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Global Policy Watch

Key Public Policy Developments Around the World From Covington & Burling LLP

India’s Tax Proposal: Beneficial For Business

Posted in Asia

Many western consumer firms operating in India have been successful at adapting to the country’s unique market challenges, which range from distinct consumer tastes and preferences to the logistical challenges of reaching a population that is still overwhelmingly rural.  Taxation and regulation have often been less pliable obstacles, as demonstrated by the deep resistance to allowing foreign investment in multi-brand retail outlets.  However, a key tax reform included in India’s 2015 budget, which was released this weekend, should materially improve the business environment, particularly for foreign consumer goods companies and single-brand retailers with a presence in India.

The Goods and Services Tax, or GST, will be a comprehensive tax levy on the manufacture, sale, and consumption of goods and services.[1]  The GST will be “collected on value-added goods and services” at each transactional stage of the supply chain.  Firms will be permitted to use the GST paid on the “procurement of goods and services” to offset GST owed on the “supply of goods and services.”[2]  Under the current tax regime in India, businesses are subject to a bevy of indirect taxes including central and state sales taxes, entry tax, stamp duty, and taxes on the transportation of goods and services.  The GST replaces this multi-layer tax scheme and instead creates a unified market with one principal indirect tax.

The GST will bring many advantages, but, for foreign investors, one stands out—the simplified tax structure will increase transparency and decrease corruption.[3]  Implementation of the GST will reduce the discretion of government agents to exempt companies from tax or to deviate from rate structures, which is possible for certain taxes under the current regime.  The GST also relies heavily on technology to ensure compliance, reducing contact between companies and government agents and thereby decreasing the opportunities for low level corruption.[4]  The resulting reduction in bribery risk is particularly important for investors subject to U.S., U.K. or other anti-bribery regimes in their home countries.

It is important to note, however, that the passage of the GST bill requires an accompanying constitutional amendment.  As a result, the bill must pass by a two-thirds majority in both houses of parliament, and be approved by at least fifteen of the twenty-nine states.[5]  Because this exceeds the majority that the government enjoys in the parliament, the government will have to work with other parties to successfully pass this bill.

The GST reform complements other attempts by the government to rationalize what has historically been a confusing and disjointed tax system.  As part of the current budget, India has proposed reducing the corporate tax rate from 30% to 25%.[6]  Additionally, it has postponed the introduction of General Anti-Avoidance Rules (GAAR), which would allow the Indian government to scrutinize corporate transactions structured to minimize or avoid taxes.[7]  And finally, by choosing not to appeal an unfavorable tax ruling from an Indian court in its case against Vodafone, the Indian government has indicated an end to controversial recent enforcement trends involving the threat of retrospective application of tax laws to corporate transactions.[8]  Collectively, these policies evidence clear and concrete steps that the Indian government has taken to remove obstacles for foreign investors and ease their concerns over India’s tax policies.

Nikhil Gore of Covington & Burling LLP contributed to this post.

 

This Week in Congress – March 2, 2015

Posted in Congressional Action

House Republicans postponed a Friday vote on an education reform bill for federal elementary and secondary education programs, turning instead to resume debate over the Department of Homeland Security (DHS) appropriations bill.  The chamber had worked through more than 40 amendments to H.R. 5, the Student Success Act, on Thursday of last week, but House Education and the Workforce Committee Chairman John Kline (R-MN) and Republican Leadership still seem to be working to garner the necessary votes for final passage in the face of what is likely to be close-to-unanimous Democratic opposition and opposition from conservatives who believe the bill does not go far enough to curb the federal role in education.  The authorization bill, an update to the No Child Left Behind Act, is considered highly partisan,  due to its rollback of federal control over education programs and concerns that leaving more decision-making authority in the hands of each state will undermine the goals of these federal education programs.  Further, the bill establishes block grants from federal funds for education programs to give states greater flexibility in the use of the funds.  It remains unclear when House leadership will schedule a vote on final passage.

As predicted twice previously in this column, Congress managed to avoid a shutdown of DHS by passing a short-term continuing resolution to fund the agency, but it was a shorter CR than expected.  The previous appropriations measure was set to expire at midnight on February 27, but the Senate had been unable to advance a House-passed bill that funded the agency and undid President Obama’s executive actions benefitting those in the country illegally.  Senate leaders finally broke the logjam by separating the two issues and passing a clean DHS funding bill.  The House, however, was not prepared to accept the Senate bill, necessitating a short-term funding extension.  When the House tried to provide funding for three weeks to allow the two chambers to work out their differences, however, the bill was defeated through a combination of conservative Republican and Democratic votes.  As the clock ticked down on shutting DHS, the two chambers were able to agree on a one-week extension of funding. This patch will require both chambers to spend time next week again trying to resolve the issue.

In addition to dealing with DHS funding this week, the Senate is likely to consider two high-profile nominations from the Administration.  Last Thursday, the Senate Judiciary Committee approved the nominations of Loretta Lynch to serve as U.S. Attorney General and Michelle Lee to serve as Director of the U.S. Patent and Trademark Office.  While the vote on Ms. Lee’s nomination was unanimous, the vote for Ms. Lynch divided the committee 12-8, with the nomination needing the votes of three Republican members voting in favor in order to get out of committee.  The committee vote may foreshadow a partisan debate and vote by the full chamber, although Ms. Lynch, who currently serves as the United States Attorney for the Eastern District of New York, is expected to garner enough Republican votes to be confirmed as the first African-American woman to serve as Attorney General.

U.S.-Israel relations and Iranian nuclear development will be at the forefront of congressional attention this week, as Israeli Prime Minister Benjamin Netanyahu is scheduled to address Congress on Tuesday, March 3 at the invitation of congressional Republican Leadership, which asked him without notifying the President.  His speech, openly opposed by the White House and many congressional Democrats, will focus on the Iranian nuclear threat.  The Administration has been leading a group of countries in negotiations with Iran over its nuclear capabilities, and Prime Minister Netanyahu has been highly critical of the negotiations, which are reaching a decisive stage.

The House returns on Monday to tackle two suspension bills dealing with veterans issues and the Department of Veterans Affairs.  It will then take up three bills subject to rules.  One, sponsored by House Transportation Committee Chairman Bill Shuster (R-PA), will reauthorize and reform Amtrak, the National Passenger Railway.  The two others, one sponsored by Rep. Frank Lucas (R-OK) and the second by House Science Committee Chairman Lamar Smith (R-TX), would reform the rule-making process at the Environmental Protection Agency.  The bills are controversial and will attract little Democratic support; as a result, prospects for moving either in the Senate are minimal.

In addition to the floor activity in each chamber and the hearings discussed below, much attention in Congress this week will be focused across First Street.  The Supreme Court will hear oral argument in the case of King v. Burwell, the challenge to subsidy payments to individuals enrolled in health insurance plans under federal exchanges pursuant to the Affordable Care Act because they are in states that did not set up their own exchanges.  If the Court rules that subsidies are not available to individuals enrolled in federal exchanges, it would deal a severe blow to the Act’s ability to cover uninsured persons.  This case will be the blockbuster of the Supreme Court’s term and may have significant repercussions on the congressional agenda once it is decided, prior to the end of June.

Both House and Senate authorizing and appropriating committees resume consideration of the President’s 2016 budget request.  Hearings regarding Fiscal year 2016 funding are scheduled throughout the week, with several Cabinet officers testifying.  Commerce Secretary Pritzker appears before both the House and Senate on Tuesday.  Transportation Secretary Foxx joins Pritzker on Tuesday afternoon before the Senate Commerce Committee.  Interior Secretary Jewell appears before committees of both chambers as well.  Education Secretary Duncan comes before House Appropriations on Wednesday.  Newly installed Defense Secretary Carter makes his first post-confirmation appearance on the Hill in front of the Senate Armed Services Committee.  Treasury Secretary Lew appears before both Senate (Tuesday) and House (Wednesday) Appropriations; sparks may fly at his Tuesday hearing, when he appears with IRS Commissioner Koskinen and Senate Republicans get the chance to focus on the various scandals plaguing the IRS.  A schedule for these and the other hearings is listed below:

Monday March 2, 2015 

House Committees 

Fiscal 2016 Appropriations: Financial Services
House Appropriations – Subcommittee on Financial Services and General Government
Subcommittee Hearing
3 p.m., 2359 Rayburn Bldg.

