and foreign clients at the federal, state and local levels, DMGS is as an ancillary business of international law firm Duane Morris LLP, one of the 100 largest law firms with more than 700 attorneys in the U.S. as well as in the UK and Asia. The firm operates in eight offices including Newark, NJ; Trenton, NJ; Albany, NY; Harrisburg, PA; Philadelphia, PA; Pittsburgh, PA; Columbus, OH; and Washington, DC.

DMGS offers a full range of government relations and public affairs services, including lobbying, grant identification/writing/administration, development finance consulting, procurement, grassroots campaigning, public relations, and crisis planning/crisis management needs.

http://www.dmgs.com/

This Week In Congress: National Security & Health Care

By: Martin J. Milita, Jr. Esq.

This week the Senate is focused on national security issues. It will attempt to complete work on the National Defense Authorization Act (NDAA) and begin consideration of the fiscal year 2016 defense appropriations bill. On the other side of the Capitol, the House is expected to take action on a number of health care-related bills, even while Congress and the president await the Supreme Court’s impending ruling in King v. Burwell, regarding subsidies for health insurance under the Affordable Care Act.

The Senate is scheduled to return today, with votes expected on two noncontroversial nominations. Following these votes, the Senate will resume consideration of the NDAA. Majority Leader Mitch McConnell, R-Ky., filed a motion on Thursday to invoke cloture and cut off debate on the bill. The cloture vote is expected on Tuesday morning. Needing the support of 60 senators in order to be successful, the cloture vote is not guaranteed to pass easily on Tuesday, because Senate Democrats have pledged to block the bill over the inclusion of funds for U.S. Department of Defense activities that exceed the spending limits established by the 2011 sequester. The NDAA provides an additional $38 billion in funding for the Pentagon through the Overseas Contingency Operations (OCO) account, an account for war-related expenses which is exempt from discretionary caps. Democrats call the move a budgeting gimmick and have tried unsuccessfully to alter the spending framework. Last Tuesday the Senate rejected (46-51) an amendment offered by Senate Armed Services Committee Ranking Member Jack Reed, D-R.I., to block the additional $38 billion in OCO funding until Congress lifts the sequester. If cloture is invoked on Tuesday, the Senate will have 30 hours to complete work on the NDAA. The amendment process moving forward is unclear, because more than 100 amendments have been filed to the bill, but bill managers do not seem to have an agreement in place on the amendments that will be considered. Senate Armed Services Committee Chairman John McCain, R-Ariz., indicated to reporters last week that the Senate will consider at least two amendments following the cloture vote on Tuesday.

The debate over defense funding and sequestration levels will continue after work on the NDAA is wrapped up. Consideration of the FY 2016 Defense Appropriations bill is expected to be the next bill on the Senate agenda. On Thursday, the Senate Appropriations Committee approved its version of the $576 billion defense spending bill. While only three Democratic committee members opposed the bill at the markup, Democratic leaders have pledged to block any vote to begin considering the 2016 defense appropriations bill on the floor as long as it contains the OCO funds for the Department of Defense, while the other appropriations bills are capped at sequester levels. Senate Minority Leader Harry Reid, D-Nev., last week told reporters that a government shutdown is already looming if congressional Republicans do not negotiate a new budget framework for FY 2016 that lifts the spending caps. President Obama has also threatened to veto the appropriations bills at their current levels. So far, Republican leadership has not indicated a willingness to agree to a budget summit, but neither chamber would have the necessary votes to overcome a presidential veto on any of the appropriations bills.

Consideration of the Cybersecurity Information Sharing Act in the Senate is also possible later this week. Majority Leader McConnell tried unsuccessfully to attach the measure as an amendment to the NDAA last week, but his effort was met with resistance from Senate Democrats who want to take up the bill independently and offer amendments. The legislation would encourage greater sharing of cyber-threat information between the private sector and government by offering companies expanded liability protections. The measure has bipartisan support, especially in light of the recent high-profile data breaches, and similar legislation passed the House of Representatives in April.

