The Week Ahead in the European Parliament – May 26, 2017

Summary

Next week will be a committee week and a mini-plenary in the European Parliament, during which some interesting votes will take place.

On Tuesday, the Committee on the Environment, Public Health and Food Safety (“ENVI”) is expected to vote on its report on Binding annual greenhouse gas emission reductions.  The report seeks to set new binding CO2 emission ceilings per EU Member State in various sectors, including transport, agriculture, waste and construction, for the 2020-2030 period.  The objective is to reduce CO2 emissions by a minimum of 30% by 2030.  The ENVI report follows the proposal for a Regulation on the same topic, introduced by the Commission in July 2016.  See the Commission proposal here, the draft report here, and amendments tabled here and here.

On the same day, the ENVI Committee will vote on a draft motion for a Resolution on HIV/AIDS, Tuberculosis and Hepatitis C.  Among its multiple proposals, the ENVI Committee calls on the Commission and the Member States to develop a comprehensive EU policy addressing HIV/AIDS, Tuberculosis and Hepatitis C; reinforce their work with vulnerable communities through multi-sectoral cooperation (including by involving NGOs); facilitate access to innovative treatments and work on tackling the negative image associated with HIV infection; encourage EU Member States to make HIV tests free of charge, particularly for vulnerable groups; and cooperate in establishing cross-border measures to prevent the spread of  Tuberculosis through the conclusion of bilateral agreements and joint actions.  In addition, the ENVI Committee highlights the impact of tackling the antimicrobial resistance crisis by funding research and development programs for new vaccines,  and through innovative and patient-centered approaches, diagnostics and treatment for tuberculosis. See the draft motion for a Resolution here.

Also on Tuesday, the ENVI Committee will vote on its report on Restriction of the use of certain hazardous substances in electrical and electronic equipment.  The report recommends introducing amendments to the proposal for a revised Restriction of Hazardous Substances Directive, introduced by the Commission in January 2017.  The amendments suggested by the ENVI committee include the possibility to adopt additional delegated acts with regard to technically-related measures, and, in particular, calls for the adoption of a legislative proposal that would include a clear methodology which would outline all steps leading to the amendments of the Annexes II, III and IV, which provide the list of restricted substances and possible exemptions.  According to the report, this methodology should also include an opinion of the European Chemicals Agency (“ECHA”).  See the draft report here, amendments tabled to the report here, and the Commission proposal here 

On Thursday, the plenary will vote on the report, prepared by the Economic and Monetary Affairs Committee (“ECON”), on the Directive amending VAT rates for books (including eBooks), newspapers and periodicals.  The proposal seeks to obtain a lower VAT rate of 5% for eBooks, instead of the standard 15% rate.  The report is in favor of the Commission proposal.  See the Commission proposal here, and the draft report here.

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D.C. Circuit Strikes Down FAA Registration Rule for Recreational Drones

On May 19, 2017, the U.S. Court of Appeals for the D.C. Circuit invalidated a Federal Aviation Administration regulation that required the owners of recreational drones—unmanned aircraft system (“UAS”)—to register with the agency.  The court held that the regulation violated the same law that the FAA had used, in part, to justify the requirement.  The court’s ruling had no effect on a separate registration requirements for drones used in commercial operations.

In the FAA Modernization and Reform Act passed in 2012, Congress prohibited the FAA from issuing any rule or regulation of “model aircraft,” which it defined as an unmanned aircraft “flown for hobby or recreational purposes.”  In December 2015, however, the FAA issued a regulation that imposed registration and marking requirements on all unmanned aircraft between 0.55 and 55 pounds.  In a move that, at the time, we called a “legal sleight of hand,” the FAA converted Congress’s prohibition on model aircraft regulations into a definition of aircraft that were covered by the new regulation.  As we said then, this was “arguably the exact inverse of Congress’s intent.”

In the ruling this week, the appellate court thought the same:  “The FAA’s 2015 Registration Rule, which applies to model aircraft, directly violates that clear statutory prohibition,” the court said.  “Statutory interpretation does not get much simpler.”

The registration rule had required any individual who owned a small drone to register the UAS with the FAA before operating the device.  Owners were required to provide contact information, pay a $5 registration fee, and display a unique identifier number issued by the FAA on the UAS.   Nearly 300,000 owners registered drones in the first 30 days of the registration system.

The court was unpersuaded by the FAA’s arguments that the rule did not violate the statute, rejecting the agency’s contention that the rule was either authorized by the agency’s other statutory authority or by the statute’s preamble related to efforts to “improve aviation safety.”

The plaintiff, Washington, D.C.-area drone hobbyist John Taylor, also challenged the FAA’s order prohibiting the operation of model aircraft in certain areas, including the Washington, D.C. Flight Restricted Zone.  The court rejected this challenge because Taylor did not file suit within 60 days of the order’s issuance, as required, and did not have a reasonable reason for his delay.

This Week in Congress – May 22, 2017

Members of the House and Senate are in session for one more week before the planned Memorial Day recess. The House is scheduled to take up a number of bills related to child protection while the Senate continues to work through nominations to the Trump Administration. Outside events, however, are again likely to overshadow the floor activity in either chamber.

President Trump’s firing of FBI Director James Comey and allegations that the President sought to stop the FBI from investigating former National Security Advisor Michael Flynn’s potential ties to Russia remains at the top of the news cycle and threatens to derail Republican efforts to pursue health care and tax reform, among other priorities. Last week, Deputy Attorney General Rod Rosenstein appointed a Special Counsel, retired FBI Director Robert Mueller, to supervise the Justice Department investigation into any potential ties between the Trump 2016 presidential campaign and Russia. The House and Senate Intelligence Committees have already been investigating Russian meddling in the 2016 presidential election. Press reports indicate that former Director Comey has accepted an invitation to testify in an open hearing before the House Intelligence Committee after the Memorial Day recess. The Senate Committee and House Oversight and Government Reform Committees have been reviewing General Flynn’s conduct and possible connections with Russia. Both committees are now expanding their inquiries to include any relation of the Flynn investigation to the surprise firing of Director Comey. Oversight and Government Reform Committee Chairman Jason Chaffetz (R-UT), who is resigning from the House at the end of June, has also invited former Director Comey to testify before the full committee at a hearing on Wednesday morning regarding “FBI Independence.” So far Comey has not publicly responded to this invitation from Chairman Chaffetz.

