This Week in Congress – May 8, 2017

After the most significant and dramatic week of the 115th Congress, having kept the government funded through the end of the fiscal year and passed its bill to repeal the Affordable Care Act, the House is on a scheduled district work period with members working in their districts.  The Senate is the only chamber in session this week.

Senators will return to legislative business on Monday, with two roll call votes scheduled in the chamber.  First, members will vote on the confirmation of Heather Wilson, a former House member from New Mexico and Air Force veteran, to be Secretary of the Air Force.  Members will then vote on cloture on the nomination of Scott Gottlieb to be Commissioner of the Food and Drug Administration, setting up a final confirmation vote on the nominee later in the week.  Leader McConnell has not announced the floor schedule beyond these two votes, although action can be expected on other nominations awaiting consideration on the Executive Calendar.  Among the pending nominations are Robert Lighthizer to serve as U.S. Trade Representative, Jeffrey Rosen to be Deputy Secretary of Transportation, Rachel Brand to be Associate Attorney General, and Courtney Elwood to serve as General Counsel of the Central Intelligence Agency.  In addition to the pending nominations, this week the Senate may also consider two congressional resolutions of disapproval under the Congressional Review Act.  The first would overturn a final rule issued by the Interior Department regarding emissions from the flaring and venting of methane during oil and gas production activities on public and tribal lands.  The second resolution of disapproval would nullify a rule issued by the Consumer Financial Protection Bureau last October regarding prepaid debit cards.

With House members out of town, only Senate committees are meeting this week.  One of the high-profile events will be the appearance of former Director of National Intelligence James Clapper and former Acting Attorney General Sally Yates before the Senate Judiciary Subcommittee on Crime and Terrorism on Monday afternoon regarding Russian interference in the 2016 U.S. presidential election and the communications between former Trump campaign advisor and initial National Security Advisor, General Michael Flynn, and the Russian Ambassador to the United States.  Ms. Yates was fired from the Justice Department in January after she refused to defend President Trump’s initial Executive Order banning travel from seven Muslim-majority nations.

Relatedly, cybersecurity is a focus of Senate committee activity this week.  On Tuesday, National Security Agency Director Admiral Michael Rogers will brief members of the Armed Services Committee on U.S. Cyber Command.  The Homeland Security and Governmental Affairs Committee will meet on Wednesday to hear testimony on the U.S. cybersecurity threat landscape.  On Wednesday afternoon the Judiciary Subcommittee on Crime and Terrorism is holding a hearing on law enforcement access to stored data across international borders.

Several Trump Administration nominees will be appearing on Capitol Hill this week as relevant committees review their qualifications.  On Tuesday, the Foreign Relations Committee will hear testimony from  John Sullivan on his nomination to be Deputy Secretary of State.  Also on Tuesday the Armed Services Committee will consider three nominees to the Department of Defense.  The Judiciary  Committee will hear from three Justice Department nominees on Wednesday morning: Noel Francisco to be Solicitor General, Makan Delrahim to serve as Assistant Attorney General for the Antitrust Division, and Steven Engel to be an Assistant Attorney General in the Office of Legal Counsel.  Later on Wednesday afternoon, Althea Coetzee is scheduled to testify before the Committee on Small Business and Entrepreneurship regarding her nomination to serve as Deputy Administrator of the Small Business Administration.

On Tuesday, the Finance Committee is scheduled to consider the Children’s Health Insurance Program (CHIP) reauthorization.  The program, which enjoys broad, bipartisan support, is set to expire on September 30.

The Health, Education, Labor and Pensions  (HELP) Committee is set to markup to two bills on Wednesday: S.1028, the Recognize, Assist, Include, Support, and Engage (RAISE) Family Caregivers Act and S.934, the Food and Drug Administration (FDA) Reauthorization Act.  The FDA reauthorization bill would renew and enhance the four FDA drug, medical device, biosimilar and generic drug user fee agreements.  The current agreements are set to expire on September 30.

Federal Housing Finance Agency Director Mel Watt, a hold-over appointee of President Obama, is scheduled to appear before the Committee on Banking, Housing, and Urban Affairs on Thursday morning as committee members consider reforms to the U.S. housing finance market.  Committee Chairman Mike Crapo (R-ID) and Treasury Secretary Steven Mnuchin have both identified housing finance reform as a priority this year.

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

Monday, May 8, 2017

Senate Committees

Russian Interference in the 2016 United States Election
Senate Judiciary – Subcommittee on Crime and Terrorism
Subcommittee Hearing
2:30 p.m.
Tuesday, May 9, 2017

Senate Committees

U.S. Cyber Command
Senate Armed Services
Full Committee Hearing
9:30 a.m., SD-G50

The Children’s Health Insurance Program (CHIP): The Path Forward
Senate Finance
Full Committee Hearing
10 a.m., SD-215

Foreign Service List
Senate Foreign Relations
Full Committee Markup
10 a.m., SD-419

Deputy Secretary of State Nomination
Senate Foreign Relations
Full Committee Hearing
10:30 a.m., SD-419

Pending Nominations
Senate Armed Services
Full Committee Hearing
2:30 p.m., SD-G50

Maritime Transportation: Opportunities and Challenges for the Maritime Administration and Federal Maritime Commission
Senate Commerce, Science and Transportation – Subcommittee on Surface Transportation and Merchant Marine Infrastructure, Safety and Security
Subcommittee Hearing
2:30 p.m., SR-253

Water Resources: The Role of the Public and Private Sectors
Senate Environment and Public Works – Subcommittee on Transportation and Infrastructure
Subcommittee Hearing
2:30 p.m., SD-406

Wednesday, May 10, 2017

Senate Committees

Secondary Sanctions Against Chinese Institutions: Assessing Their Utility for Constraining North Korea
Senate Banking, Housing and Urban Affairs – Subcommittee on National Security and International Trade and Finance
Subcommittee Hearing
10 a.m., SD-538

Growth Policies for the new Administration
Senate Budget
Full Committee Hearing
10:30 a.m., SD-608

Conservation, Consultation, and Capacity: State Views on the Need to Modernize the Endangered Species Act
Senate Environment and Public Works
Full Committee Hearing
10 a.m., SD-406

Emerging External Influences in the Western Hemisphere
Senate Foreign Relations – Subcommittee on Western Hemisphere, Transnational Crime, Civilian Security, Democracy, Human Rights and Global Women’s Issues
Subcommittee Hearing
10 a.m., SD-419

S.1028, Recognize, Assist, Include, Support, and Engage (RAISE) Family Caregivers Act and S.934, the Food and Drug Administration Reauthorization Act
Senate Health, Education, Labor and Pensions
Full Committee Markup
10 a.m., SD-G50

Cyber Threats Facing America: An Overview of the Cybersecurity Threat Landscape
Senate Homeland Security and Governmental Affairs
Full Committee Hearing
10 a.m., SD-342

Pending Nominations
Senate Judiciary
Full Committee Hearing
10 a.m., SD-226

Pending Legislation
Senate Energy and Natural Resources – Subcommittee on Water and Power
Subcommittee Hearing
2:30 p.m., SD-336