Regulatory Legislation
House Judiciary – Subcommittee on Regulatory Reform, Commercial and Antitrust Law
Subcommittee Hearing
4 p.m., 2141 Rayburn Bldg.

Intelligence Issues
House Select Intelligence
Full Committee Hearing
5 p.m., HVC-304 Capitol Visitor Center

Senate Committees

Small Businesses and U.S. Energy Issues
Senate Small Business and Entrepreneurship
Full Committee Field Hearing
12:30 p.m., Policy Jury Meeting Room, Calcasieu Parish Policy Jury, 1015 Pithon St., Lake Charles, La.

Tuesday, March 3, 2015

House Committees

Fiscal 2016 Appropriations: Labor, HHS, Education
House Appropriations – Subcommittee on Labor, Health and Human Services, Education, and Related Agencies
Subcommittee Hearing
8:30 a.m., 2358-C Rayburn Bldg.

Fiscal 2016 Appropriations: Defense
House Appropriations – Subcommittee on Defense
Subcommittee Hearing
9 a.m., H-140 Capitol Bldg.

Military Force Authorization Issues
House Armed Services
Full Committee Hearing
10 a.m., 2118 Rayburn Bldg.

Immigration Legislation (Part 1)
House Judiciary
Full Committee Markup
10 a.m., 2141 Rayburn Bldg.

FAA Reauthorization
House Transportation and Infrastructure – Subcommittee on Aviation
Subcommittee Hearing
9:30 a.m., 2167 Rayburn Bldg.

Fiscal 2016 Appropriations: Agriculture
House Appropriations – Subcommittee on Agriculture, Rural Development, Food and Drug Administration, and Related Agencies
Subcommittee Hearing
2 p.m., 2362-A Rayburn Bldg.

Fiscal 2016 Appropriations: Commerce-Justice-Science
House Appropriations – Subcommittee on Commerce, Justice, Science, and Related Agencies
Subcommittee Hearing
2 p.m., H-309 Capitol Bldg.

Fiscal 2016 Appropriations: Interior-Environment
House Appropriations – Subcommittee on Interior, Environment, and Related Agencies
Subcommittee Hearing
1 p.m., B-308 Rayburn Bldg.

Fiscal 2016 Appropriations: Military Construction-VA
House Appropriations – Subcommittee on Military Construction, Veterans Affairs, and Related Agencies
Subcommittee Hearing
1 p.m., 2358-A Rayburn Bldg.

Fiscal 2016 Appropriations: State-Foreign Operations
House Appropriations – Subcommittee on State, Foreign Operations, and Related Programs
Subcommittee Hearing
2 p.m., 2359 Rayburn Bldg.

Defense Infrastructure and Strategic Requirements
House Armed Services – Subcommittee on Readiness
Subcommittee Hearing
3:30 p.m., 2212 Rayburn Bldg.

World Energy Markets
House Energy and Commerce – Subcommittee on Energy and Power
Subcommittee Hearing
1:30 p.m., 2123 Rayburn Bldg.

Cyber Threats and Economic Issues
House Energy and Commerce – Subcommittee on Oversight and Investigations
Subcommittee Hearing
2 p.m., 2322 Rayburn Bldg.

CFPB Semi-Annual Report
House Financial Services
Full Committee Hearing
2:30 p.m., HVC-210 Capitol Visitor Center

Senate Committees

Commerce and Transportation Fiscal 2016 Budget
Senate Commerce, Science and Transportation
Full Committee Hearing
9 a.m., 253 Russell Bldg.

U.S. Tax Policy
Senate Finance
Full Committee Hearing
9 a.m., 215 Dirksen Bldg.

Fiscal 2016 Appropriations: Financial Services and General Government
Senate Appropriations – Subcommittee on Financial Services and General Government
Subcommittee Hearing
2:30 p.m., 124 Dirksen Bldg.

Fiscal 2016 Defense Authorization
Senate Armed Services
Full Committee Hearing
2:30 p.m., 216 Hart Bldg.

Federal Reserve Accountability and Reform
Senate Banking, Housing and Urban Affairs
Full Committee Hearing
2:30 p.m., 538 Dirksen Bldg.

Campaign Against ISIS
Senate Foreign Relations
Full Committee Hearing — CLOSED
4:00 p.m., SVC-217

U.S. Citizenship and Immigration Services Oversight
Senate Judiciary – Subcommittee on Immigration and the National Interest
Subcommittee Hearing
2:30 p.m., 226 Dirksen Bldg.

Wednesday, March 4, 2015

House Committees

Fiscal 2016 Appropriations: Agriculture
House Appropriations – Subcommittee on Agriculture, Rural Development, Food and Drug Administration, and Related Agencies
Subcommittee Hearing
10 a.m., 2362-A Rayburn Bldg.

Fiscal 2016 Appropriations: Commerce-Justice-Science
House Appropriations – Subcommittee on Commerce, Justice, Science, and Related Agencies
Subcommittee Hearing
10:30 a.m., H-309 Capitol Bldg.

Fiscal 2016 Appropriations: Defense
House Appropriations – Subcommittee on Defense
Subcommittee Hearing
10 a.m., 2359 Rayburn Bldg.

Fiscal 2016 Appropriations: Labor, HHS, Education
House Appropriations – Subcommittee on Labor, Health and Human Services, Education, and Related Agencies
Subcommittee Hearing
10 a.m., 2358-C Rayburn Bldg.

Fiscal 2016 Appropriations: Military Construction-VA
House Appropriations – Subcommittee on Military Construction, Veterans Affairs, and Related Agencies
Subcommittee Hearing
9:30 a.m., H-140 Capitol Bldg.

U.S.-Afghanistan Policy
House Armed Services
Full Committee Hearing
10 a.m., 2118 Rayburn Bldg.

NLRB Rule Disapproval Resolution
House Education and the Workforce – Subcommittee on Health, Employment, Labor and Pensions
Subcommittee Hearing
10 a.m., 2175 Rayburn Bldg.

FCC Fiscal 2016 Budget
House Energy and Commerce – Subcommittee on Communications and Technology
Subcommittee Hearing
10:30 a.m., 2322 Rayburn Bldg.

U.S. Electricity System
House Energy and Commerce – Subcommittee on Energy and Power
Subcommittee Hearing
10:15 a.m., 2123 Rayburn Bldg.

U.S.-Ukraine Relations
House Foreign Affairs
Full Committee Hearing
10 a.m., 2172 Rayburn Bldg.

Immigration Legislation (Part 2)
House Judiciary
Full Committee Markup
10 a.m., 2141 Rayburn Bldg.

Small Business and Entrepreneurship Assessment
House Small Business
Full Committee Hearing
11 a.m., 2360 Rayburn Bldg.

Fiscal 2016 Appropriations: Energy-Water
House Appropriations – Subcommittee on Energy and Water Development
Subcommittee Hearing
1 p.m., 2362-B Rayburn Bldg.

Fiscal 2016 Appropriations: Financial Services
House Appropriations – Subcommittee on Financial Services and General Government
Subcommittee Hearing
2 p.m., 2359 Rayburn Bldg.

Military Cybersecurity Issues
House Armed Services – Subcommittee on Emerging Threats and Capabilities
Subcommittee Hearing
3:30 p.m., 2118 Rayburn Bldg.

Air Force Projection Forces Fiscal 2016 Budget
House Armed Services – Subcommittee on Seapower and Projection Forces
Subcommittee Hearing
2 p.m., 2212 Rayburn Bldg.

Trans-Pacific Partnership Outlook
House Foreign Affairs – Subcommittee on Asia and the Pacific
Subcommittee Hearing
2 p.m., 2172 Rayburn Bldg.

White House Cybersecurity and Industry Issues
House Homeland Security – Subcommittee on Cybersecurity, Infrastructure Protection and Security Technologies
Subcommittee Hearing
2 p.m., 311 Cannon Bldg.

Senate Committees

Fiscal 2016 Appropriations: Interior and Environment
Senate Appropriations – Subcommittee on Interior, Environment and Related Agencies
Subcommittee Hearing
10 a.m., 124 Dirksen Bldg.

Fiscal 2016 Appropriations: Defense
Senate Appropriations – Subcommittee on Defense
Subcommittee Hearing
10:30 a.m., 192 Dirksen Bldg.

Duplication in Federal Programs
Senate Budget
Full Committee Hearing
10:30 a.m., 608 Dirksen Bldg.

