2016 WASHINGTON LOOK AHEAD
Fresh off a successful and active legislative year, Congress begins 2016 with numerous items to
do and Republican leadership eager to prove its ability to govern and get things done. Combined
with this legislative enthusiasm is a President with a renewed focus on what he can accomplish in
his remaining months in office. With both Houses of Congress controlled by Republicans, we can
expect the President to work at completing the unfinished priorities of his Administration by
pushing hard to advance nearly 4,000 regulations and issuing executive orders on a host of hotbutton topics. Many in Congress will fight the Administration’s rules and executive orders while
working to advance legislation on everything from aviation to health care to energy to financial
services and more.
As the President himself has said, “interesting things happen in the fourth quarter,” and we expect
2016 will be an unusually active presidential election year, both before the election and during the
lame duck session.
Here are some of the things to expect this year, as well as a list of key dates.
TRANSPORTATION, ENERGY & ENVIRONMENT
FAA Reauthorization
Having recently passed a multi-year highway bill, leaders of key House and Senate committees
are bullish on the prospect of passing a transformational Federal Aviation Administration (FAA)
Reauthorization bill in 2016. But getting a FAA bill to the finish line before current programs
expire on March 31 may not be easy. Congress plans to address, among other things, the
implementation of NextGen air traffic control systems, the proliferation and regulation of drones,
and the possible separation of the FAA’s air traffic control organization into an independent
entity. These are all thorny issues and stakeholders have already drawn their battle lines before
anyone has seen a bill. The next few weeks should reveal whether there is clear skies or turbulence
ahead for FAA Reauthorization. If what is past is prologue, we may see a few more extensions
before Congress finally passes this legislation.
Energy and Environment
At the end of 2015, congressional Republicans and Democrats struck a deal to advance major
energy priorities for both parties. In exchange for lifting the 40-year ban on exporting crude oil, a
top Republican priority, Democrats won extensions of key renewable energy tax credits.
Energy efficiency and reliability will likely remain high on the agenda and attention will focus
once again on the North American Energy Security and Infrastructure Act (H.R. 8), which the
House passed in December. While the legislation started as a bipartisan effort, it ultimately
became partisan as the bill moved out of the House Energy and Commerce Committee. In the
Senate, however, the Energy and Natural Resources Committee advanced in July a similar bill, the
Energy Policy Modernization Act (S. 2012), with bipartisan support. Chairman Lisa Murkowski
(R-AK) and Ranking Member Maria Cantwell (D-WA) are hopeful S. 2012 will be considered by
the Senate in early 2016.
Congress is also likely to make progress on legislation to reform the Toxic Substances Control Act
(TSCA). In 2015, the House and Senate passed bipartisan TSCA reform bills, and discussions to
reach an agreement on a compromise bill are ongoing. Finally, Republicans will continue to
aggressively push back on the Administration’s climate and environment agenda.
INTELLECTUAL PROPERTY & TECHNOLOGY
Patent Reform
Even though 2015 saw a 14 percent increase in patent cases filed in federal district court (with tech
products being the focus of two-thirds of all litigation), the prospects for broad patent reform
remain uncertain. Opponents of patent reform legislation point to a recent Supreme Court decision
on fee shifting and modifications to the Federal Rules of Civil Procedure pleading standards to
suggest that Congress should wait to see how these new developments impact patent cases before
moving forward with major reform. Given the uncertainty, we expect an increasing drumbeat by
stakeholders to pass targeted fixes to the patent system that have broad support, notably legislation
to curtail the abuse of demand letters by non-practicing entities on industries that use tech products
with patents that are in dispute.
Privacy & Security
ECPA, Judicial Redress, & the US-EU Safe Harbor. As last year drew to a close, the Senate
Judiciary Committee began to focus on updating the Electronic Communications Privacy Act
(ECPA). The leading Senate bill, S. 356, sponsored by Senators Mike Lee (R-UT) and Pat Leahy
(D-VT) was the subject of a Senate hearing in September and has the bipartisan support of nearly
one-fourth of the Senate. The House version, H.R. 699, has more than 300 cosponsors. Both bills
effectively codify the current “warrant for content” standard, and while there are numerous
technical issues under discussion, the larger question of allowing certain federal civil agencies
access to content without a warrant remains a key sticking point.