Pending Legislation
Senate Indian Affairs
Full Committee Hearing
2:30 p.m., SD-628

Law Enforcement Access to Data Stored Across Borders: Facilitating Cooperation and Protecting Rights
Senate Judiciary – Subcommittee on Crime and Terrorism
Subcommittee Hearing
2:30 p.m., SD-226

Deputy Administrator of the Small Business Administration Nomination
Senate Small Business and Entrepreneurship
Full Committee Hearing
3 p.m., SR-428A

Aging With Community : Building Connections that Last a Lifetime
Senate Special Aging
Full Committee Hearing
2:30 p.m., SD-562

Examining the Veterans Choice Program and the Future of Care in the Community
Senate Veterans’ Affairs
Full Committee Hearing
2:30 p.m., SR-418

Thursday, May 11, 2017

Senate Committees

Pesticide Registration under the Federal Insecticide, Fungicide, and Rodenticide Act: Providing Stakeholders with Certainty through the Pesticide Registration Improvement Act
Senate Agriculture, Nutrition and Forestry
Full Committee Hearing
9:30 a.m., SR-328A

The Status of the Housing Finance System After Nine Years of Conservatorship
Senate Banking, Housing and Urban Affairs
Full Committee Hearing
10 a.m., SD-538

Pending Business
Senate Judiciary
Full Committee Markup
10 a.m., SD-226

EU Policy Update

Brexit and European Elections

On Tuesday, April 18, U.K. Prime Minister Theresa May announced that she was calling a snap general election on June 8.  She explained that divisions in Westminster over Brexit had made an early vote unavoidable: “The country is coming together, but Westminster is not,” she told reporters outside 10 Downing Street.  The election was confirmed on the same day by a motion in the House of Commons.

Meanwhile, the EU-27 met several times at working level to consider the draft “negotiating guidelines” prepared by the Council secretariat.  These guidelines were then approved, with only minor changes, by the Foreign Ministers and then by the Heads of Government in a special meeting on April 29.  The strong degree of unity among the 27 EU leaders was highlighted by the fact that the final approval of the text took only four minutes (see here).

The main divergence of views was over the timing of the negotiation on the future relationship, which some wanted to start in parallel with the discussion on “the past”.  In order to reinforce this view, Denmark, Ireland and the Netherlands even held a mini-summit in The Hague on April 21. But the final text confirms the “phased approach” as proposed initially by the EU’s chief negotiator, Michel Barnier.

This issue and others were also discussed at a dinner in Downing Street on April 26, to which Theresa May invited Commission President Jean Claude Juncker and Mr. Barnier.  According to leaks to the press in Germany, this dinner was rather confrontational and confirmed the huge gap between the two sides’ positions at the start of the Brexit process.

As foreseen, on May 3, the European Commission presented its “recommendation” for a Brexit negotiating mandate (see here).  The aim is to have it approved by the 27 Foreign Ministers on May 22. The negotiation with the UK however will only start after the June 8 election, when the new British government is in place.

In the first round of the French election on April 23, Emmanuel Macron and Marine Le Pen were selected to run for the second round on May 7.  Several European political leaders, including German ministers, European Commission President Jean-Claude Juncker and Brexit negotiator Michel Barnier broke with tradition and either congratulated Macron or called on the French to vote for him.

Tech and Digital Single Market Policies

The Maltese MEP, Therese Comodini Cachia, rapporteur for the proposal for a new Copyright Directive in the Committee on Legal Affairs (“JURI”), finalized her report on March 10, 2017.  The JURI committee secretariat accepted suggested amendments from fellow MEPs on the JURI committee until April 12, 2017.  The JURI committee secretariat is now proof-reading and translating the amendments.  In early May, the JURI secretariat will share the amendments with Therese Comodini Cachia.  A vote on the report is expected in June or July 2017. See an overview with the expected timeline here.

On April 10, the European Commission’s Directorate-General for Internal Market, Industry, Entrepreneurship and SMEs published a road map for its forthcoming policy paper on standard essential patents.  Roadmaps are high-level policy documents prepared by the Commission to explore whether EU level legislative intervention is required in a certain policy area.  According to the roadmap, the Commission expects to publish a Communication on standard essential patents by June 2017.  See the Roadmap on standard essential patents here.

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China Moves Towards a Unified Civil Code

China is embarking on an ambitious effort to develop a new, unified civil code, scheduled for completion by 2020. During this year’s meeting of the National People’s Congress, NPC delegates ratified the General Provisions on the Civil Code (“General Provisions”), China’s first significant step toward establishing a unified legal code on civil affairs in decades. The eventual code—of which the General Provisions is the first piece—is expected to cover topics such as contracts, marriage, inheritance, property, and torts.

Like most countries around the world, China has a civil law legal system, which means that Chinese judges use statutory codes to determine proper rulings on legal matters, and past court decisions have no precedential value; this is in contrast to the common law tradition widely used in the English-speaking world, in which past judicial decisions (particularly from higher courts) may serve as binding precedents on courts deciding cases that raise similar issues. While China already has several laws on the books regarding civil affairs (e.g., marriage, contract, and property laws), it lacks a unified code to which courts and judges may look to for guidance in legal cases and disputes.

China has experimented with unified civil codes in the past. Before its fall in 1912, the Qing Dynasty drafted a civil code governing property, civil procedure, and commerce, and the subsequent Nationalist Government ultimately enacted it in some form. The Republic of China later developed a full civil code, drawing from the French, German, and Japanese civil law systems. The quest for a unified civil code in the modern-day People’s Republic dates back to the earliest days of its founding, but has been hampered over the years by internal turmoil and other priorities. In 1986, the NPC promulgated the General Principles of the Civil Law (“General Principles”), which outlined the basic principles and scope of the civil law in China with an eye toward a single, unified code, but that effort that bore little fruit in the ensuing three decades. However, it appears that, under the Xi administration’s push to establish “rule of law” across the country, this longstanding effort may be back on track.

Not only do the General Provisions lay the groundwork for China’s eventual, unified civil code, they are of immediate consequence as they are to go into effect in October 2017, long before the full code is complete. The General Provisions establish new rules on topics including individual privacy rights, minors’ rights, and virtual asset and intellectual property rights. For instance, the General Provisions:

  • Lower the age at which minors are recognized to have limited civil capacity, from 10 to 8 years old;
  • Increase the standard statute of limitations from two to three years in civil cases (unless otherwise specified);
  • Afford partial property-owning rights to fetuses in order to facilitate cases involving matters such as estate transfers and donations;
  • Expand on and guarantee individual rights, such as the right to privacy; and
  • Redefine businesses and nonprofit organizations more generally (i.e., nonprofits are now “entities that do not distribute profits” instead of “entities that do not make profit”).

Once they go into effect, the General Provisions will supersede existing civil laws where there is a conflict, but where no conflicts arise, current laws will remain in effect. Therefore, the General Provisions are neither an amendment nor a new version of existing laws. Rather, they are akin to a “software patch,” revamping sections of the existing laws without overturning any particular law wholesale.