Surface Transportation Reauthorization
Senate Commerce, Science and Transportation – Subcommittee on Surface Transportation and Merchant Marine Infrastructure, Safety and Security
Subcommittee Oversight Hearing
10 a.m., 253 Russell Bldg.

Miscellaneous Legislation
Senate Homeland Security and Governmental Affairs
Full Committee Markup
10 a.m., 342 Dirksen Bldg.

FBI Whistleblower Protection and Oversight
Senate Judiciary
Full Committee Hearing
10 a.m., 226 Dirksen Bldg.

Fiscal 2016 Appropriations: Energy and Water Development
Senate Appropriations – Subcommittee on Energy and Water Development
Subcommittee Hearing
2:30 p.m., 192 Dirksen Bldg.

Fiscal 2016 Defense Authorization: Military Personnel Programs
Senate Armed Services – Subcommittee on Personnel
Subcommittee Hearing
2:30 p.m., 232A Russell Bldg.

Fiscal 2016 Defense Authorization: U.S. Nuclear Weapons Policy
Senate Armed Services – Subcommittee on Strategic Forces
Subcommittee Hearing
3:30 p.m., 222 Russell Bldg.

Irrigation Rehabilitation and Renovation Bill
Senate Indian Affairs
Full Committee Hearing
2:30 p.m., 628 Dirksen Bldg.

Joint Committees

Veterans of Foreign Wars Legislative Issues
House Veterans’ Affairs; Senate Veterans’ Affairs
Committees Joint Hearing
10 a.m., G-50 Dirksen Bldg.

Executive Economic Report
Joint Economic Committee
Full Committee Hearing
2:30 p.m., 106 Dirksen Bldg.

Thursday, March 5, 2015

House Committees

Proposed Waters of the United States Rule and Rural America
House Agriculture – Subcommittee on Conservation and Forestry
Subcommittee Hearing
9:15 a.m., 1300 Longworth Bldg.

Fiscal 2016 Appropriations: Agriculture
House Appropriations – Subcommittee on Agriculture, Rural Development, Food and Drug Administration, and Related Agencies
Subcommittee Hearing
10 a.m., 2362-A Rayburn Bldg.

Fiscal 2016 Appropriations: Defense
House Appropriations – Subcommittee on Defense
Subcommittee Hearing
10 a.m., H-140 Capitol Bldg.

Fiscal 2016 Appropriations: Interior-Environment
House Appropriations – Subcommittee on Interior, Environment, and Related Agencies
Subcommittee Hearing
9 a.m., B-308 Rayburn Bldg.

Joint Strike Fighter Program and Budget
House Armed Services – Subcommittee on Tactical Air and Land Forces
Subcommittee Hearing
9 a.m., 2118 Rayburn Bldg.

Drug Pricing Assessment
House Energy and Commerce – Subcommittee on Health
Subcommittee Hearing
10 a.m., 2123 Rayburn Bldg.

CPSC Fiscal 2016 Budget
House Energy and Commerce – Subcommittee on Commerce, Manufacturing and Trade
Subcommittee Hearing
10:15 a.m., 2322 Rayburn Bldg.

Restoration of America’s Wire Act
House Judiciary – Subcommittee on Crime, Terrorism, Homeland Security and Investigations
Subcommittee Hearing
9:30 a.m., 2141 Rayburn Bldg.

Interior Fiscal 2016 Budget
House Natural Resources
Full Committee Oversight Hearing
9 a.m., 1324 Longworth Bldg.

Cyber Threats and American Businesses
House Select Intelligence
Full Committee Hearing
9 a.m., HVC-210 Capitol Visitor Center

SBA Capital Access Programs
House Small Business – Subcommittee on Economic Growth, Tax and Capital Access
Subcommittee Hearing
10 a.m., 2360 Rayburn Bldg.

Senate Committees

Fiscal 2016 Appropriations: Commerce-Justice-Science
Senate Appropriations – Subcommittee on Commerce, Justice and Science, and Related Agencies
Subcommittee Hearing
10:30 a.m., 192 Dirksen Bldg.

U.S. Arctic Opportunities
Senate Energy and Natural Resources
Full Committee Hearing
10 a.m., 366 Dirksen Bldg.

Health IT Innovation
Senate Health, Education, Labor and Pensions
Full Committee Hearing
10 a.m., 430 Dirksen Bldg.

Fiscal 2016 Appropriations: Legislative Branch
Senate Appropriations – Subcommittee on Legislative Branch
Subcommittee Hearing
3 p.m., 138 Dirksen Bldg.

Joint Committees

Veterans Service Organizations Legislative Issues
House Veterans’ Affairs; Senate Veterans’ Affairs
Committees  Joint Hearing
10 a.m., 345 Cannon Bldg.

Bringing Copyright Office into 21st Century

Posted in Congressional Action

The House Judiciary Committee has held some 20 hearings in the last two years as part of its comprehensive review of the copyright laws.  Its hearing scheduled for this afternoon will focus on the functions and resources of the U.S. Copyright Office.  In an opinion piece that appears in The Hill today, Covington’s Howard Berman and Aaron Cooper write that the hearing “charts promising new territory” because a“21st-century Copyright Office could make tremendous progress in helping those who create works, those who license works to use in new projects, and those of us who simply enjoy what others have created.”  Berman and Cooper state that if Congress can provide the Copyright Office with the resources and authority it needs, that “may well improve all aspects of the copyright system for years to come.”

The Candidates for African Development Bank President

Posted in Africa

In a few months’ time, the African Development Bank (“AfDB”) Board of Governors will vote to decide the successor to President Donald Kaberuka whose presidency comes to an end on August 31, 2015.  Having first gained international prominence for undertaking sweeping economic reforms as finance minister in a post-genocide Rwanda, Kaberuka has had a highly successful ten years of service as AfDB president.  Under his leadership, the AfDB made major improvements in delivery of critically needed infrastructure and technical advice, both of which contributed substantially to the sustained economic growth that Africa has seen during that time.

Today, the AfDB is increasing its impact by using new models of financing projects through investments in infrastructure funds and partial risk guarantees.  Both help to attract private capital, which is absolutely critical to fill the infrastructure gap in Africa.  It is a model that both Power Africa and Trade Africa have adopted.  Indeed, when the Obama Administration was in the early stages of conceptualizing these initiatives, it reached out to Kaberuka for his ideas and support.  Kaberuka quickly embraced the initiatives and mobilized a senior team of experts to work with the U.S. government, creating an effective partnership that lasts today.

Set out below are the eight individuals who are looking to follow in Kaberuka’s sizeable footsteps.  The ideal next AfDB president will be a global visionary, an inspirational leader, and an outstanding manager of a large, multinational bureaucracy of some 1,500 employees involved in billions of dollars in projects across the continent.  The next AfDB president is taking the helm at an especially critical time in the Bank’s history as s/he will be spearheading ongoing implementation of the AfDB’s Strategy for 2013-2022.  With a special emphasis on fragile states, agriculture and food security, and gender, the Strategy aims to achieve sustainable and inclusive growth through infrastructure development; regional economic integration; private sector development; governance and accountability; and skills and technology.  Regional economic integration through the regional economic communities was an objective of particular interest to Kaberuka who recognized the need to change the fact that Africa continues to trade more outside Africa than within Africa.