ECPA reform has given added importance to efforts that would restore the US-EU Safe Harbor
agreement. The Judicial Redress Act, H.R. 1428, is the other pending legislation seen as essential
to restoring the Safe Harbor. After strong bipartisan approval by the House, the bill’s momentum
slowed a bit in the Senate. At its last business meeting of the year, the Senate Judiciary Committee
placed H.R. 1428 on the agenda, but the bill was held over until its next business meeting, expected
to occur this month. The potential for Senate Judiciary action on H.R. 1428 would suggest there
may be movement on ECPA reform as well.
Encryption. We expect congressional deliberations to continue on policies related to private sector
use of encrypted technologies and the ability of law enforcement and national security
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organizations to work with tech and communications providers when these products are used by
criminal and terrorist entities. House Homeland Security Committee Chairman Michael McCaul
(R-TX) is expected to introduce legislation to create a commission to study the issue. Once
introduced, there could be at least one hearing followed by a markup in the Homeland Security
Committee. The commission approach also has the support of Senator Mark Warner (D-VA).
Copyright Reform
The SOPA/PIPA debacle of 2011 continues to cast a long shadow over any effort to reform our
nation’s copyright laws. While House Judiciary Chairman Bob Goodlatte (R-VA) is leading a
bipartisan review of the country’s copyright rules, the Senate has yet to engage on copyright reform
in any meaningful way.
The Senate may enter the copyright fray if and when the President nominates a Librarian of
Congress to fill the vacancy left by James Billington, who retired from the post last September
after 28 years on the job. Technology companies and content creators hope the President will
nominate a tech-savvy Librarian who will both understand the needs of industries that rely on
copyright protection and update the Copyright Office’s outdated IT systems. Not willing to wait
on new management, a bipartisan group of House members, led by Representatives Judy Chu (DCA) and Tom Marino (R-PA), have introduced a bill that would remove the Copyright Office from
under the auspices of the Library of Congress and make it an independent agency. To date the
Senate has adopted a wait-and-see approach to Copyright Office reform, believing that legislation
is premature and that new leadership at the Library of Congress may be best able to resolve the
tech and content industries’ concerns.
HEALTH CARE, EDUCATION & LABOR
Health Care
Although the partisan fights over the Affordable Care Act (ACA) will dominate the headlines,
Congress will continue to make progress on bipartisan health proposals. In 2015, Congress finally
enacted a permanent solution to the flawed Medicare physician payment rate formula and extended
the Children’s Health Insurance Program for two years. Congress also delayed the “Cadillac tax”
that was scheduled to take effect in 2018 and suspended the medical device tax for two years.
This year, Congress’s health care agenda will likely include the 21st Century Cures Act to overhaul
the Food and Drug Administration and increase funding for the National Institutes of Health. The
House passed legislation last July and the Senate Health, Education, Labor and Pensions
Committee plans to take up the issue in 2016. Mental health legislation is also on the agenda, and
it is possible bipartisan legislation may emerge to address the growing burden of chronic
diseases. Finally, drug pricing is likely to remain a hot topic. While legislative action on drug
pricing remains unlikely, the Senate Aging Committee and the House Oversight and Government
Reform Committee will continue to look at the issue.
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Higher Education Act Reauthorization
Last year Congress moved major education legislation with bipartisan support. The December 10,
2015, enactment of the Every Student Succeeds Act, which reauthorized the Elementary and
Secondary Education Act and replaced the No Child Left Behind Act, was a major accomplishment
and sets the stage for a bipartisan effort to reauthorize the Higher Education Act (HEA) in 2016.
Election year politics and a Senate majority in play will affect momentum for HEA as Congress
wrestles with higher education affordability, student debt levels, and reform of accrediting bodies.
At the same time, scrutiny of for-profit colleges and a Consumer Financial Protection Bureau
settlement following the bankruptcy of Corinthian Colleges will focus congressional attention on
student consumer protection. On top of all of this, the education committees are expected to focus
on reducing student risk by examining policies that reward institutions for workplace outcomes
and transitioning students to success. Online learning, other non-traditional approaches to
education, and quality assessments will be at the forefront of this debate.