The House will return on Monday and consider several bills naming post offices and other federal facilities, along with a resolution calling on Iran to release the Americans it is holding. The main legislative work starts on Tuesday, when the House tackles the Intelligence Authorization Act, which authorizes a variety of intelligence, cybersecurity and anti-terrorism programs. The legislation had been scheduled for last week but was displaced by Friday’s vote on the so-called “fast-track” trade legislation. That legislation too is likely to return to the House floor early this week. On Friday, two of the three elements of the bill were approved by the House in separate votes. A third component of the bill, however, to reauthorize the Trade Adjustment Assistance program, was defeated. Under the rule, however, all three elements of the bill had to be approved for the entire package to get adopted. After the defeat of the TAA portion of the package, the Majority Leader moved to reconsider that vote, and the House is likely to take up that motion early in the week.

The House will spend the remainder of the week on health care-related legislation, including measures that would repeal two contentious provisions of the Affordable Care Act. The first four of these health care-related bills will be considered under suspension of the rules. The bigger debates will follow on the other two bills. Reported out of the House Ways and Means Committee, the first bill would repeal the 2.3 percent excise tax on medical device manufacturers that was included in the Affordable Care Act as a revenue source to help pay for the law’s implementation. A second bill would repeal the controversial Independent Payment Advisory Board, a panel which makes recommendations on Medicare cuts. Other legislation up for consideration from the House Ways and Means Committee include proposals requiring more transparency at the Centers for Medicare and Medicaid Services and promoting improvements to the Medicare Advantage program for seniors.

The House may also consider H. Con. Res. 55, a resolution directing the president to remove any U.S. troops deployed to Syria or Iraq after Aug. 7, 2014, other than those troops required to protect U.S. facilities and personnel, from those two nations. If it does come to the floor, the resolution is likely to prompt heated and partisan debate.

Appropriations markups for FY 2016 continue in the House and Senate Appropriations Committees, even though there is uncertainty about spending levels and the process moving forward. The House Appropriations Committee is scheduled to mark up its Interior and Environment spending bill on Tuesday. Two Senate Appropriations subcommittees will consider their Interior and Environment and Homeland Security bills. The House of Representatives has passed six of the 12 annual appropriations bills, while the Senate has yet to consider a single appropriations bill on the floor. The full Senate Appropriations Committee has approved five of the 12 annual bills.

The House Oversight and Government Reform Committee meets on Tuesday for a hearing on the recent data breach at the Office of Personnel and Management that exposed the personal information of millions of active and retired federal employees. The House Financial Services Subcommittee on Oversight and Investigations also meets on Tuesday for a hearing on global cybersecurity and cyberthreats.

The surface transportation authorization and Highway Trust Fund financing remain at the forefront of congressional priorities because the current short-term surface transportation authorization adopted just prior to Memorial Day expires in July. The House Ways and Means Committee is scheduled to meet on Wednesday to discuss long-term financing for the Highway Trust Fund, while the Senate Finance Committee will hold a hearing on Thursday on the challenges of highway funding, with former U.S. Department of Transportation Secretary Ray LaHood appearing before the committee as a witness.

Please feel free to contact the author or your other Duane Morris Government Strategies LLC contact to learn more about this week’s legislative session  and what it may mean to you.

A full schedule of congressional hearings for this week is included below.

About Duane Morris Government Strategies, LLC

DMGS is as an ancillary business of international law firm Duane Morris LLP, one of the 100 largest law firms with more than 700 attorneys in the U.S. as well as in the UK and Asia.

DMGS is comprised of 19 experienced professionals representing U.S. and foreign clients at the federal, state and local levels. The firm operates in eight offices including Newark, NJ; Trenton, NJ; Albany, NY; Harrisburg, PA; Philadelphia, PA; Pittsburgh, PA; Columbus, OH; and Washington, DC.

DMGS draws on decades of experience in building public support and positioning clients’ issues to achieve maximum success through the often-complex governmental decision-making process. DMGS offers a full range of government relations and public affairs services, including lobbying, grant identification/writing/administration, development finance consulting, procurement, grassroots campaigning, public relations, and crisis planning/crisis management needs.

DMGS’ diverse client list includes non-profits, educational institutions, social service organizations, health care organizations, technology companies, life sciences companies, manufacturers, municipalities, construction companies/engineering companies/developers, economic development agencies, and defense contractors.

For more information, please visit http://www.dmgs.com

CALENDAR

Monday, June 15, 2015

Senate Committees

Iran Sanctions

Senate Foreign Relations

Full Committee Closed Briefing

5 p.m., S-116 Capitol Bldg.

TSA and Postal Service Nominations

Senate Homeland Security and Governmental Affairs

Full Committee Markup

5:30 p.m., S-216 Capitol Bldg.