  • Akinwumi Adesina (Nigeria).  Described as “a man on a mission to help Africa feed itself,” Adesina is one of the leading proponents of transforming Africa’s agriculture sector.  In his current role as Minister of Agriculture and Rural Development of Nigeria, he has introduced a variety of innovations to improve access to financing and inputs as well as eradicate corruption and other market inefficiencies.  He also is one of 17 global leaders appointed by UN Secretary-General Ban Ki-moon to the Millennium Development Goals Advocacy Group.  In addition, he has served as the Vice-President for Policy and Partnerships at the Alliance for a Green Revolution in Africa and was the 2013 recipient of Forbes’ prestigious African of the Year award.
  • Sufian Ahmed (Ethiopia).  Over the course of his two decades of service as Finance Minister of Ethiopia, Ahmed has overseen the transformation of the Ethiopian economy into one of the continent’s fastest growing.  Since 2006, the Ethiopian economy has averaged double digit annual growth and seen particularly impressive growth in its power and infrastructure sectors.  Ahmed’s most recent accomplishment is overseeing Ethiopia’s debut issuance of a Eurobond.  The oversubscribed bond raised $1 billion that will be used to expand the country’s power, sugar factories and manufacturing sectors.  He also is leading the government’s negotiations for Ethiopia’s first-ever Power Purchase Agreement for the 1,000 MW Corbetti geothermal power project.
  • Jaloul Ayed (Tunisia).  Ayed is a well-renowned banker with experience in both the public and private sector.  He currently serves as the President of the MED Confederation, “a newly created alliance which aims to promote socioeconomic cooperation in the Mediterranean region.”  Prior to this role, he was the Tunisian Finance Minister and “served in the two interim governments that were formed following the Tunisian revolution.”  His private sector experience includes 18 years with Citibank, setting up the investment banking arm of the Moroccan BMCE Group and founding Argan Invest, which is Morocco’s largest private equity platform.
  • Kordjé Bedoumra (Chad). In his over twenty-five years with the AfDB, Bedoumra held leadership positions (including a tenure as Secretary-General) across a range of “areas including transport, power, water and sanitation, telecommunications and finance.”  In his current capacity as Chad’s Minister for Finance and the Budget, Bedoumra is playing a leading role in helping the country to realize its ambition to double its domestic oil production and unlock other mineral resources.  Bedoumra also serves as Chad’s representative on the Board of Governors of the International Monetary Fund.  If elected, he would be the first president from the Central Africa region in the bank’s 50-year history.
  • Cristina Duarte (Cabo Verde). In the nearly ten years that Duarte has served in her current role as Minister of Finance, the country has graduated to middle-income status and has been commended for “good governance, sound macroeconomic management, trade openness and increased integration into the global economy, as well as the adoption of effective social development policies.”  Cabo Verde also has been recognized for its “significant efforts” in the areas of democracy, human rights and inclusive economic growth.  In addition, Duarte’s experience with various international organizations — such as the AfDB, the World Bank and the United Nations — is complemented by private sector experience including serving as a Vice-President for Citibank in Angola.  If elected, Duarte would be the first woman president in the bank’s 50-year history and also the first from a Lusophone country.
  • Samura Kamara (Sierra Leone).  Kamara is the Minister of Foreign Affairs and International Cooperation of Sierra Leone.  He has extensive experience in development economics at the sovereign level (as Central Bank Governor and then Finance Minister) as well as the international level (having served on the Board of Governors of the Islamic Development Bank and the African Development Bank).  Kamara has played a senior role in representing Sierra Leone before the African Union as well as the United Nations.
  • Thomas Sakala (Zimbabwe).  Having first joined the AfDB in 1983, Sakala is another candidate with extensive experience with the institution.   His last official position was as Vice-President for Country and Regional Programmes and Policy which involved oversight of the division responsible for “dialogue and programming of AfDB’s operations in the Regional Member Countries; policies and operational resources; procurement and fiduciary services; and partnerships and cooperation.”  In his capacity as Vice-President, he also was “a member of the Bank’s Senior Management Team and [contributed] to its overall Strategic Orientation.”  He stepped down from this position in October 2014.
  • Birama Boubacar Sidibe (Mali).  Sidibe is a veteran of development financing institutions.  Currently the Vice-President of Operations at the Islamic Development Bank, Sidibe was with the African Development Bank for 23 years where he “held various technical and managerial positions covering operational as well as corporate areas.”  Between these two tenures, he served as the Managing Director of Shelter Afrique, “the only pan-African finance institution that exclusively supports the development of the housing and real estate sector in Africa.”  (Shelter Afrique is “a partnership of 44 African Governments, the African Development Bank (AfDB) and the Africa Reinsurance Company.”)

Over the next few months, we will follow with great interest as the eight candidates articulate their vision for the AfDB and make the case for why they should be selected to lead one of the most important institutions in Africa.

This post can also be found on Cov Africa, the firm’s blog on legal, regulatory, political and economic developments in Africa.

This Week in Congress – February 23, 2015

Posted in Congressional Action

After a week-long recess, Members of Congress return to Washington, D.C. for a five-week work period and a jam-packed agenda. 

The Senate will convene on Monday and resume consideration of the motion to proceed to H.R. 240, the House-passed Department of Homeland Security Appropriations bill.  Current funding for the agency expires on February 27, this Friday.  For the two weeks preceding last week’s recess, Senate Democrats successfully blocked the chamber from moving forward on consideration of the appropriations measure, due to policy riders attached by the House of Representatives to nullify President Obama’s recent Executive Orders on deferred action for immigrants in the country illegally and attendant benefits.  Before departing for the President’s Day recess, Majority Leader McConnell acknowledged to reporters that the Senate is “stuck” on the bill and the next move will be “up to the House.”  House Republicans responded that they have no interest in taking up the bill a second time, without the immigration policy riders.  One major change to the policy debate since last week: a Texas federal district judge issued an injunction against the Obama Administration’s immigration policy, essentially putting it on hold.  The judge held that the policy violates the procedural requirements of the Administrative Procedure Act.  This action by the court may be an opportunity for the Senate to avoid the policy riders and pass a clean funding bill, but it remains unclear whether the House will alter its position.  A short-term, stop-gap funding measure to prevent a shutdown of the agency is the most likely outcome, as allowing DHS to shut down in this era of Islamic State terrorism and global cyber-attacks seems unlikely, but at this point no one knows for sure what will happen. 

It is unclear what the Senate will focus on once the DHS appropriations bill is resolved.  The Senate Judiciary Committee is expected to vote on Thursday on the nominations of Loretta Lynch to be U.S. Attorney General and Michelle Lee to head the U.S. Patent and Trademark Office, and the full chamber may consider the nominations in early March.   

The House will return on Tuesday and consider four bills under suspension of the rules on Tuesday and Wednesday.  The House schedule has also made allowance for House consideration of the DHS Appropriations bill coming back from the Senate.  The House will then resume consideration of tax legislation.  Having passed several bills to make various tax provisions permanent, on Wednesday the House will take up a bill to expand the use of 529 college savings plans on Wednesday.  On Thursday and Friday, House will consider legislation to reform federal elementary and secondary education programs.  House Education and Workforce Committee Chairman John Kline (R-MN) held a mark-up of H.R. 5, the Student Success Act, on February 11.  The authorization bill, an update to the No Child Left Behind Act, was reported out of committee on a partisan vote.  The bill consolidates many federal education programs and establishes block grants for other programs to  give states greater flexibility in the use of the funds.   Democrats and the Administration oppose the bill, due to its rollback of federal control over the programs and a concern that leaving more decision-making authority in the hands of each state will undermine the goals of these federal education programs.   An almost identical measure passed the House in 2013, with only one Democratic vote, but was never considered by the then-Democratic-controlled Senate.  Senate Health, Education, Labor and Pensions Committee Chairman Lamar Alexander (R-TN) has released a working draft of his own reauthorization bill.  He and Ranking Member Patty Murray (D-WA) released a joint statement saying they were working together on developing bipartisan legislation.  Chairman Alexander has previously indicated he would like to have a bill ready for consideration by the full Senate by March 1, but the Committee has not scheduled any action on the issue for next week, so that timetable appears to have slipped. 

This week, both House and Senate authorizing and appropriating committees resume consideration of the President’s 2016 budget request.  A number of Cabinet officials will be attending those hearings:  Secretary of State John Kerry will testify before the House Foreign Affairs Committee on Wednesday regarding the Administration’s foreign affairs budget request; Secretary of Agriculture Tom Vilsack will testify before the House Appropriations Subcommittee on Agriculture on Wednesday; Housing and Urban Development Secretary Julian Castro will appear before the House Appropriations Subcommittee on Transportation, Housing and Urban Development on Wednesday; Transportation Secretary Anthony Foxx will appear before the House Appropriations Subcommittee on Transportation, Housing and Urban Development on Thursday; Energy Secretary Ernest Moniz will appear before the House Appropriations Subcommittee on Energy and Water on Thursday; Health and Human Services Secretary Sylvia Burwell will appear before the House Energy and Commerce Subcommittee on Health on Thursday;  Interior Secretary Sally Jewell will testify before the Senate Energy and Natural Resources Committee on Tuesday and the House Appropriations Subcommittee on Interior on Wednesday.  Federal Reserve Board Chairman Janet Yellen will also be on Capitol Hill on Wednesday to testify before the House Financial Services Committee.  Senate Finance Committee Chairman Orrin Hatch (R-UT) scheduled a trade hearing on Thursday, and, in a highly unusual move, the scheduling of the hearing drew a rebuke from Ranking Member Ron Wyden (D-OR), a potentially foreboding signal for the prospects of Trade Promotion Authority legislation.  Finally, as noted above, the Senate Judiciary Committee will consider the Lynch and Lee nominations at its executive business meeting on Thursday.  A schedule for these hearings and other key Congressional hearings for the week are included below: 

Tuesday February 24, 2015 

Senate Committees 

Agriculture Legislation and Nominations
Senate Agriculture, Nutrition and Forestry
Full Committee Hearing
Feb. 24, 9:30 a.m., 328A Russell Bldg.