U.S. Department of Labor Rules
Fiduciary Rule. The U.S. Department of Labor (DOL) is expected to finalize the Fiduciary Rule
early in 2016 with a targeted implementation date before the President leaves office. Following
the passage of last year’s omnibus appropriations bill, which did not include a rider to prevent or
delay implementation, lawmakers offered two bills in response: Strengthening Access to Valuable
Education and Retirement Support Act (SAVERS) by Representatives Peter Roskam (R-IL),
Richard Neal (D-MA), and John Larson (D-CT); and the Affordable Retirement Advice Protection
Act (ARAP) by Representative Phil Roe (R-TN). Although both proposals require a congressional
vote to implement DOL’s Fiduciary Rule, SAVERS would amend the Internal Revenue Code and
ARAP would amend the Employee Retirement Income Security Act. The bills face an uncertain
future in the Senate. The White House considers this a legacy issue and would most likely veto
any legislation related to its Fiduciary Rule.
Overtime Rule. DOL’s overtime proposal is expected to be finalized in July. Over 300,000
comments on the rule were filed. While comment review and the Office of Management and
Budget’s interagency process may push back final issue of the rule to late 2016, lawsuits to block
implementation may cause further delay. The overtime rule may be vulnerable to being struck
down under the Congressional Review Act if it is not finalized soon and if Republicans maintain
control of Congress and win the White House.
FINANCE, TAX & BUDGET
Budget Reconciliation
Yesterday the House approved by a vote of 240-181 the Senate-passed budget reconciliation bill
that repealed significant portions of the Affordable Care Act (ACA). Although neither the House
nor the Senate came close to mustering the two-thirds vote necessary to override President
Obama’s promised veto, Republican leaders wanted to send the bill to the President before his
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final State of the Union Address next Tuesday. This will be the first time an ACA repeal bill
reaches the President’s desk.
Fiscal Year 2017 Budget Process
The House and Senate would like to expedite consideration of the 2017 budget and appropriations
bills. The hope is for both bodies to pass a budget resolution in February, as opposed to March
when it is traditionally done, and then pass the individual appropriations bills as quickly as possible
via regular order.
It is unclear at the moment, however, whether regular order is possible, as this will depend on the
nature of the policy riders being pushed. Congress could just skip this year’s budget legislative
process altogether as the enactment of the Bipartisan Budget Act (BBA) in November 2015
provided top-line spending numbers both for the remainder of FY 2016 as well as for FY 2017.
Thus, Congress could allow the BBA’s levels to govern spending through September 2017 – more
than eight months into the new President’s term. This two-year look-ahead is the same framework
that Congress used when it approved the Ryan-Murray budget compromise in December 2013.
In the aftermath of Ryan-Murray, the House followed regular order and passed a budget resolution
on the House floor. The Senate, however, never considered a budget resolution in 2014. A similar
scenario may well unfold this year: House approval of a FY 2017 budget resolution, possibly a
markup in the Senate Budget Committee, but no final Senate action. However, if Republicans
decide to set up another budget reconciliation confrontation with the White House – which would
occur in the midst of the Presidential campaign – a new budget resolution would be required.
The BBA also provided the necessary authority for setting spending levels for the appropriations
process and budget enforcement for FY 2017 even if there is no agreement on a budget resolution.
This means that many of the policy rider debates that complicated the negotiations over the
December 2015 omnibus appropriations bill will be replayed as FY 2017 appropriations bills are
considered in regular order in the coming months.
Tax Reform Efforts in 2016
Congressional leaders have had tax reform near the top of their priority lists for a long time. Every
year they condemn the federal income tax code for its complexity and negative impact on the
success of American companies that operate in a competitive international market. Every year
they vow to make progress but usually end up with new working groups and new white papers that
inventory the same tax reform options everyone already knows.
For 2016 Republican leaders are strategically lowering expectations. In the House, the new
Speaker of the House Paul Ryan (R-WI) and Chairman of the Ways and Means Committee Kevin
Brady (R-TX) say they want to use the election year to lay the groundwork for an aggressive tax
reform legislative push in 2017 with the hope that the eventual Republican presidential nominee
will help them generate voter interest. Speaker Ryan and Chairman Brady acknowledge the
generally negative reaction to the comprehensive tax reform plan released by former Ways and
Means Committee Chairman Dave Camp in 2014. The Camp draft lowered the corporate tax rate
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from 35 to 25 percent, but was still revenue-neutral because of extensive cutbacks in tax deductions
and other preferences.
