The Washington Report.
August 8, 2006
A pension reform package, which contained several priority items for the New England Council and the region’s financial services industry, passed both houses of Congress shortly before Congress adjourned for its August recess. Another Council priority, an extension of a strengthened R&D tax credit was expected to be included with the pension reform package, but at the last minute was dropped and instead paired with a permanent estate tax reduction and minimum wage increase that was not approved by the Senate. The Council will continue to work with the New England Congressional delegation in the hopes of passing the credit before Congress adjourns for the election.
Yet another priority item for the Council, legislation to speed the implementation and interoperability of Health Information Technology (HIT) recently passed the House, setting up a conference with a bill the Senate passed late last year.
Congress is now in recess until just after Labor Day.
Pension Reform
On August 3, the Senate passed H.R. 4, the Pension Protection Act. This legislation to reform the nation's pension laws includes several provisions important to New England's financial services and retirement savings industries. New England is the world leader in the retirement savings industry and the Council advocated in favor of this legislation which will:
make permanent retirement savings expansions enacted in 2001, including increased contribution limits for IRAs and 401(k)s and catch-up contributions for older workers;
provide ERISA relief to make investment advice more readily available in the workplace and on IRAs;
encourage employers to offer automatic enrollment in 401(k) plans;
modernize ERISA to accommodate the changing market by easing certain trading restrictions; and
end the legal uncertainty surrounding hybrid pension plans.
Other provisions of the legislation are intended to strengthen existing pension plans by requiring that companies fund them more completely, with additional rules for “at-risk” plans. Consequently, with more plans on firmer financial footing, the hope is that the Pension Benefit Guaranty Corporation (PBGC), the federal agency that insures such plans, would be less at risk for a federal bailout in the coming years. The PBGC has recently been hit with several high-profile pension plan collapses.
The pension reform legislation passed the Senate by an overwhelming vote of 93-5 and was not opposed by any member of the New England Senate delegation. The House passed the same bill on July 28 by a vote of 279-131. The legislation is now headed to the President’s desk for his signature.
Health Information Technology (HIT)
On July 27, the House voted 270-148 to pass H.R. 4157, the Better Health Information Systems Act, which aims to speed the implementation and interoperability of Health Information Technology (HIT). Legislation to speed the implementation of HIT is a Council priority and we are pleased that the process is moving forward with the action taken by the House.
We now look forward to a conference with the Senate, which passed its own HIT bill (S. 1418) unanimously last fall. There are significant differences between the two bills, but the Council and its members will work with New England conferees toward crafting a final product that reflects the priorities of our region and that will increase the quality, safety, efficiency and effectiveness of our nation's healthcare.
Among the differences between the two bills -- the House bill has a version of the Stark and anti-kickback safe harbors, while the Senate bill does not. In addition, the House bill has provisions that promote telehealth services and that require the adoption of ICD-10 coding by October 1, 2010, while the Senate does not.
Transparency provisions added to the House bill earlier in the week before the vote that would have required the Secretary of HHS to develop a methodology for reporting uniform price data for inpatient and outpatient hospital services were dropped from the bill before the House vote.
R&D Tax Credit
On August 3, an extension and expansion of the Research and Development tax credit, a Council priority, did not advance as the Senate failed to invoke cloture on a legislative package that included a permanent reduction in the estate tax, a minimum wage increase, and a tax extender package that included the R&D credit provisions. Senate Majority Leader Frist (R-TN) changed his vote before the vote concluded to enable the Senate to reconsider these items again before adjourning for the year. Earlier, the House had passed the so-called “trifecta” package by a vote of 230-180 in the early morning hours of July 29. The R&D tax credit expired at the end of last year and the Council will continue to actively advocate on behalf of extending and strengthening the R&D tax credit as soon as possible, as this provision is especially important to New England's innovation economy.
Committee on Foreign Investment in the United States (CFIUS)
On July 26, both the House and Senate unanimously passed different versions of legislation to overhaul the Committee on Foreign Investment in the United States (CFIUS). The legislation was prompted by the decision earlier this year by the Administration to allow Dubai Ports World, owned by the United Arab Emirates, to operate several U.S. ports. The bill passed by the House included new provisions that would make both the Secretaries of Homeland Security and Commerce Vice Chairmen of CFIUS, with the Treasury Secretary remaining as Chairman. In addition, all three officials would need to approve any report issued by the Committee that included national security concerns about a potential foreign investment in the U.S. With the approval of the two different bills, a conference committee will now be needed to work out the two versions’ differences.
Energy & Environment
On July 19, the U.S. Department of Energy (DOE) revised its opening date for the Yucca Mountain nuclear waste repository to March 31, 2017. Despite the temporary repository proposal that has been included in the Senate FY07 Energy and Water appropriations bill (see below), DOE plans to continue with the Yucca Mountain construction project. DOE will submit its license application to the Nuclear Regulatory Commission on June 30, 2008, hopes to receive authorization to begin construction by September 30, 2011, plans to complete construction by March 30, 2016, and will begin accepting nuclear waste on March 31, 2017. According to Senate Energy and Natural Resources Committee Chairman Pete Domenici (R-NM), this is the most detailed schedule for the opening of Yucca Mountain since the legislation was passed in 1982 requiring the creation of such a repository by 1998.