Congressional Gold Medal Legislation Markup and Semiannual Monetary Policy Report
Senate Banking, Housing and Urban Affairs
Full Committee Markup and Hearing
Feb. 24, 10 a.m., 106 Dirksen Bldg. 

Interior Fiscal 2016 Budget Request
Senate Energy and Natural Resources
Full Committee Hearing
Feb. 24, 10 a.m., 366 Dirksen Bldg. 

Tax Code Overhaul
Senate Finance
Full Committee Hearing
Feb. 24, 10 a.m., 215 Dirksen Bldg.

Higher Education Regulation
Senate Health, Education, Labor and Pensions
Full Committee Hearing
Feb. 24, 10 a.m., 430 Dirksen Bldg. 

Inspectors General Assessment
Senate Homeland Security and Governmental Affairs
Full Committee Hearing
Feb. 24, 10 a.m., 342 Dirksen Bldg. 

U.S. Human Trafficking
Senate Judiciary
Full Committee Hearing
Feb. 24, 10 a.m., 226 Dirksen Bldg. 

Space Exploration
Senate Commerce, Science and Transportation – Subcommittee on Space, Science and Competitiveness
Subcommittee Hearing
Feb. 24, 2 p.m., 253 Russell Bldg. 

Joint Committee 

Disabled American Veterans Legislative Issues
House Veterans’ Affairs; Senate Veterans’ Affairs
Committees Joint Hearing
Feb. 24, 2 p.m., G-50 Dirksen Bldg. 

Wednesday February 25, 2015 

House Committees 

SNAP Review
House Agriculture
Full Committee Hearing
Feb. 25, 10 a.m., 1300 Longworth Bldg. 

Fiscal 2016 Appropriations: Agriculture
House Appropriations – Subcommittee on Agriculture, Rural Development, Food and Drug Administration, and Related Agencies
Subcommittee Hearing
Feb. 25, 10 a.m., 2362-A Rayburn Bldg. 

DOJ, NASA and Commerce Oversight
House Appropriations – Subcommittee on Commerce, Justice, Science, and Related Agencies
Subcommittee Oversight Hearing
Feb. 25, 10:30 a.m., H-309 Capitol Bldg. 

IRS Oversight
House Appropriations – Subcommittee on Financial Services and General Government
Subcommittee Oversight Hearing
Feb. 25, 10 a.m., 2359 Rayburn Bldg. 

Fiscal 2016 Appropriations: Labor, HHS, Education
House Appropriations – Subcommittee on Labor, Health and Human Services, Education, and Related Agencies
Subcommittee Hearing
Feb. 25, 10 a.m., 2358-C Rayburn Bldg. 

Military Quality-of-Life Issues
House Appropriations – Subcommittee on Military Construction, Veterans Affairs, and Related Agencies
Subcommittee Hearing
Feb. 25, 9:30 a.m., 2362-B Rayburn Bldg. 

Information Technology and Future Threats
House Armed Services – Subcommittee on Emerging Threats and Capabilities
Subcommittee Hearing
Feb. 25, 3:30 p.m., 2118 Rayburn Bldg. 

DoD and European Security
House Armed Services
Full Committee Hearing
Feb. 25, 10 a.m., 2118 Rayburn Bldg. 

Net Neutrality Proposal
House Energy and Commerce – Subcommittee on Communications and Technology
Subcommittee Hearing
Feb. 25, 10:30 a.m., 2322 Rayburn Bldg. 

EPA Fiscal 2016 Budget
House Energy and Commerce – Subcommittees on Environment and the Economy and on Energy and Power
Subcommittees Joint Hearing
Feb. 25, 10 a.m., 2123 Rayburn Bldg. 

Monetary Policy and Economic Assessment
House Financial Services
Full Committee Hearing
Feb. 25, 10 a.m., HVC-210 Capitol Visitor Center 

Foreign Affairs Fiscal 2016 Budget
House Foreign Affairs
Full Committee Hearing
Feb. 25, 10 a.m., 2172 Rayburn Bldg. 

White House Cybersecurity Proposal
House Homeland Security
Full Committee Hearing
Feb. 25, 11:30 a.m., 311 Cannon Bldg. 

Immigration Executive Action
House Judiciary
Full Committee Hearing
Feb. 25, 10:15 a.m., 2141 Rayburn Bldg. 

Energy Fiscal 2016 Budget
House Science, Space and Technology
Full Committee Hearing
Feb. 25, 10 a.m., 2318 Rayburn Bldg. 

Coast Guard Fiscal 2016 Budget
House Transportation and Infrastructure – Subcommittee on Coast Guard and Maritime Transportation
Subcommittee Hearing
Feb. 25, 10 a.m., 2167 Rayburn Bldg. 

Fiscal 2016 Appropriations: Interior-Environment
House Appropriations – Subcommittee on Interior, Environment, and Related Agencies
Subcommittee Hearing
Feb. 25, 1 p.m., B-308 Rayburn Bldg. 

Fiscal 2016 Appropriations: Transportation-HUD
House Appropriations – Subcommittee on Transportation, Housing and Urban Development, and Related Agencies
Subcommittee Hearing
Feb. 25, 1 p.m., 2358-A Rayburn Bldg. 

Fiscal 2016 Appropriations: Legislative Branch
House Appropriations – Subcommittee on Legislative Branch
Subcommittee Hearing
Feb. 25, 2 p.m., HT-2 Capitol Bldg. 

Fiscal 2016 Appropriations: State-Foreign Operations
House Appropriations – Subcommittee on State, Foreign Operations, and Related Programs
Subcommittee Hearing
Feb. 25, 2 p.m., 2359 Rayburn Bldg. 

Navy Seapower Fiscal 2016 Budget
House Armed Services – Subcommittee on Seapower and Projection Forces
Subcommittee Hearing
Feb. 25, 2 p.m., 2212 Rayburn Bldg.  

Fiscal 2016 Members’ Testimony
House Budget
Full Committee Hearing
Feb. 25, 1 p.m., 210 Cannon Bldg. 

SBA Fiscal 2016 Budget
House Small Business
Full Committee Hearing
Feb. 25, 2 p.m., 2360 Rayburn Bldg. 

Disability Trust Fund Issues
House Ways and Means – Subcommittee on Social Security
Subcommittee Hearing
Feb. 25, 2 p.m., B-318 Rayburn Bldg.

Senate Committees 

Internet Governance and Stakeholders
Senate Commerce, Science and Transportation
Full Committee Hearing
Feb. 25, 10 a.m., 253 Russell Bldg.

MAP-21 Reauthorization
Senate Environment and Public Works
Full Committee Hearing
Feb. 25, 9:30 a.m., 406 Dirksen Bldg. 

Homeland Regulatory System
Senate Homeland Security and Governmental Affairs
Full Committee Hearing
Feb. 25, 10 a.m., 342 Dirksen Bldg. 

Regional Nuclear Dynamics
Senate Armed Services – Subcommittee on Strategic Forces
Subcommittee Hearing
Feb. 25, 2:30 p.m., 222 Russell Bldg. 

Military Compensation and Retirement
Senate Armed Services – Subcommittee on Personnel
Subcommittee Hearing
Feb. 25, 2:30 p.m., 216 Hart Bldg.

Federal Debt Issues
Senate Budget
Full Committee Hearing
Feb. 25, 10 a.m., 608 Dirksen Bldg. 

Indian Affairs Legislation Markup and Indian Affairs Fiscal 2016 Budget Hearing
Senate Indian Affairs
Full Committee Markup/Oversight Hearing
Feb. 25, 2:30 p.m., 628 Dirksen Bldg. 

Joint Committees 

American Legion Legislative Issues
House Veterans’ Affairs; Senate Veterans’ Affairs
Committees Joint Hearing
Feb. 25, 10 a.m., 345 Cannon Bldg.