While these congressional investigations and public scrutiny continue, the President departed Washington, DC, last Friday to begin his first official trip overseas to the Middle East and Europe.

During his absence this week, the Office of Management and Budget (OMB) will be rolling out the Administration’s first full budget blueprint, for Fiscal Year (FY) 2018. The release of President Trump’s budget comes at a much later date than the typical timeline, and the delay, in conjunction with the failure of either chamber to pass a budget resolution, has put the appropriations process well behind schedule. It is largely conceded to be a foregone conclusion that Congress will wind up missing to have any appropriations bills in place by the start of the new fiscal year on October 1. Thus, a continuing resolution is very likely, come the end of the fiscal year. OMB Director Mick Mulvaney will testify before both the House and Senate Budget Committees this week about the President’s FY 2018 budget request, which is expected to include steep expected cuts to domestic spending and increases for military activities. Many of the expected cuts have already drawn Republican opposition, leading many observers to believe the President’s Budget is “dead on arrival.” In addition to Director Mulvaney, other members of the Administration are scheduled to appear before the House and Senate Appropriations Subcommittees throughout the week to discuss their agency budgets in greater detail. Among the cabinet secretaries and agency heads expected on Capitol Hill this week are Agriculture Secretary Sonny Perdue, Commerce Secretary Wilbur Ross, Attorney General Jeff Sessions, Homeland Security Secretary John Kelly, Education Secretary Betsy DeVos, Treasury Secretary Steven Mnuchin, Food and Drug Administrator Scott Gottlieb, and Veterans Affairs Secretary David Shulkin.

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The Gowdy Era of Congressional Investigations

With the announcement by Rep. Jason Chaffetz (R-Utah) that he plans to resign from Congress on June 30, it appears increasingly likely that Rep. Trey Gowdy (R-S.C.) will become the next Chairman of the House Committee on Oversight and Government Reform, the House’s powerful watchdog committee that has very broad investigative jurisdiction.  Although a final decision on the next Chairman might not occur until early June, Mr. Gowdy’s selection could have broad implications for the Committee’s prominent role in oversight, including oversight of corporations and other private parties.

Mr. Gowdy, a former federal and state prosecutor, is one of the strongest questioners of witnesses in the House or the Senate.  Unlike some others on the Oversight panel, Mr. Gowdy’s methodical interrogations are very similar to courtroom cross-examinations.  One of his favorite techniques is to grill a witness about past statements, making the witness parse the meaning of individual words, like a trial lawyer undermining a witness’s credibility on the stand.

Because the Oversight Committee tackles some of the most high-profile and controversial issues in Congress, both parties recognize that special skills are needed to lead the Committee.  Mr. Gowdy is widely recognized to have just those skills.  In addition to his professional background as a prosecutor, Mr. Gowdy led the House’s Select Committee on Benghazi, which investigated the terrorist attack on the U.S. diplomatic mission in Libya, throughout its entire existence from 2014 to 2016.  Mr. Gowdy earned praise from his colleagues in his handling of the Committee’s investigation, which included a marathon hearing with Secretary of State Hillary Clinton.  To be sure, Mr. Gowdy also garnered his share of criticism from Democratic Members.

While Mr. Gowdy has proven he has the skills to be Oversight Chairman, the substantive issues on which he would focus is less clear.  He is not known as a champion of any one particular topic.  Mr. Gowdy has publicly pushed for Congress to take on more nonpartisan oversight, leaving behind what he has referred to as the “political subpoenas” that characterized investigations during the Obama Administration.

Mr. Gowdy’s relationship with the Democrats on the Oversight Committee will be important to the direction of the Committee.  Current Chairman Chaffetz and the Ranking Democratic Member, Elijah Cummings, have an interesting relationship.  Although they often clash in hearings, in the press, and in internal wrangling about the Committee’s priorities, they have also jointly signed a number of document request letters and permitted some breathing room on each other’s favored issues.  For example, the Committee has conducted a number of investigations on pharmaceutical pricing, one of Mr. Cummings’s key priorities.  Mr. Cummings was also the senior Democratic Member of the Benghazi Committee.  Although their prior interactions show that they can certainly clash, they also know the areas where their interests might align.  Whether bipartisan oversight increases under Mr. Gowdy’s leadership remains to be seen.  Bipartisan oversight occurred more frequently during the Chaffetz-Cummings era than during earlier periods of the Committee’s history, and we generally think that trend will continue.

At times, the Committee has been criticized for flitting from topic to topic, conducting a large number of relatively high level investigations, with media interest often causing it to switch gears on short notice.  If we had to bet, we think that, under a Gowdy chairmanship, the Committee will concentrate more methodically on a smaller set of deeper investigations.  If that occurs, Mr. Gowdy could become one of the most influential chairmen of the Committee in many years.

The Week Ahead in the European Parliament – May 19, 2017

Summary

Next week is a constituency week for Members of the European Parliament (“MEPs”).  MEPs will go back to their home countries to handle national issues, or convene in their parliamentary delegations to work on matters related to non-EU Member States.

However, this past week, the European Parliament held a plenary session.  A number of interesting votes took place.

On Tuesday, MEPs backed a report on the “Initiative on resource efficiency: reducing food waste, improving food safety” (623 votes in favor, 33 votes against, and 20 abstentions), prepared by MEP Biljana Borzan (S&D, Croatia) of the Committee on the Environment, Public Health and Food Safety (“ENVI”).  The Parliament calls for a reduction of EU food waste by half (approximately 88 million tons a year), by 2030.  The report also calls on the Commission to remove existing restrictions on food donations, and to clarify food expiry labels, such as “best before” or “use by”.  See the report here.

On Wednesday, the plenary voted in favor of a report on “FinTech: the influence of technology on the future of the financial sector” (544 votes in favor, 107 against, and 14 abstentions), prepared by Rapporteur Cora van Nieuwenhuizen (ALDE, Netherlands) of the Committee on Regional Development (“REGI”).  The report highlights the development of FinTech in the recent years, including the opportunities it presents and its benefits.  However, the committee also stresses the regulatory and social challenges which need to be addressed to ensure consumer protection and the stability of the financial system.  The report seeks to set out the first step towards creating a forward-looking EU FinTech policy.  See the report here.