On July 27, Senator Domenici included a proposal regarding spent nuclear fuel in the Senate FY07 Energy and Water appropriations bill. The proposal would require that the federal government store commercial nuclear waste for as long as 25 years at temporary facilities scattered around the country. The federal government would take ownership of commercial waste produced by 103 operating facilities in 31 states, and the Energy Secretary, in consultation with the states, would determine how many temporary federal storage sites will be needed and where they should be located. The goal of the proposal is to temporarily consolidate commercial waste until a permanent repository at Yucca Mountain is completed The House appropriations bill did not contain this proposal.
On August 1, the Senate passed an offshore drilling bill by a vote of 71-25. The bill would open 8.3 million acres in the Gulf of Mexico to offshore energy development. Earlier in the session, the House passed a companion offshore drilling bill by a vote of 232-187. The legislation would lift the 25 year ban on oil production within 100 miles of any state’s coastline. Conference committee negotiations will need to take place to work out differences between the two bills.
Budget & Appropriations
On July 20, the Senate Appropriations Committee passed the FY 07 Labor-HHS spending bill. The $142.8 billion bill contains about $5 billion more than the President proposed in his budget and $800 million more than the bill passed by the House Appropriations Committee. Funding for several programs important to the New England region is contained in the bill, including:
$28.5 billion for the National Institutes of Health (NIH), $200 million more than proposed by the President and passed by the House;
$1.9 billion to expand community health centers, $145 million more than the FY 06 appropriation;
$2.2 billion for Low Income Home Energy Assistance Program (LIHEAP), $379 million more than the President’s proposal and about $200 million more than the House approved; and
$12.6 billion for Pell grants for lower-income college students. The maximum grant was left unchanged under the bill at $4,050 per student.
Telecommunications
On June 28, the Senate Commerce Committee passed a major telecommunications overhaul bill by a vote of 15-7. The legislation would allow regional Bell telephone companies to compete with cable companies by entering the video services market and would broaden the universal service fund, among other provisions. On an 11-11 vote, a so-called network neutrality amendment offered by Sen. Olympia Snowe (R-ME) was defeated. The amendment would have barred Internet service providers from discriminating in their “treatment of Internet traffic based on source, destination, or ownership of such traffic.” The amendment was a major point of contention between Internet content companies and broadband providers. The bill is unlikely to be considered on the Senate floor until Commerce Committee Chairman Ted Stevens (R-AK) is able to confirm 60 votes in support of his Committee-passed measure. Without 60 votes, the bill would be subject to a filibuster, and Senators such as Ron Wyden (D-OR) have already expressed their intention to filibuster.
Amtrak
On July 20, the full Senate Committee on Appropriations approved $1.4 billion in funding for Amtrak in the FY 07 Senate Transportation-Treasury appropriations bill, an increase over the current $1.3 billion subsidy, and well above the President’s budget request of $900 million. In June, the House passed its FY 07 Transportation-Treasury bill, which funds Amtrak at $1.14 billion. The Council will continue to advocate for appropriate funding so that Amtrak can continue to run and undertake the capital upgrades needed in the Northeast.
Small Business
On July 27, the Senate Small Business Committee unanimously approved a three-year reauthorization of the Small Business Administration (SBA). Among the bill’s provisions are sections addressing the Administration’s disaster relief programs after it endured criticism for its response to Hurricane Katrina. Under the reauthorization legislation, the SBA would be able to make disaster loans to nonprofit organizations and the maximum size of these loans would increase from $1.5 million to $5 million.
Other provisions of the legislation would: Authorize the agency to back loans by private lenders to disaster victims at lower rates; Create a new bridge loan program that would provide states with federal guarantees on disaster-related loans; Strengthen the authority to prosecute large corporations that illegally secure agency small business loans; Establish a small business energy disaster loan program to help combat sharp rises in energy costs; and Double the Small Business Innovation Research (SBIR) Program, which provides loans to firms engaged in long-term research in areas such as biotechnology.Health
On June 28, the Senate Committee on Health, Education, Labor, and Pensions (HELP) approved by voice vote legislation designed to help the Food and Drug Administration (FDA) monitor potentially dangerous over-the-counter drugs and dietary supplements. The bill, sponsored by Senator Hatch (R-UT) and cosponsored by Senator Kennedy (D-MA), would require manufacturers and distributors of supplements and over-the-counter drugs to report to the FDA all serious adverse events such as death, life-threatening conditions, hospitalization, significant disabilities or congenital birth defects resulting from the use of the drugs or supplements, allowing the FDA to collect useful safety information. Similar legislation is pending in the House.