Reviews have been mixed so far, with some legal commentators observing that the General Provisions do not go far enough on civil liberties, individual privacy, and property rights. Other observers, however, are hopeful that they will be the first step to greater and more ambitious civil and legal reforms in the future. In a new section added after discussion among NPC delegates, the General Provisions make it illegal to defame or challenge the narrative of Communist Party “heroes and martyrs,” raising a wide array of legal questions on how damage would be assessed, or which parties would have standing to sue on behalf of a martyr. How the clause will be implemented is yet to be seen, but this situation is not entirely without precedent or context. In 2016, the brother of the nationally recognized martyr Qiu Shaoyun brought a lawsuit against Sun Jie, an internet celebrity with a 9 million-strong following, for making light of Qiu’s death on social media. The court ordered Jie to pay a nominal 1 RMB fine and apologize consecutively for five days.

Observers will be watching to see whether further progress towards the development of a unified civil code will reduce significant “gray areas” under current Chinese law, bringing individuals and entities in China a greater measure of certainty in the legal consequences of their actions.

Zhijing Yu of Covington & Burling LLP contributed to the research and drafting of this article.

This Week in Congress – May 1, 2017

Lawmakers were able to avert a shutdown on Friday by passing a one-week stopgap funding bill to keep the government operational.  This week they are looking to finalize a broader spending package for the remainder of Fiscal Year (FY) 2017, through September 30.  Leaders in both parties and chambers appear to be working through a number of outstanding issues, including some controversial policy riders, that members are aiming to attach to the omnibus spending bill, but appear optimistic that the bill final text will be wrapped up early this week and passed by both chambers before the end of this week.  Once the spending bill is resolved, members can begin the process anew for FY 2018.

While leadership wraps up the FY 2017 appropriations measure, the House and Senate will tackle other legislative business on the agenda.

The Senate returns on Monday, with a scheduled cloture vote on the nomination of Jay Clayton as chairman of the Securities and Exchange Commission, setting up a final confirmation vote on the nominee later in the week. The Senate floor schedule beyond this vote is unclear, although action can be expected on the government funding bill once an agreement is reached and the bill passes the House.  In the meantime the Majority Leader may move to consider other nominations awaiting consideration on the Executive Calendar.  The current pending nominations include Robert Lighthizer to be United States Trade Representative, Scott Gottlieb to be Commissioner of the Food and Drug Administration, Jeffrey Rosen to be Deputy Secretary of Transportation, and Rachel Brand to be Associate Attorney General, as well as a number of military appointments.

The House will return to legislative business on Monday, when members will consider six bills under suspension of the rules, including H.R. 1644, the Korean Interdiction and Modernization of Sanctions Act.  Intended to target the Kim Jung Un regime in North Korea and its recent provocations, the bill would require the President to expand existing sanctions and impose new sanctions against North Korea, blocking trade activities and imposing sanctions against those who employ North Korean slave labor.

On Tuesday and during the remainder of the week, members will take up an additional three bills under suspension of the rules, all under the jurisdiction of the Transportation and Infrastructure Committee.

Members will also consider H.R. 1180, the Working Families Flexibility Act of 2017, subject to a rule.  The legislation would amend the Fair Labor Standards Act of 1938 to allow employers to offer employees the choice of paid time off, usable at the employee’s discretion, in lieu of higher wages for overtime hours worked.  Employees would be eligible to accrue 1.5 hours of compensatory time for every hour of overtime worked, for up to 160 hours per year, and an employer would be required to pay cash wages for any unused time at the end of the year.  Such compensatory time could be provided only in accordance with a collective bargaining agreement or with the express consent of affected private sector employees. The bill also would require the Government Accountability Office (GAO) to report to Congress about the extent to which employers provide such compensatory time as well as the number of complaints alleging violations of the provisions and the disposition of those complaints, including any enforcement actions. The changes would be effective for five years after enactment of the bill.  The bill was approved by the Committee on Education and the Workforce on April 26 by a 22-16 party-line vote.

The Majority Leader’s schedule indicates that consideration of additional legislation is possible this week, leaving room for consideration of the legislation to fund the government through FY 2017.  Consideration of a new version of the healthcare “repeal and replace” bill related to the Affordable Care Act is also possible.  House Republican leadership continues to determine whether a new compromise bill negotiated between Rep. Tom McArthur, a leading moderate, and Rep. Mark Meadows, chair of the House Freedom Caucus, can garner sufficient votes to pass the House.  Press reports confirm what two members of Congress have reported to us privately — that House Republicans remain a few votes short of being able to pass this version of the bill.  Thus, further changes to the current version of the legislation are likely needed in order to garner enough votes to pass the House.

Congressional committees are again focused on U.S. military operations and readiness this week, given the ongoing diplomatic confrontation with North Korea over its continued provocations surrounding its nuclear and missile programs.  The Senate Armed Services Committee is scheduled to hear testimony from General Darren W. McDew, Commander of U.S. Transportation Command, on Tuesday morning.  The committee will meet again on Thursday to hear testimony from General Raymond A. Thomas III, Commander of U.S. Special Operations Command, and Theresa Whelan, the Acting Assistant Secretary of Defense for Special Operations/Low Intensity Conflict.

Also related to foreign affairs and military operations, against the backdrop of increased tensions with Russia, the Senate Appropriations Subcommittee on Military Construction, Veterans Affairs and Related Agencies will hear testimony from General Curtis Scaparrotti, the current Supreme Allied Commander in Europe and Commander of the United States European Command, on Tuesday.

On Tuesday, the Senate Foreign Relations Committee is scheduled to begin its consideration of the President’s nominee to serve as U.S. Ambassador to China, former Iowa Governor Terry Branstad.  Among the many complex issues expected to be raised at the hearing, committee members will certainly spend time questioning Governor Branstad on the Ambassador’s role to work with the Chinese government on its policy towards its neighbor, North Korea, and assisting with diplomacy in dealing with the regime’s recent provocations and reducing its weapons program.

FBI Director James Comey will appear before the Senate Judiciary Committee on Wednesday morning for the committee’s annual oversight hearing of the agency.  This appearance will be the first for Director Comey before the Judiciary Committee under the Trump Administration and since his testimony earlier this year before the House Intelligence Committee regarding Russian meddling in the 2016 presidential election.

Comptroller General of the United States Gene Dodaro of the GAO is scheduled to testify before the House Budget Committee on Wednesday regarding fiscal mismanagement and mechanisms to improve efficiencies.  His appearance follows the release of the GAO’s seventh annual report to Congress on duplicative federal programs or activities and “Additional Opportunities to Reduce Fragmentation, Overlap, and Duplication and Achieve Other Financial Benefits.”  The GAO’s recommendations for cost savings are also in line with the recent White House actions to install government-wide reforms and reorganization in order to increase efficiencies and reduce the size of the federal workforce.

Also on Wednesday, the House Oversight and Government Reform Committee will meet to review the recent data breach that led the Internal Revenue Service (IRS) to disable its Data Retrieval Tool, used to import tax information to the Free Application for Federal Student Aid (FAFSA) on the Education Department’s website, a tool utilized by millions of students and their families to apply for federal financial student aid.  IRS Commissioner John Koskinen indicated during a Senate Finance Committee hearing last month that the data breach may have compromised the personal data of as many as 100,000 taxpayers.