Tuesday, June 16, 2015

House Committees

Fiscal 2016 Appropriations: Interior-Environment

House Appropriations

Full Committee Markup

10:15 a.m., 2359 Rayburn Bldg.

Child Nutrition Assistance Rules and Regulations

House Education and the Workforce

Full Committee Hearing

10 a.m., 2175 Rayburn Bldg.

EPA’s Proposed Ozone Rule and Manufacturing Impact

House Energy and Commerce – Subcommittee on Commerce, Manufacturing and Trade; House Energy and Commerce – Subcommittee on Energy and Power

Committee Joint Hearing

10:15 a.m., 2322 Rayburn Bldg.

Mental Health Legislation

House Energy and Commerce – Subcommittee on Health

Subcommittee Hearing

10 a.m., 2123 Rayburn Bldg.

Global Cybersecurity Issues

House Financial Services – Subcommittee on Oversight and Investigations

Subcommittee Hearing

10 a.m., 2128 Rayburn Bldg.

U.S. Interests at the United Nations

House Foreign Affairs

Full Committee Hearing

10 a.m., 2172 Rayburn Bldg.

TSA Aviation Workforce Vetting

House Homeland Security – Subcommittee on Transportation Security

Subcommittee Hearing

10 a.m., 311 Cannon Bldg.

Federal Lands Bills

House Natural Resources – Subcommittee on Federal Lands

Subcommittee Hearing

10 a.m., 1324 Longworth Bldg.

Arctic Resources

House Natural Resources – Subcommittee on Energy and Mineral Resources

Subcommittee Oversight Hearing

10:30 a.m., 1334 Longworth Bldg.

OPM Data Breach

House Oversight and Government Reform

Full Committee Hearing

10 a.m., 2154 Rayburn Bldg.

Tribal Labor Sovereignty Act

House Education and the Workforce – Subcommittee on Health, Employment, Labor and Pensions

Subcommittee Hearing

2 p.m., 2175 Rayburn Bldg.

Public Safety Broadband Network Update

House Energy and Commerce – Subcommittee on Communications and Technology

Subcommittee Hearing

2 p.m., 2322 Rayburn Bldg.

Business Development and Investment

House Financial Services – Subcommittee on Capital Markets and Government Sponsored Enterprises

Subcommittee Hearing

2 p.m., 2128 Rayburn Bldg.

Fiscal 2016 Europe and Eurasia Budget Request

House Foreign Affairs – Subcommittee on Europe, Eurasia and Emerging Threats

Subcommittee Hearing

2 p.m., 2172 Rayburn Bldg.

Merger and Acquisition Regulatory Legislation

House Judiciary – Subcommittee on Regulatory Reform, Commercial and Antitrust Law

Subcommittee Hearing

2 p.m., 2141 Rayburn Bldg.

International Shipping Competition

House Oversight and Government Reform – Subcommittee on Government Operations

Subcommittee Hearing

2 p.m., 2154 Rayburn Bldg.

Genetically Engineered Human DNA

House Science, Space and Technology – Subcommittee on Research and Technology

Subcommittee Hearing

2 p.m., 2318 Rayburn Bldg.

Federal Government Real Estate Investment

House Transportation and Infrastructure – Subcommittee on Economic Development, Public Buildings and Emergency Management

Subcommittee Hearing

1 p.m., 2167 Rayburn Bldg.

Drug Interdiction in the Western Hemisphere

House Transportation and Infrastructure – Subcommittee on Coast Guard and Maritime Transportation

Subcommittee Hearing

2 p.m., 2253 Rayburn Bldg.

SSA Disability Benefits Management

House Ways and Means – Subcommittee on Social Security

Subcommittee Hearing

2 p.m., B-318 Rayburn Bldg.

Senate Committees

Fiscal 2016 Appropriations: Homeland Security

Senate Appropriations – Subcommittee on Homeland Security

Subcommittee Markup

10:30 a.m., 138 Dirksen Bldg.

Energy Department Nominations

Senate Energy and Natural Resources

Full Committee Confirmation Hearing

10 a.m., 366 Dirksen Bldg.

Electronic Health Record User Experience

Senate Health, Education, Labor and Pensions

Full Committee Hearing

10 a.m., 430 Dirksen Bldg.

Federal Real Property Overhaul

Senate Homeland Security and Governmental Affairs

Full Committee Hearing

10 a.m., 342 Dirksen Bldg.