On July 11, the Senate adopted an amendment to the FY07 Homeland Security appropriations bill that would allow the importation of prescription drugs from Canada. The amendment, which was introduced by Senator David Vitter (R-LA), passed by a vote of 68-32. The spending bill passed the Senate by a vote of 100-0. The provision is now subject to conference committee negotiations.
On July 18, the Senate passed the Stem Cell Research Enhancement Act (H.R. 810) by a vote of 63-37. This legislation would require the U.S. Secretary of Health and Human Services to conduct and support research that utilizes human embryonic stem cells, provided such embryos: 1) have been donated from in vitro fertilization clinics; 2) were created for the purposes of fertility treatment; 3) were in excess of the needs of the individuals seeking such treatment and would never be implanted in a woman and would otherwise be discarded; and 4) were donated by such individuals with written informed consent and without any financial or other inducements. On July 19, President Bush vetoed this legislation and that same day the House failed to override the President’s veto.
Along with H.R. 810, the House and Senate considered other related pieces of legislation. Both the House and Senate unanimously passed S. 3504, which would prohibit “fetal farming,” or the development of embryos for research. The President signed this bill into law on July 19. Another piece of legislation, which would encourage the development of stem cell lines using other techniques that do not knowingly harm embryos, passed the Senate by a vote of 100-0 but failed in the House by a vote of 273-154, as the vote took place under suspension of the rules where a two-thirds majority was required for passage.
On July 19, the Senate HELP Committee approved by voice vote legislation (S. 3678) that aims to better prepare the nation to respond to a possible flu pandemic or other health-related disasters. The bill would authorize more than $1 billion in yearly funding for HHS public health and medical preparedness grants that would require a five percent state match in 2009 and a ten percent state match beginning in 2010. Under the bill, the Secretary of HHS would be designated the lead federal official in charge of public health emergency response, states would need to meet minimum disaster response performance standards, and a system would need to be created to organize and train healthcare disaster response volunteers. Other provisions of the bill would promote the employment of mobile medical assets by local hospitals to better respond to emergencies, and require HHS to build on state and local efforts to better detect and contain infectious disease outbreaks through a “near real-time” public health situation awareness network.
Education
On July 18, Senators Lamar Alexander (R-TN) and John Ensign (R-NV), along with Representative Sam Johnson (R-TX) of the House Education and the Workforce Committee, introduced the America’s Opportunity Scholarships for Kids Program. The bill would provide $4,000 grants to each elementary school student attending underperforming schools to help subsidize private school tuition. This bill would require $100 million to fund the program, which could affect 1,750 schools that do not meet No Child Left Behind standards.
Before adjourning for the August recess, both the House and Senate overwhelmingly passed the conference report to reauthorize the Carl Perkins Career and Technical Education Improvement Act (S. 250) – the Senate by unanimous consent on July 26, and the House by a vote of 399-1 on July 29. Despite the President’s proposal to leave the program unfunded in both his FY 06 and FY 07 budget requests, it still has strong support in Congress. Last year, the program provided $1.18 billion in grants to states for career and technical education at the secondary and post-secondary levels. Some of the bill’s provisions include: $105 million for the Tech Prep program, which provides vocational skills training through collaborative education at two- and four-year institutions; and stricter accountability guidelines at the local level that require the annual reporting of job placement percentages and proficiency test scores to state agencies.
Data Security
On June 26, a bipartisan duo from the Senate Banking Committee, Senators Thomas Carper (D-DE) and Robert Bennett (R-UT), introduced data breach security legislation that could serve as the basis for the panel’s bill on this issue. The bill, modeled after safeguards put in place under the Gramm-Leach-Bliley law, would set a uniform national standard for data security breaches where notification would be triggered when a data breach would present substantial harm or inconvenience to consumers – a significantly higher threshold than those contained in similar House bills. Under the Carper-Bennett bill, banking regulators would oversee their industries and the FTC would cover other industries. Data security breach laws have overlapping jurisdiction in several Congressional Committees. The Senate Judiciary and Commerce Committees have their own legislation on this issue, as does the House Financial Services, Energy & Commerce, and Judiciary Committees.
The Council issued data security breach principles earlier this year calling on Congress to pass data security breach legislation that would preempt the patchwork of state data security laws. We remain hopeful that Congress will address this issue this year.
Trade
On June 29, the Senate passed the U.S.-Oman Free Trade Agreement Act by a vote of 60-34. The House passed the bill by a vote of 221-205 on July 20. As required by the Constitution, the legislation now must be sent back to the Senate, which must approve the bill again before it can be signed by the President.
On July 31, the Senate Finance Committee approved a measure to allow normal trade relations with Vietnam. The Committee also reported out a draft of the U.S.-Peru Free Trade Agreement. The House Ways and Means Committee approved its version of the U.S.-Peru agreement earlier this session. The draft language will be sent to the President so that a final implementing bill can be sent to Congress.
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