Thursday, February 26, 2015 

House Committees 

Fiscal 2016 Appropriations: Agriculture
House Appropriations – Subcommittee on Agriculture, Rural Development, Food and Drug Administration, and Related Agencies
Subcommittee Hearing
Feb. 26, 10 a.m., 2362-A Rayburn Bldg. 

Fiscal 2016 Appropriations: Energy-Water
House Appropriations – Subcommittee on Energy and Water Development
Subcommittee Hearing
Feb. 26, 9:30 a.m., 2359 Rayburn Bldg. 

Fiscal 2016 Appropriations: Defense
House Appropriations – Subcommittee on Defense
Subcommittee Hearing
Feb. 26, 10 a.m., H-140 Capitol Bldg. 

Aging and Disability Program Oversight
House Appropriations – Subcommittee on Labor, Health and Human Services, Education, and Related Agencies
Subcommittee Oversight Hearing
Feb. 26, 10 a.m., 2358-C Rayburn Bldg. 

AUMF Request
House Armed Services
Full Committee Hearing
Feb. 26, 10 a.m., 2118 Rayburn Bldg.

Federal Labor Executive Orders
House Education and the Workforce – Subcommittees on Workforce Protections and on Health, Employment, Labor and Pensions
Subcommittee Joint Hearing
Feb. 26, 10 a.m., 2175 Rayburn Bldg. 

Patent Demand Letter Practices
House Energy and Commerce – Subcommittee on Commerce, Manufacturing and Trade
Subcommittee Hearing
Feb. 26, 10:15 a.m., 2322 Rayburn Bldg. 

HHS Fiscal 2016 Budget
House Energy and Commerce – Subcommittee on Health
Subcommittee Hearing
Feb. 26, 10 a.m., 2123 Rayburn Bldg. 

FHA Oversight
House Financial Services – Subcommittee on Housing and Insurance
Subcommittee Hearing
Feb. 26, 10 a.m., 2220 Rayburn Bldg. 

U.S.-Asia-Pacific Relations
House Foreign Affairs – Subcommittee on Asia and the Pacific
Subcommittee Hearing
Feb. 26, 10 a.m., 2172 Rayburn Bldg. 

DHS Performance Assessment
House Homeland Security – Subcommittee on Oversight and Management Efficiency
Subcommittee Hearing
Feb. 26, 10 a.m., 311 Cannon Bldg. 

ISIL and Domestic Terrorism
House Judiciary – Subcommittee on Crime, Terrorism, Homeland Security and Investigations
Subcommittee Hearing
Feb. 26, 10 a.m., 2141 Rayburn Bldg. 

Puerto Rico Chapter 9 Uniformity Act
House Judiciary – Subcommittee on Regulatory Reform, Commercial and Antitrust Law
Subcommittee Hearing
Feb. 26, 11:30 a.m., 2237 Rayburn Bldg. 

NSF, NIST Fiscal 2016 Budget
House Science, Space and Technology – Subcommittee on Research and Technology
Subcommittee Hearing
Feb. 26, 10 a.m., 2318 Rayburn Bldg. 

SNAP Population Research
House Agriculture – Subcommittee on Nutrition
Subcommittee Hearing
Feb. 26, 1 p.m., 1300 Longworth Bldg. 

Fiscal 2016 Appropriations: Interior-Environment
House Appropriations – Subcommittee on Interior, Environment, and Related Agencies
Subcommittee Hearing
Feb. 26, 1 p.m., B-308 Rayburn Bldg.  

Fiscal 2016 Appropriations: Transportation-HUD
House Appropriations – Subcommittee on Transportation, Housing and Urban Development, and Related Agencies
Subcommittee Hearing
Feb. 26, 1 p.m., 2358-A Rayburn Bldg. 

Fiscal 2016 Appropriations: Legislative Branch
House Appropriations – Subcommittee on Legislative Branch
Subcommittee Hearing
Feb. 26, 1:30 p.m., HT-2 Capitol Bldg. 

Strategic Forces Fiscal 2016 Budget
House Armed Services – Subcommittee on Strategic Forces
Subcommittee Hearing
Feb. 26, 2 p.m., 2118 Rayburn Bldg. 

Information Sharing Issues
House Homeland Security – Subcommittee on Counterterrorism and Intelligence
Subcommittee Hearing
Feb. 26, 2 p.m., 311 Cannon Bldg. 

U.S. Copyright Office
House Judiciary
Full Committee Hearing
Feb. 26, 1:30 p.m., 2141 Rayburn Bldg. 

Senate Committees 

Forest Service Fiscal 2016 Budget Request
Senate Energy and Natural Resources
Full Committee Hearing
Feb. 26, 10 a.m., 366 Dirksen Bldg. 

Congress and U.S. Tariff Policy
Senate Finance Committee
Full Committee Hearing
Feb. 26, 10 a.m., 215 Dirksen Bldg. 

Medical and Public Health Preparedness
Senate Health, Education, Labor and Pensions
Full Committee Hearing
Feb. 26, 10 a.m., 430 Dirksen Bldg.  

Human Trafficking Legislation and Nominations
Senate Judiciary
Full Committee Markup
Feb. 26, 9:30 a.m., 226 Dirksen Bldg. 

Veterans Affairs Fiscal 2016 Budget
Senate Veterans’ Affairs
Full Committee Hearing
Feb. 26, 9:30 a.m., 418 Russell Bldg. 

Friday February 27, 2015 

House Committees 

Fiscal 2016 Appropriations: Agriculture
House Appropriations – Subcommittee on Agriculture, Rural Development, Food and Drug Administration, and Related Agencies
Subcommittee Hearing
Feb. 27, 10 a.m., 2362-A Rayburn Bldg. 

Fiscal 2016 Appropriations: Interior-Environment
House Appropriations – Subcommittee on Interior, Environment, and Related Agencies
Subcommittee Hearing
Feb. 27, 10 a.m., B-308 Rayburn Bldg.

Fiscal 2016 Appropriations: Defense
House Appropriations – Subcommittee on Defense
Subcommittee Hearing
Feb. 27, 9 a.m., H-140 Capitol Bldg.

FAA’s Proposed Drone Rules

Posted in Drones

This past weekend the Federal Aviation Administration (FAA) took the first steps to allow the routine use of certain small unmanned aircraft systems (UAS) for commercial purposes in U.S. airspace.  In taking this highly anticipated action, the FAA released a proposed rule, an overview of the proposed rule, a fact sheet and a press release.  The White House also released its long-expected executive order on drone privacy.

Secretary Foxx and Administrator Huerta held a press conference on Sunday announcing the Administration’s actions.  Administrator Huerta’s delivered remarks can be found here and an audio of the press event can be found here.

Also released by FAA over the weekend–by accident–was the Notice Of Proposed Rulemaking Regulatory Evaluation, which can be found here.  This document was taken down from FAA’s website shortly after it was posted.

Here are ten important things to know about the proposed rule.

First, the notice of proposed rulemaking (NPRM) will most likely be published in the Federal Register this week, possibly on Wednesday, February 18th.  The public will be able to comment on the proposed regulation for 60 days from the date of publication.  FAA official documents and the comments by the public will be placed in Docket ID: FAA-2015-0150, which can be found here.

Second, and importantly, this is only a proposed rule.  It will not take effect until it is finalized and implemented, which is a lengthy process and could take until 2017.  In the interim, FAA’s current policies on the use of small UASs remain in effect.

Third, the proposed rule only applies to certain small non-recreational drones.  While FAA airworthiness certification will not be required (which can take several years to obtain), the drone must–

  • weigh less than 55 pounds;
  • be registered (same registration as for all other aircraft);
  • be maintained in condition for safe operation;
  • be inspected prior to each flight; and
  • have aircraft markings (same markings as for all other aircraft).

Fourth, FAA is proposing that the new rules only apply to drones operated in a certain way, most notably drones that–

  • remain close enough to the operator for the operator to be capable of seeing the aircraft with vision unaided by any device other than corrective lenses (i.e., visual-line-of-sight flight only);
  • are flown only during daylight;
  • are not operated over any persons not directly involved in the operation;
  • do not exceed a maximum airspeed of 100 mph;
  • do not exceed a maximum altitude of 500 feet above ground level;
  • are not operated carelessly or recklessly; and
  • are operated so as to not allow any object to be dropped.

Fifth, under the proposed rule, the person actually flying a small UAS would be an “operator,” who would have to–

  • be at least 17 years old;
  • pass an aeronautical knowledge test; and
  • obtain an FAA UAS operator certificate.