Following the public outrage over an incident last month in which a United Airlines passenger was dragged off of a plane, two congressional committees this week will review airline booking policies and customer service.  United Airlines CEO Oscar Munoz is scheduled  to testify before the House Transportation and Infrastructure Committee on Tuesday, alongside the company’s President, Scott Kirby, and representatives from American Airlines, Alaska Airlines, Southwest Airlines, and Consumers Union.  On Thursday, the Senate Commerce, Science and Transportation Subcommittee on Aviation will hold a hearing to explore the current state of airline travel and consumer protections.

The full hearing schedule for the week ahead is detailed below:

Tuesday, May 2, 2017

House Committees

Examining Improvements to the Regulation of Medical Technologies
House Energy and Commerce – Subcommittee on Health
Subcommittee Hearing
10 a.m.

Combating Waste, Fraud, and Abuse in Medicaid’s Personal Care Services Program
House Energy and Commerce – Subcommittee on Oversight and Investigations
Subcommittee Hearing
10:15 a.m., 2322 RHOB

Financial CHOICE Act
House Financial Services
Full Committee Markup
10 a.m.

Consequences of Executive Branch Overreach of the Antiquities Act
House Natural Resources – Subcommittee on Federal Lands
Subcommittee Hearing
10 a.m., 1324 LHOB

Pending Legislation
House Oversight and Government Reform
Full Committee Markup
10:30 a.m., 2154 RHOB

H.R.2105, the “NIST Small Business Cybersecurity Act of 2017
House Science, Space and Technology
Full Committee Markup
10 a.m., 2318 RHOB

Oversight of U.S. Airline Customer Service
House Transportation and Infrastructure
Full Committee Hearing
9:30 a.m., 2167 RHOB

Veterans Appeals Improvement and Modernization Act of 2017
House Veterans’ Affairs
Full Committee Hearing
10 a.m.

Overview of the Annual Report on Sexual Harassment and Violence at the Military Service Academies
House Armed Services – Subcommittee on Military Personnel
Subcommittee Hearing
3:30 p.m., 2118 RHOB

Winning the Fight Against Human Trafficking: The Frederick Douglass Reauthorization Act
House Foreign Affairs – Subcommittee on Africa, Global Health, Global Human Rights and International Organizations
Subcommittee Hearing
2 p.m., 2172 RHOB

Examining the Management of Red Snapper Fishing in the Gulf of Mexico
House Oversight and Government Reform – Subcommittee on the Interior
Subcommittee Hearing
2 p.m., 2154 RHOB

VA Specialized Services: Lower Extremity Conditions
House Veterans’ Affairs – Subcommittee on Health
Subcommittee Hearing
2 p.m., 334 CHOB

Senate Committees

U.S. Transportation Command
Senate Armed Services
Full Committee Hearing
9:30 a.m., SD-G50

Examining the U.S. – EU Covered Agreements
Senate Banking, Housing and Urban Affairs
Full Committee Hearing
10 a.m., SD-538

Fiscal Certainty for Communities With Tax-Exempt Federal Lands
Senate Energy and Natural Resources
Full Committee Hearing
10 a.m., SD-366

Ambassador to China Nomination
Senate Foreign Relations
Full Committee Hearing
10 a.m., SD-419

Responses to the Increase in Religious Hate Crimes
Senate Judiciary
Full Committee Hearing
10:30 a.m., SD-226

U.S. European Command
Senate Appropriations – Subcommittee on Military Construction, Veterans Affairs and Related Agencies
Subcommittee Hearing
2:30 p.m., SD-124

Wednesday, May 3, 2017

House Committees

Oversight of the 2020 Census
House Appropriations – Subcommittee on Commerce, Justice, Science, and Related Agencies
Subcommittee Hearing
10:30 a.m., H-309

Member’s Day/Outside Witnesses
House Appropriations – Subcommittee on Legislative Branch
Subcommittee Hearing
10 a.m., HT-2

2018 Veterans Affairs Oversight
House Appropriations – Subcommittee on Military Construction, Veterans Affairs, and Related Agencies
Subcommittee Hearing
10 a.m., 2359 RHOB

Public Witness Day
House Appropriations – Subcommittee on Energy and Water Development and Related Agencies
Subcommittee Hearing
10:30 a.m., 2362-B RHOB

Failures of Fiscal Management: A View from the Comptroller General
House Budget
Full Committee Hearing
10 a.m., 1334 LHOB

Pending Legislation
House Energy and Commerce – Subcommittee on Energy and Power
Subcommittee Hearing
10 a.m., 2123 RHOB

Pending Legislation
House Foreign Affairs
Full Committee Markup
10 a.m.

Reviewing the FAFSA (Free Application for Federal Student Aid) Data Breach
House Oversight and Government Reform
Full Committee Hearing
9:30 a.m., 2154 RHOB

Oil and Gas Technology Innovation
House Science, Space and Technology
Full Committee Hearing
10 a.m., 2318 RHOB

Empowering Small Businesses: The Accelerator Model
House Small Business
Full Committee Hearing
11 a.m., 2360 RHOB

Maritime Transportation Regulatory Issues
House Transportation and Infrastructure – Subcommittee on Coast Guard and Maritime Transportation
Subcommittee Hearing
10 a.m., 2167 RHOB

IRS Oversight Hearing
House Appropriations – Subcommittee on Financial Services and General Government
Subcommittee Hearing
1 p.m., 2362-A RHOB

Littoral Combat Ships and the Transition to Frigate Class
House Armed Services – Subcommittee on Seapower and Projection Forces
Subcommittee Hearing
3:30 p.m., 2118 RHOB

Denying Terrorists Entry to the United States: Examining Visa Security
House Homeland Security
Full Committee Hearing
2 p.m., HVC-210

The Challenges of Keeping Hydropower Affordable and Opportunities for New Development
House Natural Resources – Subcommittee on Water, Power and Oceans
Subcommittee Hearing
2:30 p.m., 1324 LHOB

Senate Committees

Defense Innovation and Research Funding
Senate Appropriations – Subcommittee on Defense
Subcommittee Hearing
10:30 a.m., SD-192

Department of Defense Laboratories and Their Contributions to Military Operations and Readiness
Senate Armed Services – Subcommittee on Emerging Threats and Capabilities
Subcommittee Hearing
10 a.m., SR-222

Economy and Private Sector Growth
Senate Budget
Full Committee Hearing
10:30 a.m., SD-608

Investing in Broadband Infrastructure
Senate Commerce, Science and Transportation
Full Committee Hearing
10 a.m., SR-253

Infrastructure Project Streamlining and Efficiency: Achieving Faster, Better, and Cheaper Results
Senate Environment and Public Works
Full Committee Hearing
10 a.m., SD-406

Global Philanthropy Remittances and International Development
Senate Foreign Relations – Subcommittee on Multilateral International Development, Multilateral Institutions and International Economic, Energy and Environmental Policy
Subcommittee Hearing
10 a.m., SD-419