Both Chairman Brady and Senate Finance Committee Chairman Orrin Hatch (R-UT) believe that
their corporate rate goal should be no higher than 20 percent in order to stay competitive
internationally. Assuming they continue to support revenue neutrality for tax reform, finding
acceptable offsets will be an even bigger challenge. Both committees anticipate additional tax
reform hearings this year as they prepare for 2017. Special concern over U.S. companies that want
to repatriate overseas profits, the flight of U.S. research and development to jurisdictions that
incentivize innovation, and base erosion could lead to targeted action in the international tax area
during 2016. Chairman Brady calls permanent repatriation a challenge, but achievable. The
Chairmen both argue for making the “innovation box,” a research and development incentive with
significant bipartisan support, the framework for international tax reform.
On the Democratic side, there is still interest in working on international tax reform in a way that
would generate revenues for infrastructure spending. In addition, many Democrats support using
tax reform as a way of generating new revenues for deficit and debt reduction. Republicans,
however, generally take the position that savings from tax reform should be used only for lowering
tax rates.
Financial Services
There is still a great deal of interest among Republicans to continue working on Senate Banking
Committee Chairman Richard Shelby’s (R-AL) Financial Regulatory Improvement Act (S. 1484).
Pieces of the bill have already been passed but many of the remaining sections of the bill are
popular priorities for Republicans. The broker dealer industry, along with its Capitol Hill
supporters, will undoubtedly regroup following its unsuccessful effort to enact changes to the
Labor Department’s Fiduciary Rule during the appropriations process. Process and timing on
these issues has not yet been decided.
Senate Banking Democrats remain interested in working with Chairman Shelby on a more targeted
approach to reforming the Dodd-Frank Act. Conversations are ongoing and Senator Majority
Leader Mitch McConnell (R-KY) would need these Democrats to hold tight with Republicans
should a reform bill be reported out of committee and reach the full Senate floor. Over in the
House, Financial Services Committee Chairman Jeb Hensarling (R-TX) will focus on moving a
comprehensive repeal-and-replace solution to Dodd-Frank as well as government sponsored
enterprise (GSE) reform legislation. The Jumpstart GSE Reform Act was included in the 2015
omnibus appropriations legislation, potentially paving the way for a more comprehensive solution
to problems surrounding GSEs.
OTHER ISSUES
Criminal Justice Reform
Early this year, Congress is set to consider bipartisan criminal justice reform legislation cleared in
2015 by the House and Senate Judiciary Committees. These bills reverse decades of mandatory
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minimum sentencing for nonviolent drug crimes and “three strikes” life sentencing. While many
Republicans support these efforts, the President’s executive actions this week to expand gun show
background checks could complicate any movement toward sentencing reform this year. Other
criminal reform efforts continue at the state level, where, among other things, marijuana
legalization will be considered in California and other states, following legalization efforts in
Colorado, Washington, Alaska, Oregon, and the District of Columbia.
Trans-Pacific Partnership
A ratification vote might occur on the Trans-Pacific Partnership (TPP) in the first quarter, but
election year politics may complicate passage of the bill, especially as the year progresses. While
that may push a TPP vote to a lame duck session, Majority Leader McConnell has indicated he
would like a TPP vote to be set in early 2017. In any case, the Administration will need to do
more work to shore up sufficient congressional support for ratification.
Industry Consolidation
Mergers and acquisitions were at an all-time peak in 2015 as companies in the pharmaceutical,
technology, insurance, beer, and retail industries, among others, announced record-setting
deals. We saw regulators flex their muscle in 2015 and we expect the Judiciary antitrust
subcommittees to exercise their oversight jurisdiction by holding hearings this year on some of the
proposed transactions. Given the current cynicism among regulators about consolidation – as well
as among the press and some policymakers – Congress will likely channel public opinion and take
a close, hard look at these deals.
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KEY 2016 DATES
January 12
State of the Union
February 1
Iowa Caucus
February 1
President’s Budget Due to Congress
February 7
Super Bowl
February 9
New Hampshire Primary
March 1
Super Tuesday (15 primaries and caucuses)
July 15-September 5
House and Senate Recess
July 18-21
Republican National Convention (Cleveland, OH)
July 25-28
Democratic National Convention (Philadelphia, PA)
September 6
House and Senate Reconvene
September 26
Presidential Debate (Dayton, OH)
September 30
FY16 Appropriations Expire
September 30
House Recesses
October 4
Vice Presidential Debate (Farmville, VA)
October 7
Senate Recesses
October 9
Presidential Debate (St. Louis, MO)
October 19
Presidential Debate (Las Vegas, NV)
November 8
Election Day
November 14
House and Senate Reconvene
December 16
House and Senate Adjourn
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