To maintain certification, the operator would have to pass the FAA knowledge tests every 24 months.  A small UAS operator would not need any further private pilot certifications (i.e., a private pilot license or medical rating).

Sixth, according to an article in Politico, the reaction to the FAA’s proposal has been measured at best. The Association for Unmanned Vehicle Systems International praised the FAA for issuing the long-delayed rule, but remained cautious about its impact.  The Airline Pilots Association was measured in its response, given that the NPRM does not call for full pilot licensing or medical certification. And Amazon issued a statement stating that “The FAA’s proposed rules for small UAS could take one or two years to be adopted and, based on the proposal, even then those rules wouldn’t allow Prime Air to operate in the United States.”

Seventh, the White House’s privacy memo will also receive considerable attention in the coming weeks and months.  It generally pertains to the federal government’s use of drones but also convenes a multi-stakeholder process for privacy issues relating to drone use generally.  Press reports have indicated that the American Civil Liberties Union and Senator Markey have criticized the proposal as not going far enough to address privacy concerns.  A post on the White House memo can be found on Covington’s Inside Privacy Blog.

Eighth, the leaked FAA Regulatory Evaluation focused on four potential small UAS markets:

  • Aerial photography,
  • Precision agriculture,
  • Search and rescue/law enforcement, and
  • Bridge inspection.

It found that the NPRM would not only enable new technologies for these markets and other new marketplace opportunities, but utilizing a small UAS in place of a manned aircraft would save costs and improve safety.

Ninth, the NPRM also includes extensive discussion of the possibility of an additional, more flexible framework for “micro” UAS under 4.4 pounds. The FAA is asking the public to comment on this possible classification to determine whether it should include this option as part of a final rule.

Tenth, the NPRM would not apply to model aircraft.  Model aircraft operators must continue to satisfy all of the criteria specified in Sec. 336 of Public Law 112-95.  As a general matter, the NPRM would also not apply to government aircraft operations, because FAA expects that these government operations will typically continue to actively operate under the Certificate of Waiver or Authorization process unless the operator opts to comply with and fly under the new small UAS regulations.

South Africa To Ban Foreign Land Ownership?

Posted in Africa

Landowners in South Africa again are focused on a governmental land reform policy that seeks to prohibit foreign ownership of land in the country.  The government has been publicly discussing the policy for over two years but it is back in the spotlight after President Jacob Zuma announced in last week’s State of the Nation Address that a “Regulation of Land Holdings Bill will be submitted to Parliament this year.”  Under the proposed Bill, “foreign nationals and juristic persons […] as well as juristic persons whose dominant shareholder or controller is a foreign controlled enterprise, entity or interest” will be prohibited from owning land and instead only eligible to lease land for periods of between 30 to 50 years.  In addition, the Bill sets a ceiling of land ownership that restricts the amount of land that any individual — regardless of nationality — can own to 12,000 hectares.  Should an individual own land in excess of that amount, the government will purchase and redistribute the land.

The impact that the proposed legislative measure will have on foreigners who currently own land in South Africa is especially unclear.  President Zuma has “recognised that [the Bill] cannot apply retrospectively without constitutional infringements and as such those who have already acquired freehold would not have their tenure changed” should the measure pass.  However, with regards to those landowners, a “Right of First Refusal will apply in favour of another South African citizen in freehold or the state if the land is deemed strategic.”   (Also unclear is if the latter situation is distinct from the government’s already existing constitutional power to expropriate land.)  Another fundamental question that remains unanswered is the types of land to which the foreign land ownership ban will apply.  In the days following the President’s announcement, members of his Cabinet have stated that the ban is aimed at agricultural lands and that they are undecided as to whether it “will apply to all categories of land.”

The proposed measure has been justified on the grounds of a “need to secure [South Africa’s] limited land for food security and address the land injustice of more than 300 years of colonialism and apartheid.”  While section 25 of the South African constitution enshrines various property rights, it expressly does not “impede the state from taking legislative and other measures to achieve land, water and related reform, in order to redress the results of past racial discrimination.”  However, under section 36 of the constitution, any such limitations still must be “reasonable and justifiable in an open and democratic society based on human dignity, equality and freedom.”  One required factor to consider is “the relation between the limitation and its purpose.”  Some critics of the Bill have claimed that “the area of land owned by non-South Africans is relatively insignificant (approximately 5% to 7%) and not the key reason for the slow transfer of land to black South Africans.”

Although the government has been claiming for months that the Regulation of Land Holdings Bill will be submitted to Parliament, inclusion in the President’s State of the Nation Address is a strong indication that it is a priority once again.  Over twenty years since the end of apartheid, the South African government continues to struggle with unravelling the legacies of a horrendously racist regime characterized by arbitrary deprivation of property.  As the proposed measure moves through Cabinet approval, the public consultation process, and the required Parliamentary procedures, it is critical that the government develops a Bill that adheres to basic principles of a constitutional democracy including due process and recourse for those who are adversely impacted by its provisions.

White House Releases Drone Privacy Memorandum

Posted in Drones

On Sunday, the White House released a memorandum that outlines privacy protections that federal agencies must take when they use drones, and directs the National Telecommunications and Information Administration to work with the private sector to establish voluntary privacy practices for commercial drone use.

The White House issued the memorandum on the same day that the Federal Aviation Administration released a Notice of Proposed Rulemaking to allow limited commercial use of drones.

The memorandum primarily focuses on the government’s use of drones. Federal agencies currently use drones for a wide range of purposes, such as monitoring forest fires and protecting borders. Among the White House’s new restrictions on the federal government’s use of drones:

  • Federal agencies that use drones must notify the public about where they plan to operate the drones in the national airspace, inform the public about any changes that might affect privacy and civil liberties, and provide the public with an annual summary of the agency’s drone operations during the previous year. Agencies are not required to provide information that could “reasonably be expected to compromise law enforcement or national security.”
  • Federal agencies must review their use of drones at least every three years to ensure that the use complies with the federal Privacy Act. The agencies must ensure that they only collect information pursuant for an authorized purpose. Agencies also may not retain personally identifiable information that is collected via drone for more than 180 days, unless the retention is necessary for an authorized mission or subject to another exception. The memorandum also restricts the dissemination of information collected via drones.
  • Agencies must ensure that their policies prohibit the collection, use, retention, or dissemination of drone information in a manner that violates the First Amendment or civil rights laws. Agencies also must “ensure that adequate procedures are in place to receive, investigate, and address, as appropriate, privacy, civil rights, and civil liberties complaints.”
  • Agencies must establish policies, oversight procedures, and training to prevent misuse of information collected via drones.
  • State and local government agencies that receive federal grants for drone purchases must safeguard individual privacy and civil liberties. For commercial drone use, the memorandum directs the NTIA, within 90 days, to begin a multi-stakeholder engagement process for voluntary best practices for privacy, accountability, and transparency issues.

This Week in Congress – February 17, 2015

Posted in Congressional Action

The Senate and House of Representatives are on a scheduled recess this week, set to return to legislative work on Monday, February 23.

Both chambers adjourned without any resolution to the dispute over continued funding for the Department of Homeland Security (DHS).  The current appropriations measure for the agency expires on February 27, leaving little time for the two chambers to come to agreement.  While the House of Representatives passed a bill on January 14 to provide $40 billion in funding for DHS through the end of the fiscal year, the Senate has stalled, unable to bring the House-passed bill up for consideration.  At issue is the inclusion of policy riders attached by the House to nullify President Obama’s recent Executive Orders on deferred action for immigrants in the country illegally and attendant benefits.  Democratic Senators are opposed to the policy riders and have demanded the Senate take up a clean appropriations bill without policy riders.  Without any Democratic support to move forward on the House-passed bill, Senate Majority Leader McConnell has failed for two weeks to achieve the necessary 60 votes to invoke cloture on the motion to proceed to the bill, so the Senate has been unable to start debate and consider amendments.  The Majority Leader has indicated he will hold another cloture vote on the motion once Senators return to Washington, D.C., but it is highly unlikely he will garner any additional votes this time.  The Majority Leader’s strategy after the next cloture vote is unclear.  A short-term extension of current funding for DHS may be the most likely scenario, while leadership tries to work out an agreement.  A series of stop-gap, short-term funding bills for DHS through the end of the fiscal year may be the most likely outcome, but some Republicans are urging the agency be forced to shut down.  At this point, the future on DHS funding is murky.