On Thursday, the Committee on Industry, Research and Energy (“ITRE”) and the Committee on the Internal Market and Consumer Protection (“IMCO”) held an extraordinary meeting, during which MEPs approved the report on Online Platforms and the Digital Single Market (73 votes in favor, 16 against, and 3 abstentions).  It follows the Commission Communication “Online Platforms and the Digital Single Market. Opportunities and Challenges for Europe”, published in May 2016.  The reports seeks to facilitate the sustainable growth of European online platforms, clarify intermediaries’ liability, enhance consumer information and provide them with additional protection tools, create a level playing field among online platforms, and more broadly, increase online trust and foster innovation.  See the draft report here, amendments tabled here and here, and the Commission Communication here.

Also on Thursday, the plenary approved a draft report, prepared by the Committee on International Trade (“INTA”) on the “Implementation  of the Free Trade Agreement between the European Union and the Republic of Korea” (468 votes in favor, 118 against, and 39 abstentions).  The report evaluates the implementation of the Free Trade Agreement, almost six years after it came into force.  The report finds that the Agreement has promoted deeper commercial partnership and increased bilateral trade, but raises concerns about certain aspects, including barriers in the area of sanitary and phytosanitary measures, intellectual property rights, technical barriers to trade (in particular, the direct transport clause) and the wording of the rules of origin and their effect on utilization rate.  In particular, MEPs stated that South Korea should improve labor rights, including right of association and collective negotiation, before possible deepening of the trade relations could be contemplated.  They also called on South Korea to remove existing trade barriers in relation to the EU exports of pork and beef.  See the report here.

On the same day, the plenary adopted the Parliament’s position on the Proposal for a Regulation on Cross-Border Portability for Online Content (586 votes in favor, 34 against, and 8 abstentions).  The proposal seeks to allow EU consumers benefit from portability with regard to online content, such as games, movies and music, while they are traveling abroad.  See the Parliament’s position here, and the proposal for a Regulation here.

Meetings and Agenda

 

  • No meetings scheduled for this week.

 

 

 

 

D.C. Circuit Dismisses Major Case Concerning Attorney-Client Privilege in Congressional Investigations

The long saga of the legal challenge by Carl Ferrer, CEO of Backpage.com, to a subpoena issued by the Senate’s Permanent Subcommittee on Investigations (“PSI”) appears to have reached a conclusion.  A three-judge panel of the U.S. Court of Appeals for the D.C. Circuit this week dismissed the case as moot and additionally vacated a series of prior rulings by the district court in the case.  The D.C. Circuit’s ruling effectively wipes the slate clean, erasing a district court action that seemed to open the door to a rare adjudication of Congress’s ability to compel the production of documents covered by the attorney-client privilege, while possibly making it significantly more difficult for individuals and companies to assert the privilege before Congress.

Although it may come as a surprise to many observers, including experienced litigation attorneys, both the Senate and House maintain that they are not required to respect the attorney-client privilege or the related attorney work product doctrine.  Congressional lawyers contend that such privileges are judicial, common law privileges that do not bind legislatures.  Congress’s position is rooted in the Constitution’s separation of powers and the inherent legislative authority to conduct investigations.

Congressional investigators often use this dynamic as a source of leverage over corporations and others from whom they seek to obtain documents or testimony.  Although it is relatively rare for a committee actually to compel production of privileged documents, it does happen.  For example, Congress did so in a high profile case involving Bank of America some years ago.  Over the years, Congress, corporations, and the courts have managed to steer clear of opportunities to test Congress’s position that it need not respect the attorney-client privilege, and there has never been a definitive court ruling on the topic, even though Congress has staked out this position for more than a century.

In Ferrer’s case, the company withheld attorney-client privileged documents, as well as other documents, but PSI contended that the company had not explicitly asserted the attorney-client privilege until relatively late in the process.  The district court agreed and held that Backpage had waived its ability to object based on the attorney-client privilege, and it ordered the company to produce documents.  PSI’s arguments, however, opened potentially dangerous ground for Congress.  In finding that Ferrer had waived the privilege, the court’s ruling seemed to suggest that such a privilege existed before Congress.  After all, how could Ferrer have waived something that did not exist?

During the weeks and months that the litigation and appeal developed, PSI completed its investigation, issued a final report, and held its final hearing in January 2017.  In the D.C. Circuit, PSI informed the court that it would not certify its continued interest in enforcing the subpoena, which was required in this instance because a new Congress convened in January, and it advanced the mootness argument, perhaps in recognition of the risk associated with an appellate ruling on the attorney-client privilege before Congress.  Although Ferrer, with the support of various amici, continued to press the appeal, the Court determined that the case was moot because PSI no longer was seeking to compel production of documents.  The Court then went one step further and actually vacated the decisions of the district court below, so that the lower court’s decisions will not have precedential value in future cases involving congressional investigations.

This outcome essentially restores the status quo ante, in which congressional investigation committees and those under investigation will bargain around Congress’s position on the attorney-client privilege without any real guidance from a controlling court decision.  Given the dramatic impact that would have been felt if the Backpage case had led to a ruling on the applicability of attorney-client privilege in congressional investigations, it is not altogether surprising that PSI in the end sought to avert a ruling by the court on the issue, and that the D.C. Circuit was very willing to oblige.

Administration submits notice of NAFTA renegotiation

On May 18, 2017, newly-confirmed U.S. Trade Representative Robert Lighthizer formally notified Congress that President Trump intends to renegotiate the North American Free Trade Agreement (NAFTA). The Trump Administration has indicated that it will request public input on the “direction, focus, and content” of these negotiations, and will publish notice in the Federal Register regarding such input. In a letter to House and Senate leaders regarding this renegotiation, Lighthizer indicated that he would also “consult closely with Congress” in developing U.S. negotiating positions. Negotiations with Canada and Mexico will begin no earlier than August 16, 2017.