FBI Oversight
Senate Judiciary
Full Committee Hearing
10 a.m., SD-226

Building a F.A.S.T. Force: A Flexible Personnel System for a Modern Military
Senate Armed Services – Subcommittee on Personnel
Subcommittee Hearing
2:30 p.m., SR-222

Thursday, May 4, 2017

House Committees

Examining a Church’s Right to Free Speech
House Oversight and Government Reform – Subcommittee on Government Operations
Subcommittee Hearing
10 a.m., 2154 RHOB

Ongoing Intelligence Activities
House Select Intelligence
Full Committee Hearing (CLOSED)
1 p.m., HVC-304

Improving the Small Business Innovation Research and Small Business Technology Transfer Programs
House Science, Space and Technology – Subcommittee on Research and Technology; House Small Business – Subcommittee on Contracting and Workforce
Subcommittees Joint Hearing
9 a.m., 2318 RHOB

Senate Committees

U.S. Special Operations Command
Senate Armed Services
Full Committee Hearing
9:30 a.m., SD-G50

Reauthorization of the National Flood Insurance Program, Part II
Senate Banking, Housing and Urban Affairs
Full Committee Hearing
10 a.m., SD-538

Electromagnetic Pulse Threats and Policy Options to Protect Energy Infrastructure
Senate Energy and Natural Resources
Full Committee Hearing
10 a.m., SD-366

International Development: Value Added Through Private Sector Engagement
Senate Foreign Relations
Full Committee Hearing
10 a.m., SD-419

Pending Business
Senate Judiciary
Full Committee Markup
10 a.m.

Veterans Affairs Telemedicine
Senate Appropriations – Subcommittee on Military Construction, Veterans Affairs and Related Agencies
Subcommittee Hearing
10:30 a.m.

Questions, Answers, and Perspectives on the Current State of Airline Travel
Senate Commerce, Science and Transportation – Subcommittee on Aviation Operations, Safety and Security
Subcommittee Hearing
10:30 a.m., SR-253

Ballistic Missile Defense Policies and Programs
Senate Armed Services – Subcommittee on Strategic Forces
Subcommittee Hearing
2:30 p.m., SR 232-A

Intelligence Matters
Senate Select Intelligence
Full Committee Briefing
2 p.m.

Trump moves on aluminum under Section 232; Steel investigation update

Just one week after launching a national security investigation of steel imports under Section 232 of the Trade Expansion Act of 1962, President Trump has announced plans to institute a similar investigation regarding aluminum. In a memorandum of April 27, 2017, President Trump announced that the Secretary of Commerce had initiated an investigation under Section 232 to determine the national security effects of aluminum imports.

Concurrent with this new action under Section 232 on aluminum, the Department of Commerce has also moved forward in its Section 232 investigation of steel. On April 26, 2017, the Commerce Department issued a schedule for the steel Section 232 investigation, calling for a hearing on May 24, applications to participate in that hearing by May 17, and written comments by any person by May 31.

I.          Section 232 investigation of aluminum

President Trump’s memorandum on the Section 232 aluminum investigation largely mirrors his prior memorandum on the Section 232 steel investigation. Both memoranda note that “[c]ore industries such as steel, aluminum, vehicles, aircraft, shipbuilding, and semiconductors are critical elements of our manufacturing and defense industrial bases.” Both memoranda emphasize the need to defend these core industries “against unfair practices and other abuses.” Both memoranda assert that “global markets” are “distorted by large volumes of excess capacity” and observe that this excess capacity “discourages long-term investment in the industry.” Finally, both memoranda emphasize that other efforts at controlling overcapacity have been unsuccessful.

Although some initial reports suggested an expedited timeline for the aluminum investigation, the press release accompanying President Trump’s memorandum on aluminum referred only to the statutory timeline. This timeline permits the Secretary of Commerce 270 days to determine the national security effects of the imports at issue, and gives the President a further 90 days thereafter to determine what action is necessary to adjust the imports in question. In remarks at the White House, Commerce Secretary Wilbur Ross promised that “the federal government will be proactive” and that the Commerce Department would “conduct this investigation thoroughly and expeditiously so that we can fully enforce our trade laws and defend this country against those who would do us harm.”

Pursuant to the Section 232 statute, Secretary Ross must determine whether aluminum is being “imported into the United States in such quantities or under such circumstances as to threaten to impair the national security.” Based on Secretary Ross’s findings, President Trump must issue a report to Congress and may take such actions as he deems necessary to “adjust” aluminum imports “so that such imports will not threaten to impair the national security.”

The Commerce Department determines the effect of imports on national security based on the quantity of those imports, and other circumstances related to importation. The Commerce Department judges national security requirements based on a number of factors, including the domestic production needed for national defense requirements, the capacity of domestic industries to meet national defense requirements, and existing and anticipated availability of human resources, raw materials, and other supplies essential to national defense.

The Section 232 regulations contemplate public hearings and commentary in these investigations, and prior investigations under the statute have involved multiple hearings across the United States. As discussed in Part III below, the Commerce Department will likewise hold hearings and permit public comments in the Section 232 steel investigation, and following the initial announcement of the investigation, the Commerce Department has indicated it is “particularly interested” in comments on certain topics. Similar guidance regarding the Section 232 aluminum investigation may be issued in the coming days.

II.         Prior Section 232 investigations

According to a Commerce Department summary, there have been 26 prior investigations under Section 232, with the first investigation occurring in 1963 and—prior to last week—the most recent investigation being initiated in 2001. These prior investigations have related to industries including tungsten mill products, anti-friction bearings, petroleum, watches, and ferroalloys. Prior investigations were initiated by industry associations or other private parties, as well as cabinet officials, members of Congress, or by presidential decree.

Most prior investigations under Section 232 have not resulted in presidential action. In the first investigation under Section 232, for example, the Commerce Department concluded that imports of the metals in question did not threaten to impair national security. In other cases, even when the Commerce Department has determined that the imports of the product at issue do threaten national security, the President has determined that no action was necessary to adjust imports. The President made such a determination in both 1994 and 2000, for example, with respect to petroleum imports.

When Presidents have acted under Section 232, they have taken a variety of steps. In response to some investigations the President has simply embargoed imports of the product in question. Voluntary restraint agreements were sought in connection with one Section 232 investigation, and another investigation resulted in the removal of products from eligibility for duty-free entry under the Generalized System of Preferences. In other investigations, the President has imposed fees or quotas to limit imports of the product at issue.

Presidential actions under Section 232 have at times been subject to challenge. In response to one such challenge, the Supreme Court held in 1976 that Section 232 authorized the President to impose not only quotas to control imports, but also to implement certain license fees. The Supreme Court emphasized the limits of its holding, however, that stated that its conclusion in that case “in no way compels the further conclusion that any action the President might take, as long as it has even a remote impact on imports, is also so authorized.”

Taking up this limiting language in subsequent case, a federal district court struck down President Carter’s imposition of a license fee on crude oil and gas pursuant to a Section 232 investigation. As that court concluded, the fee in question would affect not only oil imports, but also domestic oil. In light of this broad effect and the Supreme Court’s limiting language, the court held that the President lacked authority under Section 232 to impose the fee. Despite this decision, however, the President retains significant discretion to act under Section 232, should the Commerce Department determine that imports of aluminum (or steel) threaten to impair national security.