Fiscal 2016 Appropriations: Interior-Environment

Senate Appropriations – Subcommittee on Interior, Environment and Related Agencies

Subcommittee Markup

2:30 p.m., 124 Dirksen Bldg.

Asia-Pacific Region Trade Issues

Senate Foreign Relations – Subcommittee on East Asia, the Pacific, and International Cybersecurity Policy

Subcommittee Hearing

2:30 p.m., 419 Dirksen Bldg.

Native American Economic Issues

Senate Indian Affairs

Full Committee Panel Discussion

2:45 p.m., 216 Hart Bldg.

Wednesday, June 17, 2015

House Committees

Smithsonian Institution Assessment

House Administration

Full Committee Hearing

10:30 a.m., 1310 Longworth Bldg.

Fiscal 2016 Appropriations: Labor-HHS-Education

House Appropriations – Subcommittee on Labor, Health and Human Services, Education, and Related Agencies

Subcommittee Markup

9 a.m., 2358-C Rayburn Bldg.

Fiscal 2016 Appropriations: Financial Services

House Appropriations

Full Committee Markup

10 a.m., 2359 Rayburn Bldg.

Middle East Policy

House Armed Services

Full Committee Hearing

10 a.m., 2118 Rayburn Bldg.

Balanced Budget Issues

House Budget

Full Committee Hearing

10 a.m., 210 Cannon Bldg.

Financial Advice Access

House Education and the Workforce – Subcommittee on Health, Employment, Labor and Pensions

Subcommittee Hearing

10 a.m., 2175 Rayburn Bldg.

Financial Stability Oversight Council Report

House Financial Services

Full Committee Hearing

10 a.m., 2128 Rayburn Bldg.

Syria and Chemical Weapons

House Foreign Affairs

Full Committee Hearing

10 a.m., 2172 Rayburn Bldg.

Tribal Land Legislation

House Natural Resources – Subcommittee on Indian, Insular and Alaska Native Affairs

Subcommittee Hearing

11 a.m., 1324 Longworth Bldg.

Drones and Commerce

House Oversight and Government Reform

Full Committee Hearing

9 a.m., 2154 Rayburn Bldg.

Energy Innovation Hubs

House Science, Space and Technology – Subcommittee on Energy

Subcommittee Oversight Hearing

10:30 a.m., 2318 Rayburn Bldg.

Small Business and Crude Oil Issues

House Small Business

Full Committee Hearing

11 a.m., 2360 Rayburn Bldg.

Highway Trust Fund Financing

House Ways and Means

Full Committee Hearing

10 a.m., 1100 Longworth Bldg.

U.S. Navy Surface Combatant Capacity

House Armed Services – Subcommittee on Seapower and Projection Forces

Subcommittee Hearing

2 p.m., 2212 Rayburn Bldg.

International Monetary Fund Assessment

House Financial Services – Subcommittee on Monetary Policy and Trade

Subcommittee Hearing

2 p.m., 2128 Rayburn Bldg.

China’s Economic and Military Growth

House Foreign Affairs – Subcommittee on Asia and the Pacific

Subcommittee Hearing

2 p.m., 2200 Rayburn Bldg.

Iran, North Korea and Syria Nonproliferation Act

House Foreign Affairs – Subcommittee on the Middle East and North Africa

Subcommittee Hearing

2 p.m., 2172 Rayburn Bldg.

Immigration Policy Executive Actions

House Oversight and Government Reform – Subcommittee on National Security; House Oversight and Government Reform – Subcommittee on Health Care, Benefits and Administrative Rules

Subcommittees Joint Hearing

2 p.m., 2154 Rayburn Bldg.

Senate Committees

Federal Government Fiscal Challenges

Senate Budget

Full Committee Hearing

10 a.m., 608 Dirksen Bldg.

Consumer Product Safety Commission

Senate Commerce, Science and Transportation – Subcommittee on Consumer Protection, Product Safety, Insurance and Data Security

Subcommittee Oversight Hearing

10 a.m., 253 Russell Bldg.

Coal Ash Disposal Rule

Senate Environment and Public Works

Full Committee Oversight Hearing

9:30 a.m., 406 Dirksen Bldg.

Higher Education Reauthorization

Senate Health, Education, Labor and Pensions

Full Committee Hearing

10 a.m., 430 Dirksen Bldg.