Lighthizer’s letter also gave some indication of the Trump Administration’s priorities for this renegotiation. That letter observes that NAFTA was negotiated when “digital trade was in its infancy,” indicating that new provisions on electronic commerce may be forthcoming. The letter also states that new provisions were needed to address “intellectual property rights, regulatory practices, state-owned enterprises, services, customs procedures, sanitary and phytosanitary measures, labor, environment, and small and medium enterprises.” Finally, Lighthizer’s letter emphasized the importance of “effective implementation and aggressive enforcement” of the substantive commitments in the agreement in order to ensure the success of the agreement.

Renegotiation of NAFTA has long been part of President Trump’s agenda. During the campaign, then-candidate Trump called NAFTA a “disaster,” and renegotiation of the agreement is central to President Trump’s “Top Issue” of “Trade Deals that Work For All Americans.” The 2017 Trade Policy Agenda of the Office of the U.S. Trade Representative (USTR) provided some context for this dissatisfaction with NAFTA, and observed that “[f]or years now, the United States has run trade deficits in goods with our trading partners in the [NAFTA].” In recent weeks, President Trump had indicated an intention to terminate NAFTA, but decided instead to renegotiate the agreement after “pleasant and productive” conversations with President Peña Nieto of Mexico and Prime Minister Trudeau of Canada.

The United States, Canada, and Mexico—along with other nations—had recently concluded five years of intensive negotiations with respect to the Trans Pacific Partnership Agreement (TPP). As compared with NAFTA and other existing U.S. free trade agreements, TPP already reflected an evolution in the treatment of intellectual property, investment, and electronic commerce. Other provisions, such as the essential security exception, were largely the same in TPP as in prior U.S. trade agreements. While TPP negotiations were ongoing, USTR had requested public comment on various aspects of that agreement, including negotiating objectives with respect to participation in that agreement by both Mexico and Canada. On January 23, 2017, President Trump withdrew the United States as a signatory to TPP.

The Administration’s announcement of renegotiation offers stakeholders a significant opportunity to engage with USTR, Congress, and other government bodies to ensure that their priorities are included in the U.S. negotiating positions.

This Week in Congress – May 15, 2017

Following their one-week recess, members of the House of Representatives will join their Senate colleagues back in Washington, D.C. this week, where the news of FBI Director James Comey’s sudden dismissal continues to reverberate.  President Trump’s unexpected decision to fire Director Comey dominated the news cycle last week and commanded the attention of the Senate, slowing legislative business in the chamber.  Both Democratic and Republican Members of Congress have expressed concerns about the timing of President Trump’s termination of Director Comey, and any possible relation to the FBI’s investigation of the Trump 2016 presidential campaign and possible collusion with Russia to influence the election outcome. The fallout is likely to continue to distract Capitol Hill, even as former Director Comey declined an invitation from the Senate Intelligence Committee to testify in a closed session on Tuesday afternoon.  While Director Comey declined to testify this week in closed session, Deputy Attorney General Rod Rosenstein, whom President Trump and senior administration officials said had been the source of the initial recommendation to dismiss Director Comey, has reportedly accepted an invitation to brief senators in closed session on his recommendation.

The GOP majority is undoubtedly hoping that the political storm surrounding Director Comey’s dismissal does not derail its agenda for the 115th Congress.  Prior to the news of Director Comey’s dismissal, Senate Majority Leader McConnell had announced the formation of a 13-member Special Working Group on Healthcare Reform, charged with developing new Senate legislation to repeal and replace the Affordable Care Act.  That act was an admission that the version of the bill that narrowly passed the House earlier this month cannot garner enough votes to pass the Senate, even using the reconciliation process that allows the majority to avoid a filibuster.

While the Comey saga and the Republicans’ effort to craft their own healthcare reform bill continue to play out, the Senate is expected to remain focused on consideration of the President’s nominees.  The Senate is scheduled to return to legislative business on Monday, when it will resume consideration of the nomination of Jeffrey Rosen to be Deputy Secretary of Transportation.  A cloture vote on the nomination is expected on Monday evening, setting up a final confirmation vote later in the week.  Upon disposition of the Rosen nomination, the Senate will proceed to a cloture vote on the nomination of Rachel Brand to be Associate Attorney General, setting up a final confirmation vote likely before the end of the week.  Leader McConnell has not announced the floor schedule beyond these two nominations, although action can be expected on other nominations awaiting consideration on the Executive Calendar.  Among the pending nominations is that of former Iowa Governor Terry Branstad to serve as U.S. Ambassador to China.

House members will return to legislative business on Tuesday with the consideration of four bills under suspension of the rules.  All four bills were reported out of the Judiciary Committee and are related to law enforcement activities or honoring public safety officers in conjunction with the observance of National Police Week from May 11-17.

On Wednesday the House will consider 14 bills under suspension of the rules.

Members will take up additional legislation related to law enforcement beginning on Thursday with the consideration of H.R. 115, the Thin Blue Line Act.  The legislation would require federal courts to consider the murder, attempted murder, or targeting of a law enforcement official or first responder as an aggravating circumstance when determining if a death sentence is warranted.  Consideration of H.R. 115 will be subject to a rule.

On Friday, the House will take up H.R. 1039, the Probation Officer Protection Act of 2017.  This bill would amend current law to allow federal probation officers to arrest a person if there is probable cause that the person has assaulted, intimidated, or otherwise interfered with any probation officers while performing their official duties. The bill also would direct the Administrative Office of the U.S. Courts, which oversees the federal probation service, to implement rules and regulations governing probation officers’ conduct while exercising that authority.  Consideration of H.R. 1039 will be subject to a rule.

Related to the National Police Week activities in the House, on Thursday the Senate Judiciary Committee is expected to mark up the Law Enforcement Mental Health and Wellness Act of 2017, legislation providing support for law enforcement agencies in their efforts to protect the mental health and well-being of law enforcement officers.

As the full Senate resumes consideration of the President’s nominees, several Senate committees will continue to review the qualifications of other appointees.  On Tuesday, the Committee on Banking, Housing and Urban Affairs will hear testimony from three nominees to the Treasury Department and one nominee to the Commerce Department: Sigal Mandelker to be Treasury Undersecretary for Terrorism and Financial Crimes; Marshall Billingslea to be Assistant Treasury Secretary for Terrorist Financing; Heath Tarbert to be Assistant Treasury Secretary for International Markets and Development; and Mira Radielovic Ricardel to be Commerce Undersecretary for the Export Administration.