The politics of the current debate and between chambers could spread to other upcoming legislative battles that on their own were likely to be quite contentious.  The federal debt limit is scheduled to be reached in mid-March, although the Treasury Department has indicated that record tax revenues may give the government room to borrow the existing ceiling until the fall.  Still, at some point, Congress will need to vote on raising the debt limit.  The current patch for averting steep cuts to Medicare payments to physicians expires March 31.  The statutory deadline by which Congress must pass a budget is April 15, and adoption of a budget is vital if Republicans want to use the vehicle of reconciliation to try to enact significant legislation.  The current highway funding bill expires at the end of May.  Authorization for the Export-Import Bank will expire in June.  Portions of the USA PATRIOT Act will lapse at the start of June unless renewed.  The spring promises to be a busy one on Capitol Hill.

It remains unclear  what the Senate will turn to once the DHS funding issue is resolved.  One possibility is a vote to overturn President’ Obama’s veto of the Keystone Pipeline bill.  Last week, before the recess, the Senate Judiciary Committee held over the nomination of Loretta Lynch to be U.S. Attorney General.  We anticipate the committee will take up this nomination and that of Michelle Lee to head the U.S. Patent and Trademark Office the week the Senate returns.  The full Senate may well consider these nominations early in March, though some Republicans continue to want to block the Lynch nomination from a vote to continue to fight the President’s initiatives to assist illegal immigrants.  Bipartisan tax reform measures may be another item on the agenda, as the Senate Finance Committee reported out  17 different bills on February 11th.  The bipartisan measures, fully paid for and reported out together by voice vote, include a new credit for military spouses, a new tax credit for waste-heat-to-power investment, and several bills aimed at the beer and alcohol industry.  While tax bills must originate in the House to become law, Senate passage of these bills could stir action on House versions of them.

The House will return next week to resume consideration of its own tax relief legislation.  Last week, the House Ways and Means Committee adopted three tax relief measures: a bill to expand the use of 529 college savings plans; a bill to make permanent the state and local sales-tax deduction; and a bill to make permanent the research and development tax credit.  These bills could well see action when the House returns.  Before the end of this month it is expected that the House will also turn to consideration of elementary and secondary education reforms.  On February 11, the House Education and Workforce Committee approved H.R. 5, the Student Success Act, an update to the No Child Left Behind Act.  The bill passed the committee by a vote of 21-16, along party lines.  A similar measure passed the House in 2013, with only one Democratic vote but was never considered by the then-Democratic-controlled Senate.  Work on a more bipartisan bill is seemingly underway in the Senate.  Senate Health, Education, Labor and Pensions Committee Chairman Lamar Alexander (R-TN) and Ranking Member Patty Murray (D-WA) released a statement on February 6 saying they were working together on a Senate proposal to update No Child Left Behind.  Chairman Alexander has indicated he would like to have a bill ready for consideration by the full Senate by March 1, adding another important issue to the challenging agenda already confronting Congress for the spring.

One more issue of note that looms over Congress.  The FCC is expected to adopt at its February 26 meeting net neutrality rules.  The rules are already absorbing considerable legislative and oversight attention.  Oversight and legislative committees of jurisdiction in both chambers have been looking closely at the Administration’s role in the development of these new rules, as the FCC is ostensibly an independent agency. The House Oversight and Government Reform Committee and the Senate Homeland Security and Government Affairs Committee have both launched investigations into whether the Obama Administration exerted any influence over FCC rulemaking.  The House Energy & Commerce Committee and the Senate Commerce Committee will no doubt also take hard looks at the substance of the rules.  Litigation over the rules is certain, and a legal challenge over a prior FCC effort to regulate in the area was successful.  So Congress may not need to act immediately.  Nonetheless, the issue is critical to the continued development of the Internet and is sure to attract lots of attention in Congress.

When they return next week, both House and Senate authorizing and appropriations committees will continue to hold hearings focused on the President’s Fiscal Year 2016 Budget.  This week, a field hearing is scheduled for the Senate Small Business and Entrepreneurship Committee on February 19 at 11:30 a.m. in Shreveport, Louisiana to discuss “Innovative Education Systems”.

AU-UN Report Reveals Startling Illicit Financial Flows in Africa

Posted in Africa

A new, comprehensive report published by the African Union’s high-level panel on illicit financial flows and the United Nations economic commission for Africa (Uneca) concludes that Africa loses more than $50 billion every year to illicit financial outflows (IFFs).  The report, entitled Illicit Financial Flows, represents the first African initiative of its kind, and is the product of a study that began in February 2012.  It analyzes various fraudulent practices of governments and multinational companies that deprive African countries of tax payments, facilitate the undervaluing of African trade, and perpetuate profit-shifting schemes that collectively divert billions of dollars in essential capital from the world’s poorest continent every year.  

According to the AU-UN report, Africa lost approximately $850 billion in illicit financial outflows between 1970 and 2008.  “Illicit financial outflows” are defined as “money that is illegally earned, transferred or utilized,” and that typically originate from one of three sources: (1) “commercial tax evasion, trade misinvoicing and abusive transfer pricing”; (2) criminal activities; and (3) “bribery and theft by corrupt government officials.”  The AU-UN report asserts that “large commercial corporations are by far the biggest culprit of illicit outflows, followed by organized crime.”  Illicit funds are often routed out of Africa to developing countries and tax havens around the world, causing Africa to function as a “net creditor to the rest of the world.”  

Although corrupt practices and weak governance structures are key facilitators of IFFs in Africa, the report notes that tax evasion, international trade manipulations, and organized crime constitute large portions of illicit outflows from the continent.  Indeed, the Open Society Foundations’ Initiative for West Africa recently stated that throughout Africa, only 3% of IFFs stem from government corruption, while 64% arise from trade manipulations and 33% originate from organized crime.  One of the AU-UN researchers’ methods of estimating IFFs was to compare the reported value of African exports with the higher value attributed to the same goods by non-African countries that received the goods as imports. 

Development Consequences

Over the past decade, Africa has maintained an impressive economic growth rate of approximately 5% annually, yet the degree of capital flight documented by the AU-UN panel paints a grim picture, suggesting that Africa’s economic growth will elude many of the estimated 414 million Africans who live on less than $1.25 a day.  A recent study by Global Financial Integrity asserts that illicit finances flow out of Africa at a much faster rate than development assistance enters into the continent, with IFFs outpacing international development funds at a ratio of at least two-to-one.  According to the AU-Uneca report, Sub-Saharan African countries have been most heavily impacted by IFFs; West and Central Africa shoulder the largest numbers of illicit financial streams. 

Governance, Oversight and Capacity Constraints

IFFs plague developing and developed nations alike, yet African governments are especially impacted by these illegal activities because they often lack the capacity, centralization and collaborative networks necessary to identify and reduce illicit practices effectively.  For example, without a consistent means of exchanging financial and tax information among African countries, it is difficult for African authorities to thwart the efforts of those who evade tax payments and engage in other illegal activities.  In light of these obstacles, the AU-UN report makes several key recommendations aimed towards African states, including the drafting of clear and concise legislation prohibiting trade mispricing, the enhancement of financial monitoring and oversight mechanisms, and the automatic exchange of tax information between African governments.  

Charting a Way Forward 

In addition to making recommendations towards African leaders, the report’s authors call on countries that receive illicit outflows to help prevent these financial streams, assist Africa in repatriating illicit funds, and to prosecute perpetrators.  Recent remarks before the Assembly of the African Union by Thabo Mbeki, South Africa’s former President and Chairperson of the AU-Uneca panel, summarize the report’s call for political mobilization on a global scale:  “[W]hile the study of illicit financial flows seems technically complex, it is ultimately a political matter requiring decisions at various levels of governance.  It can indeed be said that illicit financial flows are an ‘African problem with a global solution.’”   

As the first African initiative to comprehensively address IFFs throughout the continent, the report is a strong indicator that African governments are prioritizing the fight to eradicate IFFs throughout the continent.  The target period of the UN Millennium Development Goals is  scheduled to end at the close of this year, and African governments are now looking towards the design of Africa’s Post-2015 Development Agenda.  IFFs will likely be viewed as a seminal source of development financing whose recovery is essential to meaningful progress.  

 

This post can also be found on Cov Africa, the firm’s blog on legal, regulatory, political and economic developments in Africa.