Economic and National Security Policy

Senate Homeland Security and Governmental Affairs

Full Committee Hearing

10 a.m., 342 Dirksen Bldg.

USAID Administrator Nomination

Senate Foreign Relations

Full Committee Confirmation Hearing

2 p.m., 419 Dirksen Bldg.

GSA Inspector General

Senate Homeland Security and Governmental Affairs

Full Committee Confirmation Hearing

2 p.m., 342 Dirksen Bldg.

Capital Access Issues

Senate Indian Affairs

Full Committee Oversight Hearing

2:15 p.m., 628 Dirksen Bldg.

Joint Committees

Federal Credit Programs

Joint Economic

Full Committee Hearing

10 a.m., 216 Hart Bldg.

Thursday, June 18, 2015

House Committees

Optimized Fleet Response Plan

House Armed Services – Subcommittee on Readiness

Subcommittee Hearing

8 a.m., 2118 Rayburn Bldg.

Biotechnology Food Labeling Standards

House Energy and Commerce – Subcommittee on Health

Subcommittee Hearing

10 a.m., 2123 Rayburn Bldg.

Cuba Property Rights Outlook

House Foreign Affairs – Subcommittee on the Western Hemisphere

Subcommittee Hearing

10 a.m., 2172 Rayburn Bldg.

Rapid DNA Act

House Judiciary – Subcommittee on Crime, Terrorism, Homeland Security and Investigations

Subcommittee Hearing

9 a.m., 2141 Rayburn Bldg.

Senate Committees

Renewable Fuel Standard Program Management

Senate Homeland Security and Governmental Affairs – Subcommittee on Regulatory Affairs and Federal Management

Subcommittee Hearing

9:30 a.m., 342 Dirksen Bldg.

Future of Highway Funding

Senate Finance

Full Committee Hearing

10 a.m., 215 Dirksen Bldg.

Water Related Measures

Senate Energy and Natural Resources – Subcommittee on Water and Power

Subcommittee Hearing

2 p.m., 366 Dirksen Bldg.

GAO Highly Critical of Administration For Wasteful IT Procurement

The Government Accountability Office has painted a dismal portrait of the current state of information technology procurement in federal agencies despite years of recommending improvements to the system, exposing in a new report billions of dollars wasted on top-heavy contracts and lackluster modernization efforts.
Cost overruns, poor management and deadline woes have afflicted 178 of the government’s 738 major IT investments as of May 2015, an amount worth approximately $8.7 billion, the watchdog agency said in its report released on Wednesday.
“The federal government invests more than $80 billion annually in IT, but many of these investments fail to meet cost and schedule expectations or make significant contributions to mission-related outcomes,” the GAO said. “This underperformance of federal IT projects can be traced to a lack of disciplined and effective management and inadequate executive-level oversight.” (Credit GAO).
While government waste in the IT acquisition area is by no means a revelation, federal agencies have been slow, if not idle, in enacting meaningful internal reforms to help modernize and oversee projects, according to the GAO, who said only 23 percent of the 737 recommendations it has issued to the administration since 2009 have been implemented.
The GAO report identified several areas “urgently” needing reform, including the consolidation of federal data centers, an effort the office estimate will save the government $6.3 billion in the coming years. In order to effectively carry out the consolidations, the GAO said, agencies must “provide for greater transparency and oversight.”(Credit GAO).
Speaking on behalf of the GAO to House lawmakers on Capitol Hill Wednesday, David A. Powner, the office’s director of information technology management issues, expressed similar frustration at the slow pace of change within the IT acquisition space.
“We spend nearly 75 percent of IT dollars on operational legacy systems, leaving far too little to modernize the federal government,” Powner told members of an oversight subcommittee. “We need to find ways to shift these dollars towards acquiring new technologies and further performance.” (Credit AP).
Echoing the GAO report’s conclusion, Powner said he was hopeful that the newly enacted Federal Information Technology Acquisition Reform Act, or FITARA, will help steer the IT procurement system back on course.
Among other things, the new law gives more budget authority and responsibility to federal agency chief information officers where before CIO’s had little opportunities to make executive decisions over IT contracts that were far behind schedule or over budget.
“It’s going to attract a better breed of CIOs into the federal government,” Powner said of the provision. (Credit AP).
One of the most publicized IT flubs came in December 2012, when the Department of Defense cancelled a project for a logistics system for the Air Force after spending more than $1 billion. The Air Force, through its prime contractor Virginia-based Computer Sciences Corp., failed to deploy the system within five years of receiving the funds.
More recently, the Department of Homeland Security’s United States Citizenship and Immigration Services has poured an additional half-billion dollars into what was originally a $2.1 billion project to transition to a completely electronic system after casting doubt they could meet all of the capabilities of the project.
The report lists several other problem-saddled projects, including the Department of Transportation’s $15 billion to $22 billion “Next Generation Air Transportation System” to replace the Federal Aviation Administration’s ground-based system. According to the GAO, the DOT has “significantly increased the number, cost, and complexity of FAA’s acquisition programs.” (Credit GAO).