Former Senator Scott Brown (R-MA) will appear before the Foreign Relations Committee on Wednesday regarding his qualifications to serve concurrently as U.S. Ambassador to New Zealand and U.S. Ambassador to Samoa.  The Foreign Relations Committee will meet again on Thursday to hear testimony from William Hagerty IV on his nomination to serve as U.S. Ambassador to Japan.

The Energy and Natural Resources Committee will hear from David Bernhardt on Thursday morning regarding his nomination to serve as Deputy Secretary of the Interior.

The Armed Services Committee is also scheduled to meet on Thursday to consider the nominations of four individuals to positions within the Department of Defense.

Even though Congress has yet to pass a budget resolution setting parameters for Fiscal Year (FY) 2018 spending, the House Appropriations Committee appears poised to begin its work on FY 2018 spending bill.  Its Legislative Branch Subcommittee has a number of hearings scheduled throughout the week regarding funding for various Legislative Branch entities, including the Library of Congress, the Architect of the Capitol, and U.S. Capitol Police.  The Subcommittee on Interior, Environment, and Related Agencies will also hold hearings throughout the week on FY 2018 funding for American Indian and Alaska Native programs.  The Subcommittee on Homeland Security is scheduled to meet on Thursday regarding funding for the Coast Guard and future acquisition plans.  The hearing could become a forum for opposition to the President’s budget request calling for steep cuts to the Coast Guard in order to fund more aggressive Homeland Security enforcement efforts against illegal immigration.  Democrats and Republicans alike have not received the proposed Coast Guard cuts warmly.

The House Ways and Means Committee is set to initiate its formal proceedings related to tax reform legislation this week.  On Thursday, the committee will meet to discuss “how tax reform will grow our economy and create jobs.”  This event is the first in a series of hearings as the chief tax-writing committee in the House of Representatives works towards producing the major tax reform legislation the GOP is hoping to pass later this year.  House architects of tax reform, including the Speaker, Paul Ryan, and the Ways & Means Chairman, Kevin Brady (R-TX) have been developing a plan that relies on revenue neutrality, including a new border adjustability tax (BAT) to help pay for tax cuts in the proposal.  The BAT has not garnered support from the Senate or key administration officials.  Instead, Senate Republicans and the President and his advisors appear to be willing not to cover the full costs of tax cuts in order to spur faster encomium growth.  This week’s hearing will be the opening public event in what is likely to be the next legislative focus of Congress, once the Senate resolves its approach to healthcare reform.

Treasury Secretary Steven Mnuchin is scheduled to testify before the Senate Banking, Housing and Urban Affairs Committee on Thursday.

Infrastructure modernization is again a focus of congressional committees this week.  The House Transportation Committee will hold a Wednesday hearing on reforms to the Federal Aviation Administration (FAA), including a controversial plan sponsored by Committee Chairman Bill Shuster to separate air traffic control from the FAA.  Chairman Shuster authored a five-year FAA reauthorization bill during the 114th Congress that included a provision to privatize the country’s air traffic control system, a  move supported by President Trump and included in his first budget submission to Congress.  The Senate Environment and Public Works Subcommittee on Transportation and Infrastructure will hold a subcommittee hearing on Tuesday entitled, “Leveraging Federal Funding: Innovative Solutions for Infrastructure.”  The full Senate Environment and Public Works Committee will also meet on Wednesday to discuss America’s transportation infrastructure.  On Thursday, the House Transportation and Infrastructure Subcommittee on Water Resources and Environment will hold a hearing on improving water quality through integrated planning.

There are two events related to Medicare scheduled this week.  The Senate Finance Committee is scheduled to meet on Tuesday to discuss bipartisan improvements to Medicare policies for patients with chronic conditions.  On Thursday the House Ways and Means Subcommittee on Health will hold a hearing to review the current status of the Medicare program, changes needed to Medicare’s payment systems, and Medicare programs that are set to expire before the end of the year.

The full details for congressional committee events during the week ahead are included below:

Tuesday, May 16, 2017

House Committees

American Indian and Alaska Native Funding
House Appropriations – Subcommittee on Interior, Environment, and Related Agencies
Subcommittee Hearing
9 a.m., 2007 RHOB

American Indian and Alaska Native Funding
House Appropriations – Subcommittee on Interior, Environment, and Related Agencies
Subcommittee Hearing
1 p.m., 2007 RHOB

Senate Committees

Pending Nominations
Senate Banking, Housing and Urban Affairs
Full Committee Hearing
10 a.m., SD-538

Examining Bipartisan Medicare Policies that Improve Care for Patients with Chronic Conditions
Senate Finance
Full Committee Hearing
10 a.m., SD-215

Foreign Service Lists
Senate Foreign Relations
Full Committee Markup
10 a.m., S-216

Leveraging Federal Funding: Innovative Solutions for Infrastructure
Senate Environment and Public Works – Subcommittee on Transportation and Infrastructure
Subcommittee Hearing
3:15 p.m., SD-406

Intelligence Matters
Senate Select Intelligence
Full Committee Briefing (CLOSED)
2:30 p.m., SVC-217

Wednesday, May 17, 2017

House Committees

Transforming GPO for the 21st Century and Beyond
House Administration
Full Committee Hearing
11 a.m., 1310 LHOB

State of the Rural Economy
House Agriculture
Full Committee Hearing
10 a.m., 1300 LHOB

American Indian and Alaska Native Funding
House Appropriations – Subcommittee on Interior, Environment, and Related Agencies
Subcommittee Hearing
9 a.m., 2007 RHOB

Biomedical Research Advances
House Appropriations – Subcommittee on Labor, Health and Human Services, Education, and Related Agencies
Subcommittee Hearing
10 a.m., 2358-C RHOB

House of Representatives: FY2018 Budget
House Appropriations – Subcommittee on Legislative Branch
Subcommittee Hearing
10 a.m., HT-2

Initial Findings of the Section 809 Panel: Setting the Path for Streamlining and Improving Defense Acquisition
House Armed Services
Full Committee Hearing
May 17, 10 a.m., 2118 RHOB

H.R.2353, the “Strengthening Career and Technical Education for the 21st Century Act
House Education and the Workforce
Full Committee Markup
10 a.m., 2175 RHOB