III.        Steel Section 232 investigation update – Schedule for hearing and comments

This initiation of this new Section 232 investigation of aluminum is accompanied by developments in the Section 232 investigation of steel, initiated on April 20, 2017. Specifically, on April 26, 2017, the Commerce Department requested public comments and announced a hearing in the Section 232 steel investigation.

The steel investigation hearing will be held in Washington, D.C. on Wednesday, May 24, 2017, at the Commerce Department auditorium. Requests to participate in the hearing are due the previous week, on Wednesday, May 17, 2017. The Commerce Department will accept comments from anyone, whether appearing at the hearing or not, through Wednesday, May 31, 2017.

The Commerce Department has indicated that it is “particularly interested” in comments directed at a number of specific criteria, consistent with the Section 232 regulations. These criteria are:

(a) Quantity of steel or other circumstances related to the importation of steel;

(b) Domestic production and productive capacity needed for steel to meet projected national defense requirements;

(c) Existing and anticipated availability of human resources, products, raw materials, production equipment, and facilities to produce steel;

(d) Growth requirements of the steel industry to meet national defense requirements and/or requirements to assure such growth;

(e) The impact of foreign competition on the economic welfare of the steel industry;

(f) The displacement of any domestic steel causing substantial unemployment, decrease in the revenues of government, loss of investment or specialized skills and productive capacity, or other serious effects;

(g) The displacement of any domestic steel causing substantial unemployment, decrease in the revenues of government, loss of investment or specialized skills and productive capacity, or other serious effects;

(h) Relevant factors that are causing or will cause a weakening of our national economy; and

(i) Any other relevant factors.

According to the Commerce Department’s notice, the hearing will last from 10 a.m. until 1 p.m., and although each speaker will be allowed only 10 minutes to present, limits on the number of persons presenting may be necessary. The Commerce Department advises those who seek to participate in the hearing to “describe the individual’s interest in the hearing” and “where appropriate, explain why the individual is a proper representative of a group or class of persons that has such an interest.” Consistent with the conduct of prior investigations, the Commerce Department has indicated that it wishes to ensure “a full range of comments is heard” at the hearing.

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Interest in these two Section 232 investigations is likely not limited to the aluminum and steel industries. In fact, in light of President Trump’s initiation of two such investigations in quick succession, other industries—particularly those also described as “core industries” in the underlying memoranda—may seek similar treatment.

The Week Ahead in the European Parliament – April 28, 2017

Summary

This week was a committee week and a mini-plenary in the European Parliament, during which some interesting votes took place.

On Tuesday, the European Parliament’s Culture and Education Committee (“CULT”) passed its report on the draft for a revised Audiovisual Media Services Directive proposed by the European Commission in May 2016.  While some have put forward amendments to the proposal to include strict rules against advertising of unhealthy foods and drinks (similar to the ones that apply to tobacco products) and even a strict ban on advertising for these products, the CULT Committee rejected these amendments.  Instead, Members of the CULT Committee adopted a less-stringent approach towards the industry, calling on EU Member States to work together with the food and drink industry to prepare voluntary rules to reduce children’s exposure to audiovisual advertising.  The Parliament’s position on the proposal should be subject to a vote in plenary in the course of May.  See the Commission proposal here, the CULT Committee’s draft report here, and the various amendments tabled here, here, here and here.

On Thursday, the Parliament’s plenary voted in favor of a non-binding position on the proposed Directive against “Hybrid Mismatches”.  This phrase refers to the practices used by some multinational companies to benefit from tax loopholes in EU Member States and third countries.  Tax matters fall exclusively in the competence of the Council of the EU (i.e., Member States).  This position is therefore not binding on the Council.  See the proposal for a Directive here, and the report here.

Next week will be a committee week in the European Parliament.  There will be a number of interesting discussions in the committees.

On Tuesday, the Internal Market and Consumer Protection Committee (“IMCO”) will vote on amendments to its draft resolution on the “European agenda for collaborative economy”.  The IMCO Committee will assess, in particular, taxation, consumer protection and labor rights, as well as the benefits and opportunities which the sharing economy may bring to society.  See the Commission Communication here, the draft resolution here, and the amendments tabled here. 

On Wednesday, the Economic and Monetary Affairs Committee (“ECON”) and Civil Liberties Committee (“LIBE”) will vote on a draft motion for a resolution on the Commission proposal for a Delegated Regulation on identifying high-risk third countries with strategic deficiencies.  The Committees call on the Commission to insert additional countries to its list of high-risk third countries.  See the draft motion for a resolution here. 

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Suniva Requests Global Safeguards For U.S. Solar Industry Under Section 201

On April 26, 2017, the U.S.-based solar manufacturer Suniva, Inc. filed a petition for global safeguards with the U.S. International Trade Commission (“ITC”). In particular, Suniva requests the imposition of tariffs on solar cells and the establishment of a minimum price for solar modules imported into the United States. The petition was filed under Section 201 of the Trade Act of 1974, as amended, which authorizes global safeguards investigations, also known as “escape clause” investigations. Throughout the proceedings, affected parties will have multiple opportunities to submit their views not only to the ITC but also to the Trump Administration, which will have the final say on any relief recommended by the ITC.

The Suniva Petition

Suniva is a manufacturer of high-efficiency solar cells and panels based in Georgia, with production facilities in Georgia and Michigan. Earlier this year, Suniva laid off nearly 200 employees; in mid-April, it also filed for Chapter 11 bankruptcy protection. The company’s ITC petition claims that unless global safeguards are imposed, Suniva will be forced to shutter its remaining production operations permanently.

Suniva is filing its Section 201 petition against a backdrop of existing trade remedy measures in the solar industry. Specifically, the ITC and the U.S. Commerce Department previously imposed antidumping and countervailing duties against solar cells and modules from China and Taiwan, and those tariffs remain in effect.

The Suniva petition goes beyond the existing antidumping and countervailing duty orders because the requested safeguards are not limited to imports from specific countries; rather, the remedies under Section 201, if granted, would be global in scope and would affect all solar cells and modules imported into the United States, regardless of origin. The scope of the petition is limited to crystalline silicon photovoltaic cells and modules; it expressly excludes competing thin film photovoltaic products. The petition also excludes modules, laminates, and panels produced in other countries using cells manufactured in the United States.

In terms of duration, Suniva asks the ITC to recommend that the President impose global safeguards for four years—the maximum statutory period. The requested relief is an initial duty rate on imported solar cells of $0.40/watt, along with an initial minimum price on solar modules of $0.78/watt. These initial rates would be reduced slightly over the course of the proposed four-year schedule. Reports suggest that under current market conditions, the price of imported solar modules would roughly double if Suniva’s request were granted.

Section 201 Investigations

In a Section 201 investigation, the ITC must determine whether an article is being imported “in such increased quantities as to be a substantial cause of serious injury, or the threat thereof, to the domestic industry producing an article like or directly competitive with the imported article.” If the ITC issues an affirmative injury determination, it recommends a remedy to the President, who ultimately decides what remedy, if any, will be imposed.