Senate Sends NSA Spying Overhaul Bill To President’s Desk

The U.S. Senate on Tuesday passed legislation to halt the National Security Agency’s bulk collection program for domestic telephone metadata and certain other domestic surveillance programs, sending the bill to be signed into law.

Senators voted 67-32 to pass the USA Freedom Act, which would prohibit the NSA from scooping up phone metadata, among other changes, while reauthorizing the Patriot Act’s Section 215, the chief statutory authority used to underpin a number of the agency’s surveillance programs, after having invoked cloture earlier in the day.

The bill now goes to President Barack Obama to be signed into law after earlier passing the House of Representatives, with senators rejecting several amendments put forward by Senate Majority Leader Mitch McConnell, R-Ky., that, if adopted, would have sent the bill back to the House for further consideration.

The proposed amendments had previously been labeled “poison pills” by Sen. Mike Lee, R-Utah, one of the main sponsors of the bill, and he made one last effort Tuesday to urge colleagues Tuesday to reject them. (Credit: AP).

“It’s time for us to pass this bill, this bill that has been passed overwhelmingly in the House of Representatives, this bill that carefully balances important interests that the American people care deeply about,” Lee said on the Senate floor ahead of the vote. (Credit: AP).

Senators had voted to move forward with formal debate on the bill in a rare Sunday session, trying to pass the bill ahead of a looming deadline, after failing to come to a consensus the week before, just prior to heading out on a week-long recess. (Credit: AP)

But they were unable to complete consideration on Sunday as Sen. Rand Paul, R-Ky. — who opposes the renewal of Section 215, arguing other existing surveillance authorities are sufficient and less intrusive — refused to allow debate to be sped up unless McConnell agreed to put Paul’s proposed amendments on the Senate floor for debate.

As a result, Section 215 — along with a provision allowing the government to target suspected “lone wolf” terrorists and roving wiretap authority, used to trace disposable “burner” cellphones — expired at midnight on Sunday, temporarily blocking the NSA from moving forward with certain new surveillance efforts until it is restored, although ongoing surveillance is allowed to continue.

When McConnell tried again to move forward on the bill on Monday, Paul again opposed the move, drawing public criticism from a number of his Republican colleagues. The bill has strong Democratic support but has split Republican lawmakers into several factions, both supporting and opposing, with opposition coming variously from those who believe it goes too far in changing Section 215 and those who believe it doesn’t go far enough.

McConnell had initially favored a reauthorization of existing Section 215 authorities through to 2020, but had begrudgingly put his support behind moving forward with the USA Freedom Act in recent days, even after criticizing what he argued were “serious flaws” in the bill, when it became clear that his proposed alternative did not have enough support to pass. The other alternative — letting Section 215 expire entirely — would be a “completely and totally unacceptable outcome,” he had argued on the Senate floor Sunday. (Credit: AP).

The USA Freedom Act was first introduced into Congress in 2013 in the wake of document leaks by former NSA contractor Edward Snowden, demonstrating the broad scope of the NSA’s domestic surveillance and drawing outrage from a number of lawmakers, among others.

It makes several reforms to domestic surveillance authorities, prohibiting bulk collection of telephone and other records using either Section 215 or the “pen register” authority granted by the Foreign Intelligence Surveillance Act, or through so-called national security letters. Using Section 215 for bulk telephone data collection was recently found unlawful by the Second Circuit.

The bill would also bar federal intelligence agencies from making other large-scale indiscriminate sweeps for domestic records, such as those filtered by ZIP code or city, make a number of changes to procedures at the Foreign Intelligence Surveillance Court, which oversees FISA requests.