Future of Emergency Alerting
House Energy and Commerce – Subcommittee on Communications and Technology
Subcommittee Hearing
10 a.m., 2123 RHOB

Pending Legislation
House Energy and Commerce – Subcommittee on Health
Subcommittee Hearing
10:15 a.m., 2322 RHOB

Energy Opportunities in South America
House Foreign Affairs – Subcommittee on the Western Hemisphere
Subcommittee Hearing
10 a.m., 2172 RHOB

Challenges Facing Law Enforcement in the 21st Century
House Judiciary – Subcommittee on Crime, Terrorism, Homeland Security and Investigations
Subcommittee Hearing
10 a.m., 2142 RHOB

Reviewing Recent State Successes with the Rigs to Reefs Program
House Natural Resources – Subcommittee on Energy and Mineral Resources
Subcommittee Hearing
10 a.m., 1324 LHOB

SBA’s 7(a) Loan Program: A Detailed Review
House Small Business
Full Committee Hearing
11 a.m., 2360 RHOB

The Need to Reform FAA and Air Traffic Control to Build a 21st Century Aviation System for America
House Transportation and Infrastructure
Full Committee Hearing
10 a.m., 2167 RHOB

Opportunities for Youth and Young Adults to Break the Cycle of Poverty
House Ways and Means – Subcommittee on Human Resources
Subcommittee Hearing
10 a.m., 2020 LHOB

American Indian and Alaska Native Funding
House Appropriations – Subcommittee on Interior, Environment, and Related Agencies
Subcommittee Hearing
1 p.m., 2007 RHOB

Judiciary Funding
House Appropriations – Subcommittee on Financial Services and General Government
Subcommittee Hearing
2 p.m., 2359 RHOB

Architect of the Capitol: FY2018 Budget
House Appropriations – Subcommittee on Legislative Branch
Subcommittee Hearing
2 p.m., HT-2

Military Personnel Posture: FY2018
House Armed Services – Subcommittee on Military Personnel
Subcommittee Hearing
3:30 p.m., 2118 RHOB

The Balkans: Threats to Peace and Stability
House Foreign Affairs – Subcommittee on Europe, Eurasia and Emerging Threats
Subcommittee Hearing
2 p.m., 2200 RHOB

Revitalizing U.S.-ASEAN (Association of Southeast Asian Nations) Relations
House Foreign Affairs – Subcommittee on Asia and the Pacific
Subcommittee Hearing
2:30 p.m., 2172 RHOB

Seeking Better Management of America’s Overgrown, Fire-Prone National Forests
House Natural Resources – Subcommittee on Federal Lands
Subcommittee Hearing
2 p.m., 1324 LHOB

Senate Committees

Running the Government for Less
Senate Budget
Full Committee Hearing
10:30 a.m., SD-608

Current Issues in American Sports: Protecting the Health and Safety of American Athletes
Senate Commerce, Science and Transportation
Full Committee Hearing
10 a.m., SR-253

Improving America’s Transportation Infrastructure: The Road Forward
Senate Environment and Public Works
Full Committee Hearing
10 a.m., SD-406

Pending Legislation
Senate Homeland Security and Governmental Affairs
Full Committee Markup
10 a.m., SD-342

Military Space Organization, Policy, and Programs
Senate Armed Services – Subcommittee on Strategic Forces
Subcommittee Hearing
2 p.m., SR-222

U.S. Military Small Arms Requirements
Senate Armed Services – Subcommittee on Airland
Subcommittee Hearing
3:30 p.m., SR-232A

New Zealand and Samoa Ambassador Nominations
Senate Foreign Relations
Full Committee Hearing
2 p.m., SD-419

High Risk, No Reward: GAO’s High Risk list for Indian Programs
Senate Indian Affairs
Full Committee Hearing
2:30 p.m., SD-628

Intelligence Matters
Senate Select Intelligence
Full Committee Briefing (CLOSED)
1 p.m., SH-219

Veterans Healthcare and Benefits
Senate Veterans’ Affairs
Full Committee Hearing
2:30 p.m., SR-418

Joint Committees

What We Do Together: The State of Social Capital in America Today
Joint Economic
Full Committee Hearing
10 a.m., SD-106

Thursday, May 18, 2017

House Committees

Coast Guard Requirements, Priorities, and Future Acquisition Plans
House Appropriations – Subcommittee on Homeland Security
Subcommittee Hearing
8 a.m., 2007 RHOB

U.S. Capitol Police: FY2018 Budget
House Appropriations – Subcommittee on Legislative Branch
Subcommittee Hearing
10 a.m., HT-2

Emerging Transportation Technologies
House Appropriations – Subcommittee on Transportation, Housing and Urban Development, and Related Agencies
Subcommittee Hearing
10 a.m., 2358-A RHOB

Regulatory Barriers Facing Workers and Families Saving for Retirement
House Education and the Workforce – Subcommittee on Health, Employment, Labor and Pensions
Subcommittee Hearing
10 a.m., 2175 RHOB

Lessons from the IMF’s Bailout of Greece
House Financial Services – Subcommittee on Monetary Policy and Trade
Subcommittee Hearing
10 a.m., 2128 RHOB

U.S. Interests in Africa
House Foreign Affairs
Full Committee Hearing
May 18, 10 a.m., 2172 RHOB

Pending Legislation
House Natural Resources – Subcommittee on Water, Power and Oceans
Subcommittee Hearing
10 a.m., 1324 LHOB

Federal Employee Compensation: An Update
House Oversight and Government Reform
Full Committee Hearing
9 a.m., 2154 RHOB

Building a 21st Century Infrastructure for America: Improving Water Quality through Integrated Planning
House Transportation and Infrastructure – Subcommittee on Water Resources and Environment
Subcommittee Hearing
10 a.m., 2167 RHOB

How Tax Reform Will Grow Our Economy and Create Jobs
House Ways and Means
Full Committee Hearing
10 a.m., 1100 LHOB

Library of Congress: FY2018 Budget
House Appropriations – Subcommittee on Legislative Branch
Subcommittee Hearing
2 p.m., HT-2