The ITC is currently reviewing Suniva’s petition to determine whether it was “properly filed” in accordance with its rules. By regulation, petitions must contain specific supporting information including import data, domestic production data, and data showing the alleged injury. Once this initial review is complete, the ITC will decide whether to institute the investigation and will publish a notice of its decision in the Federal Register.

If the ITC institutes an investigation, stakeholders will have various opportunities to present their views. Public hearings are held during the ITC’s consideration of injury (or threat of injury) to the domestic industry and during any subsequent remedy phase. “All interested parties and consumers, including any association representing the interests of consumers,” may attend, present evidence, and cross-question other presenters at hearings.

The injury phase must be concluded within 120 days after the petition’s filing, though the ITC has an extra 30 days to complete “extraordinarily complicated” investigations. Then, in the event of an affirmative injury determination, the ITC submits a report to the President at the conclusion of the remedy phase containing its findings and recommendations. This report must be submitted within 180 days after the petition’s filing.

In determining what relief to provide, if any, the President must take into account the ITC report, the domestic industry’s efforts to make a positive adjustment to import competition, the economic and social costs and benefits of the proposed relief, U.S. economic and security interests, and other statutory factors. Additionally, an interagency trade group must make a recommendation to the President about any action to be taken. This interagency group—chaired by the U.S. Trade Representative and including the Secretaries of Commerce, State, Agriculture, Labor, and the Treasury—will request public comments following an affirmative injury determination by the ITC.

*           *           *

In his recently released 2017 Trade Policy Agenda, President Trump emphasized that the “safeguard” provisions of Section 201 “can be a vital tool for industries needing temporary relief from imports to become more competitive.” While it remains to be seen what actions the Administration may take in response to the results of the ITC’s Section 201 investigation, Suniva’s petition appears designed to capitalize upon the Administration’s stated interest in strictly enforcing U.S. trade remedy laws, strengthening the nation’s manufacturing base, and protecting against domestic job losses. Depending upon the outcome, the beneficiaries could include not only Suniva but also traditional energy sectors that compete with the solar industry.

 

Trump Tax Reform Proposal

On April 26, 2017, Treasury Secretary Steven Mnuchin and National Economic Council Director Gary Cohn introduced the Trump Administration’s tax reform proposal (the “Trump Proposal”) in a briefing. The proposal appears to borrow heavily from the tax reform plan put out by Mr. Trump during his presidential campaign with the significant exception that this reform proposal advocates adoption of a territorial tax system.

The proposal, set forth in a bulleted one-page document, was notably short on detail, and Secretary Mnuchin stated that many details will be finalized in subsequent discussions with Congress. Below, we highlight the major components in the Trump Proposal that we anticipate will be of the greatest interest to our clients.

Major Proposals

Reduce the number of individual tax rate brackets. Under the Trump Proposal, the top rate for individual income tax would go down to 35 percent from its current rate of 39.6 percent (which is above the top rate of 33 percent proposed by Mr. Trump during his presidential campaign). The number of tax brackets would also be reduced from seven to three (10 percent, 25 percent, and 35 percent). Effectively, these changes would reduce income tax rates for most individual taxpayers, though no determination has been made on the income levels where these brackets would be set.

Expanded standard deduction. The standard deduction for individuals would be doubled under the Trump Proposal, which would effectively create a zero rate for many lower income taxpayers. Additionally, a higher standard deduction would reduce the number of taxpayers who would use itemized deductions, thus simplifying the return filing process for many taxpayers.

Eliminate most individual deductions. Secretary Mnuchin noted that most individual deductions will be eliminated, with the exception of the mortgage interest deduction and the charitable contribution deduction. This change may prove controversial because it repeals the deduction for state and local income taxes.

Other individual provisions. Consistent with the Trump campaign’s position, the proposal also would repeal the alternative minimum tax, the estate tax, and the Affordable Care Act’s 3.8 percent tax on net investment income.

Adoption of a territorial system. The Administration would also shift the United States to a territorial tax system, a proposal that was also advocated in the House Republican Tax Reform Blueprint (the “House Blueprint”)1 released last year, as a way to “level the playing field” for U.S. companies. A territorial tax system generally would exempt from taxation the foreign earning of U.S. headquartered companies. This is a significant change from an early Trump campaign position that advocated a worldwide tax system without deferral.

One-time repatriation tax. The Trump Proposal includes a one-time repatriation tax on the foreign earnings of U.S. companies, which is consistent with the Trump campaign position. However, in his remarks, Secretary Mnuchin did not give a specific repatriation rate even though the Trump Administration in prior comments has advocated for a 10 percent repatriation rate. This may suggest that the Administration is moving to the House Blueprint’s suggested bifurcated rates of 3.5 percent for foreign earnings and profits invested in “hard” assets and 8.75 percent for earnings and profits held as cash equivalents.

15 Percent business income rate and treatment of pass-through entities. The Trump Proposal would impose a 15 percent rate on all business income, including corporations and individuals receiving business income from S corporations, partnerships and other pass-throughs. It is uncertain whether this 15 percent rate will apply to all pass-through income. Secretary Mnuchin has previously stated that the 15 percent business rate would apply to small business income but would not be “a loophole for people that should be paying a higher rate.”

No mention of a cash-basis tax system or the border adjustability tax. The Trump Proposal did not contain any discussion of a cash-basis tax system or the border adjustability approach under the House Blueprint. Under the tax reform proposals of the Trump campaign, U.S. manufacturers would have been allowed to elect full and immediate expensing (subject to loss of the interest deduction) or retain current law depreciation and interest deductions. The Trump Proposal did not contain this earlier campaign proposal. On the issue of the border adjustable tax, Secretary Mnuchin noted that the Administration was continuing discussions with the House. Because the Trump Proposal briefing only provided a general overview of the Administration’s proposals, it is possible that President Trump could endorse either of these ideas at a later date.

At this point, it remains unclear how the Trump Proposal will affect the current tax policy debate or the ongoing tax reform process. Given the fast pace of tax reform efforts, we anticipate that we will issue Alerts regularly with new developments.

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1 The House Republican tax reform proposal is formally titled “A Better Way: A Pro-Growth Tax Code for All Americans.”

 

Congressional Review Act Developments

In response to the unprecedented use of the Congressional Review Act (“CRA”) by the 115th Congress and the Trump Administration, the Center for Biological Diversity (“Center”), a nonprofit dedicated to wildlife conservation, filed a lawsuit in an Alaska federal court challenging the constitutionality of the Act.

The CRA is a statute that requires federal agencies to submit new regulations to Congress before those rules can take effect. As we have previously explained, the Act also, significantly, gives Congress the opportunity to pass a joint resolution of “disapproval,” which nullifies the entire regulation at issue, leaving the rule with “no force or effect.” The agency is also prohibited from later promulgating any rule that is “substantially the same” as the rejected rule.

The Center’s lawsuit concerns the Federal Wildlife Services “Refugees Rule,” 81 Fed. Reg. 52,247 (Aug. 5, 2016), which, according to the complaint, protects certain wildlife from “cruel and ecologically harmful predator control practices.” The Refugee Rule was promulgated by the Obama Administration, and, because it was issued within 60 legislative days of the end of the 114th Congress, is subject to CRA review by the 115th Congress.