It easily passed the House in May in a 338-88 vote with bipartisan support, and should be swiftly signed into law, with the White House having signaled its strong support for the bill, saying it makes appropriate reforms to address civil liberties and privacy concerns while still adequately protecting national security.

Major Policy Developments for the 114th Congress: CYBERSECURITY

Cybersecurity.

The increasing and nearly daily occurrences of cybersecurity attacks against both public and private sector entities that service the every- day lives of Americans  continues to raise the importance of addressing cybersecurity issues head on. Members of Congress feel a level of frustration about the lack of movement on legislation as they seek to balance security with privacy. Members of the House and Senate continue to work together to seek
ways to pass cybersecurity bills in the lame duck session. Member retirements in key leadership  roles, such as with Chairman Rockefeller in the Senate and Chairman Rogers in the House, could spur action, as  they face a crowded calendar of “must- do” bills. Given the odds against anything being approved  this year, anticipate that enactment of cybersecurity legislation will again be a top issue for  the 114th Congress. Also expect continued executive action by the President as a means to move the ball forward on this issue while the Congress continues to work through the process. With few  exceptions, the key congressional players engaged in cybersecurity– related initiatives in the last Congress will remain the same and will provide some continuity for the public and private sector participants who have been closely following the process.

Efforts focused on increased cyber information sharing and associated liability protections will continue in both chambers, with the expectation that leading Members in both the House and Senate will again introduce bills in the various committees. With a new chairman at the helm of the House Permanent Select Committee on Intelligence, the approach pursued by the leadership of the  committee may vary given private sector privacy concerns and continued White House opposition to  the proposed Cyber Intelligence Sharing and Protection Act (CISPA). The Senate has moved forward
with information sharing legislation in a bipartisan fashion in the past. Anticipate that approach will continue.

Anticipate introduction of bills in the 114th Congress similar to those we have seen in the past, such as those focusing on the need to strengthen the capabilities of the U.S. Department of Homeland Security (DHS) in the area of cyber—maintaining a  civilian agency as a partner to the private sector. Others will include a focus on codifying the
mandate of: the National Cybersecurity and Communications Integration Center (NCCIC), strengthening the hiring abilities of DHS to build and maintaining a cybersecurity workforce, increasing investments in cybersecurity research and development, and updating the Federal Information Security Modernization Act (FISMA).

The annual appropriations bills will also continue to be a vehicle for moving cybersecurity-related provisions, including language that restricts purchases from specifically targeted Chinese entities based on supply chain security issues that were included in the House’s FY 2015 Commerce-Justice-Science appropriations bill.

At the end of the day, it is clear that the Obama Administration will continue to use its executive authority to address cybersecurity concerns and will remain actively  engaged in the implementation of the February 2013 Cybersecurity Executive Order (EO) 13636 and  Presidential Policy Directive (PPD-21). The release of the Cybersecurity Framework in 2014, almost exactly a year from the issuance of EO 13636, and the recently issued EO on data security, signals  that other EOs may be in the works and should be closely watched.

Since the issuance of EO 13636, almost every department and independent agency has taken an active role on cybersecurity issues in the last nearly two years as  concerns grow over the impact of cybersecurity attacks on the sixteen Critical Infrastructure (CI)
sectors defi in the EO. The Securities and Exchange Commission (SEC), for example, has begun  spot checks of companies to ensure adequate fillings on cyber risk. The Federal Trade Commission (FTC) has filed 53 lawsuits against hotels and retailers using its consumer protection authorities, and is seeking greater enforcement and rulemaking powers  from Congress. The Federal Communications Commission (FCC) has begun eff to look at ways to  address the lack of existing cybersecurity regulations on the communications sector. It is safe to  say that there will be an increasingly activist oversight role by every one of these agencies in  the last two years of the Obama Administration.

On the international front, concerns in a post-Snowden world have tied together the bilateral and multilateral negotiations on cybersecurity and privacy. The European  Union is working on its own cybersecurity regime under the Network and Information Systems (NIS)  Cybersecurity Directive along with the European Program for Critical Infrastructure Protection. The North Atlantic Treaty Organization (NATO) recently issued a statement about rules  of engagement on a cyber-attack. The Russian and Chinese governments recently reaffirmed the principle of national sovereignty in cyberspace. Expect more discussion in the international  realm on cybersecurity and privacy issues as governments focus more attention on the balance needed between security and
privacy protections.