Amphibious Warfare in a Contested Environment
House Armed Services – Subcommittee on Seapower and Projection Forces
Subcommittee Hearing
2 p.m., 2212 RHOB

Disappeared, Jailed, and Tortured in China: Wives Petition for Their Husbands’ Freedom
House Foreign Affairs – Subcommittee on Africa, Global Health, Global Human Rights and International Organizations
Subcommittee Hearing
2 p.m., 2172 RHOB

From the Border to Disasters and Beyond: Critical Canine Contributions to the DHS Mission
House Homeland Security – Subcommittee on Oversight and Management Efficiency
Subcommittee Hearing
2 p.m., HVC-210

Current Status of the Medicare Program, Payment Systems, and Extenders
House Ways and Means – Subcommittee on Health
Subcommittee Hearing
2 p.m., 1100 LHOB

Senate Committees

Pending Nominations
Senate Armed Services
Full Committee Hearing
9:30 a.m., SD-G50

Domestic and International Policy Update
Senate Banking, Housing and Urban Affairs
Full Committee Hearing
10 a.m., SD-538

Pending Business
Senate Commerce, Science and Transportation
Full Committee Markup
10 a.m., SH-216

Deputy Interior Secretary Nomination
Senate Energy and Natural Resources
Full Committee Hearing
10 a.m., SD-366

Ambassador to Japan Nomination
Senate Foreign Relations
Full Committee Hearing
9:30 a.m., SD-419

Law Enforcement Mental Health and Wellness Act of 2017/Pending Nomination
Senate Judiciary
Full Committee Markup
10 a.m., SD-226

The Balkan Peninsula
Senate Foreign Relations – Subcommittee on Europe and Regional Security Cooperation
Subcommittee Hearing
2:30 p.m., SD-419

Intelligence Matters
Senate Select Intelligence
Full Committee Briefing (CLOSED)
2 p.m., SH-219

Friday, May 19, 2017

House Committees

FY2018 Priorities and Posture of the National Security Space Enterprise
House Armed Services – Subcommittee on Strategic Forces
Subcommittee Hearing
9 a.m., 2118 RHOB

Recent Trends in International Antitrust Enforcement
House Judiciary – Subcommittee on Regulatory Reform, Commercial and Antitrust Law
Subcommittee Hearing
9 a.m., 2141 RHOB

 

The Week Ahead in the European Parliament – May 12, 2017

Summary

Next week will be plenary week in Strasbourg, with a few committee meetings.

On Monday, the Committee on Regional Development (“REGI”) will introduce its report on “FinTech: the influence of technology on the future of the financial sector” to the plenary, for debate.  The report highlights the development of FinTech in the recent years, including the opportunities it presents and its benefits.  However, the committee also stresses the regulatory and social challenges which need to be addressed to ensure consumer protection and the stability of the financial system.  The REGI Committee seeks to set out the first step towards the creation of a forward-looking EU FinTech policy.  See the report here.

On Tuesday, the plenary is expected to vote on the report “Initiative on resource efficiency: reducing food waste, improving food safety” prepared by the Committee on the Environment, Public Health and Food Safety (“ENVI”).  This report advocates a reduction of EU food waste by half (approximately 88 million tons a year) by 2030.  The report also calls on the Commission to remove existing restrictions on food donations, and to clarify the existing confusion on labels, such as “best before” or “use by”.  See the report here.

Also on Tuesday, the plenary will discuss a draft report, prepared by the Committee on International Trade (“INTA”) on the “Implementation  of the Free Trade Agreement between the European Union and the Republic of Korea”.  This report seeks to evaluate the implementation of the Free Trade Agreement, almost six years after it came into force.  The report finds that the Agreement has promoted deeper commercial partnership and increased bilateral trade, but raises concerns about certain aspects, including barriers in the area of sanitary and phytosanitary measures, intellectual property rights, technical barriers to trade (in particular, the direct transport clause) and the wording of the rules of origin and their effect on utilization rate.  See the report here.

On Thursday, the Committee on Industry, Research and Energy (“ITRE”) and the Committee on the Internal Market and Consumer Protection (“IMCO”) will hold an extraordinary meeting, during which Members of the European Parliament (“MEPs”) are expected to vote on an own-initiative report on Online Platforms and the Digital Single Market.  The report follows the Commission Communication “Online Platforms and the Digital Single Market. Opportunities and Challenges for Europe”, published in May 2016.  The reports seeks to facilitate the sustainable growth of European online platforms, clarify intermediaries’ liability, enhance consumer information and provide them with additional protection tools, create a level playing field among online platforms, and more broadly, increase online trust and foster innovation.  See the draft report here, amendments tabled here and here, and the Commission Communication here.

On the same day, the plenary will vote on the Parliament’s position on the Proposal for a Regulation on Cross-Border Portability for Online Content.  The proposal seeks to allow EU consumers benefit Continue Reading

President Macron and the Brexit Negotiation

On May 7, President-elect Emmanuel Macron greeted his jubilant supporters in the grounds of the Louvre to a serenade of the Ode to Joy, the anthem of the European Union. He had won the second round of the French Presidential election, dismissing the far-right Marine Le Pen’s challenge by 66.1% to her 33.9% 

A New Euro-Euphoria ?

The new French President will face tough challenges in promoting his party, re-named “La République en Marche” in the two-stage Parliamentary elections on June 11 and 18. He will need to counter the resentment of the traditional parties who did not make it to the second round of the election, and also the anger of those who voted for the extreme left-wing Mélenchon, who will try to derail his first attempts at fixing the labor market with demonstrations in the streets.

But the fact that he received 2/3 of the votes in the second round while defending further integration of the EU is enough for the future of the block to look brighter again – after two anni horribiles.

Macron’s election follows the defeat in December of last year of the populist Norbert Hofer for the presidency of Austria and the victory in March in the Netherlands of the Liberal prime minister Mark Rutte over the sulfurous Geert Wilders. With current local elections in Germany offering the Christian Democrats’ unexpected success, the re-election of Angela Merkel in September once again seems likely. Only Italy continues to remain under threat of the populist “Cinque Stelle” movement – but the ease with which Matteo Renzi regained the chairmanship of his Democratic Party this month contributes further to a new wave of Euro-Euphoria. 