The lawsuit attacks the CRA on two fronts. First, it broadly challenges the “substantially the same” prohibition, arguing that Congress violated the constitutional separation of powers between the Executive and Legislative Branches by revoking a properly promulgated rule without amending the underlying statute through the legislative process.  In other words, because Congress has delegated to the Department of the Interior the power to make certain regulations, Congress cannot, without amending the Department’s substantive authorities, alter or revoke an action taken by the Executive Branch.

Second, the lawsuit argues that Congress lacks the power to revoke the Refugee Rule because the Rule falls under a specific exception, found in 5 U.S.C. § 808, to the CRA’s requirement that regulations be submitted to Congress before they take effect: rules that concern a “regulatory program for a commercial, recreational, or subsistence activity related to hunting” do not require submission to Congress, and may take effect “at such time as the agency . . . determines.” Thus, the Center argues, because no submission to Congress was required, the Rule was not subject to disapproval.

This argument that Congress cannot revoke rules subject to Section 808 would also apply to regulations “for which an agency for good cause finds . . . that notice public procedure are impracticable, unnecessary, or contrary to the public interest,” and thus do not require a submission to Congress under the CRA.

While it is too soon to determine whether this novel legal case has merit, a constitutional challenge to the CRA is significant. If federal courts determine that the “substantially the same” prohibition in the CRA is unconstitutional, many federal agencies would be free to reenact nullified rules in a similar fashion.  Such a ruling would also likely trigger litigation to determine the meaning of “substantially the same,” as well as a flurry of lobbying efforts to encourage (or discourage) agencies to re-promulgate rules similar to those overturned by Congress.

This is one of the first legal challenges to the CRA, since the statute, historically, has been rarely used: until the Trump Administration and the 115th Congress, only one rule had ever been nullified under the CRA.  This Congress and Administration have made frequent and significant use of the CRA to reverse Obama Administration rules:  56 disapproval resolutions, affecting 32 rules have been introduced in Congress, and 15 resolutions have passed in at least one chamber.  President Trump has already signed ten resolutions of disapproval into law.

While the 60-day window (“continuous session”) since January 30 to introduce new CRA resolutions has passed for this Congress, each chamber has an ongoing window from the date of introduction to act on the dozens of CRA resolutions still pending. Pending resolutions that have not passed both chambers include resolutions concerning:

  • the privacy rights of broadband customers
  • requirements for offshore drilling off the Alaska coast
  • the EPA’s cross-state pollution rule and air quality initiatives
  • endangered and threatened species policy
  • emissions standards for the oil and natural gas sector
  • IRS treatment of certain interests in corporations as stock or indebtedness
  • rules governing drug testing for unemployment compensation applicants

The ongoing use of the CRA to overturn these and other regulations will be of interest to companies that support or oppose these rules or other rules facing congressional scrutiny.

China’s 2017 Party Leadership Transition

As the dramatic political shifts in Washington captivate the world, and the US reconsiders its traditional global leadership role, Chinese President Xi Jinping is positioning China to increase its own global role and influence. In a highly touted speech at the World Economic Forum in January, Mr. Xi mounted a rousing defense of economic globalization (though some business executives fighting market access barriers in China found more than a touch of irony in the rhetoric). Similar themes were echoed during the annual dual meetings of the National People’s Congress and the Chinese People’s Political Consultative Conference—also known as the “Two Sessions”—last month. At the same time, Mr. Xi has sought to engage with the new Trump Administration and bring a measure of stability to China’s external environment, meeting with U.S. President Donald Trump earlier this month at Mr. Trump’s Mar-a-Lago resort in Florida.

It is against this backdrop that China is preparing for its own leadership transition later this year. The interplay between political transitions at home and abroad could present a complex and intriguing plot for China watchers in the months to come.

This fall, the 19th Party Congress will meet to appoint the new senior leadership of the Chinese Communist Party (“CCP”), and Mr. Xi will undoubtedly begin his second five-year term as CCP General Secretary. The Party Congress convenes once every five years to elect the more than 200-member Central Committee of the CCP, which is formally the highest authority within the Party. Afterwards, the newly elected Central Committee will hold its first annual plenary session, during which it will appoint or elect individuals to the Party’s most important leadership positions. Although top Party leaders determine the rosters in advance, the political process is an important piece of political theater displaying the Party’s commitment to intra-Party democracy and democratic centralism. In addition to appointing and confirming the make-up of various Party commissions, organs, and the CCP Secretariat, the Central Committee will elect the General Secretary, members of the Central Military Commission, the 25 members of the Politburo and, most importantly, the now seven members of the Politburo Standing Committee. Under the leadership of the General Secretary, the Standing Committee is where true power ultimately resides within the Party and, in this one party state, within the entire Chinese political system.

Guide to the Leadership Organs of the Chinese Communist Party - 2

During Hu Jintao’s administration from 2002-2012, the Standing Committee was widely seen as a leadership body where decisions were made by consensus. Some view Mr. Xi as having changed that, reducing the number to seven members and consolidating power in a more visibly hierarchical institution. Meanwhile, others such as Alice Miller at the Hoover Institution, believe that the collective leadership model for decision-making remains intact under Mr. Xi. In any case, after the Standing Committee makes a decision, the Secretariat and lower leadership organs implement its mandate. Members of the Standing Committee typically have powerful roles in other parts of the government and Party apparatus that reflect their work portfolios. For instance, as the Premier, Standing Committee member Li Keqiang leads the State Council (composed of the Chinese government’s ministers and other heads of agencies) and is responsible for macroeconomic policy, particularly economic reform—though some believe that Mr. Xi has taken over some of the economic portfolio in the past few years. Standing Committee member Wang Qishan is now the Party’s renowned anti-corruption czar and unofficial Party whip, and correspondingly holds the position of Secretary of the Central Disciplinary Commission. Mr. Xi Jinping, for his part, is General Secretary of the Chinese Communist Party, President of the PRC government, and the Chairman of the Central Military Commission.

Decisions regarding the composition of the future Standing Committee will convey crucial bits of data, such as the potential identity of Mr. Xi’s successor or, alternatively, whether Mr. Xi plans to stay on past 2022, contravening the Party’s informal two-term limit that has developed in recent decades. Observers will be watching to see if Wang Qishan stays on the Standing Committee or transitions to another role, despite being past the traditionally understood retirement age. There is also some speculation as to whether power on the Standing Committee will be further consolidated through another reduction in its size. In 2012, the number of seats on the Standing Committee was reduced from nine to seven.

Politburo Standing Committee

During his first term, Mr. Xi has accumulated an unprecedented level of political power for the post-Deng era, and has recently been referred to as the “core leader” of the Chinese Communist Party, essentially equating Mr. Xi’s policy views with the Party’s. The eventual selection of the Standing Committee will likely be a confirmation of Mr. Xi’s dominance, but analysts will be looking closely at its particular composition and size to determine whether other intra-Party factions still hold sway. Speculation will continue to build as the fall meetings approach.

 

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