The EU 27 and the UK in two Different Galaxies

Tempering this enthusiasm, however, is the fact that the Brexit negotiations have not even started, and that their chance of success continues to be as low as when Prime Minister Theresa May presented her “hard” position at the Conservative party conference in October 2016. After more than 10 months of “non-negotiation,” the positions on both sides have hardened, which was to be expected. The famously-leaked dinner in Downing Street on April 26 only made the general public more aware of this polarization.

In a spectacular show of unity, and with almost no debate, on April 29, the 27 EU heads of government agreed the “guidelines” for the negotiation (see here). These guidelines make clear there will be two phases in the Brexit negotiation, and that the second phase – in which the future relationship will be discussed – can only start after the Council decides that “sufficient” progress has been achieved on the two main issues to be discussed to settle the “past”: the fate of EU citizens living in the UK and the settlement of UK financial commitments resulting from its membership of the Union.

In short, as the countdown began on March 29, if there is no satisfactory agreement on these two issues before the end of the two years, the UK will leave the EU on March 29, 2019, falling off the “cliff” with no parachute. A withdrawal with no agreement could happen even earlier, if the pressure from public opinion and the press in the UK is such that Theresa May does not have the political support to make the necessary concessions on time.

Let us look briefly at why these two issues are so difficult. 

Citizens’ rights

The guidelines adopted by the 27 ask explicitly that EU citizens residing in the UK before the withdrawal date should continue to receive “equal treatment … compared to UK citizens.” The British view is rather different: they would apply the most generous existing immigrant conditions to the EU citizens who want to remain. This would not, however, give them the rights they enjoy now – one example being the status of the spouse if he or she comes from a third country.

Maintaining an equivalent status will also generate a bureaucratic nightmare, since new legislation will need to be passed on a myriad of issues. And the question will also arise of a continuing jurisdiction of the European Court of Justice – which is anathema for the “Leavers” (and apparently for Theresa May herself).

This is a very emotional issue and, since reciprocity will be given to UK citizens residing in other European Union states, a solution will probably be found. But at this stage the positions are very far from each other, and a lot of technical as well as political effort will be needed. 

The Financial Settlement

If the guidelines only define general principles for a “single financial settlement”, “covering all commitments as well as liabilities, including contingent liabilities”, the Commission “recommendation” for the negotiating mandate (see the text here) outlines in detail what the “methodology” for a financial settlement should be. Commission sources leaked to the press calculations based on their view of the methodology that might put the figure owed by the UK at close to 100 billion.

The British approach to its financial commitments is radically different. Many Leavers interpret Article 50, according to which after two years “the treaty ceases to apply” to the UK, to mean that, after that date, there is no further obligation to reimburse. Some commentators even argue that not only will the UK not be liable for anything, but that the EU should rather reimburse it for the share of EU assets it will have to abandon.

Insiders in Brussels acknowledge that the final solution to the financial issue will probably be a fixed global amount decided as a political compromise. Meanwhile, the “methodology” mentioned in the guidelines will need to be agreed – and it will require a major effort from the UK side to agree to any formula. Even if Theresa May, in her 29 March letter, seemed to admit that a “fair settlement of the UK’s rights and obligations has to be determined”, her current campaign statements are not preparing British public opinion to swallow this. 

The Future Relationship

What the future relationship between the UK and the EU will not be is already clear: the UK will leave the internal market and the customs Union, and will no longer need to respect the four freedoms linked to it. The two sides have already agreed that there will be no “cherry picking” – that is, no sectorial agreements or partial membership of the internal market. In their guidelines, the 27 announce that they stand ready to negotiate a “balanced, ambitious and wide-ranging” free trade agreement with the UK. They add that they also stand ready to establish “partnerships in the fight against terrorism and international crime, as well as security, defense and foreign policy”.

The new trade relationship will resemble free trade agreements concluded recently by the EU with “Western” countries, like the CETA with Canada. The advantage is that it will be negotiated in reverse: starting with the current membership situation, there will logically be major efforts to keep the trade relation as close as it is now. But the devil will obviously be in the numerous technical details, and might well extend the text to the same 2,000 pages of the CETA.

Meanwhile, there are already discussions among the 27 about the current trade agreements between the EU and third countries in which import quotas have been fixed, including a substantial share for the UK. Will these quotas need to be shared among the remaining member states or will the UK take a part of them in a parallel negotiation?

Another sensitive issue is the transition period. Since the new free trade agreement will probably need to be ratified by all parliaments of the member states, a transitional period will be needed during which the current trade relationship will be preserved, in order to avoid the “cliff edge.” But even if the UK will no longer be a member, during this period it will have to respect the rules of the single market, including the four freedoms. This will also be very difficult to accept in London, where the Leave camp will suspect the Remainers of attempting to prolong this transition forever.

The Moment of Truth

The EU Council is currently examining the Commission’s “recommendation,” and the General Affairs Council will meet to approve it on May 22. The negotiation between the UK and the EU will then probably start in the second half of June when the new British government will be in place.

Not very much will happen in the first three months of the talks. July will be used for exchanging positions and hearing clarifications. August will be light, for reasons of the sacred EU Summer break, however urgent matters may be. In September, attention will be squarely on the German elections. Only after that will a first serious discussion take place, most likely around the October European Council.

This might well be the (first) moment of truth. In the guidelines, the European Council was careful to reserve the right to decide if “sufficient” progress has been made in the first phase to start the negotiation on the future relationship – the only “positive” part of the negotiation from the British point of view. If not, the Article 50 clock will continue to tick.

Macron’s election and the renewed spirit of Euro – optimism will help prepare this dangerous moment in a more positive spirit than would have been the case with Marine Le Pen or Mélenchon. And Angela Merkel’s probable fourth term will also help make the situation more serene. The Brexit negotiation will proceed more easily if negotiators on both sides can count on a comfortable majority behind them.

This does not mean that Macron and Merkel will be flexible on the principles mentioned in the guidelines. One can expect them to be tough and to rally most Member States to their intransigence. Only the Netherlands, Ireland, Denmark and maybe Belgium will continue to push for an early start on the negotiation on the future – vital to their economic ties with the UK. But as far as the first phase is concerned, the 27 have no choice but to remain united in pressing the UK to agree with their “methodology” for settling the past.

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