FY 2018 Appropriations Process Kicks Off

On Tuesday, May 23, the White House intends to transmit the much-anticipated fiscal year 2018 budget request.  The budget is expected to track the “skinny budget” that the White House released in March identifying the priority to reduce domestic spending by hundreds of billions of dollars to balance the budget within ten years.

Next week’s release will reaffirm the spending cuts and programs targeted for elimination that has been the subject of much congressional discussion.  In past years, White House budgets have been deemed dead on arrival, but this year’s transmittal might best be termed dead before arrival.  Statements by key budget and appropriations leaders, including Majority Leader McConnell’s statement that Presidential budget requests don’t get much attention seemed to capture the general view in Congress.  Earlier this week, a decision was reached that no spending bills would be acted upon until sometime in June after a budget blueprint known as a budget resolution is approved by Congress.  At the same time, key Members have all but stated aloud that Congress is likely to abandon any pretense of passing spending bills and agree to approve a year-long Continuing Resolution.  Such an action would mean that most program spending would remain in place without the dramatic spending cuts sought by the White House.

Senate Confirmation Hearing on Deputy Secretary of the Interior Sets Stage for Senate Vote

The Senate Committee on Energy and Natural Resources held a hearing on David Bernhardt, the Administration’s nominee to be Deputy Secretary of the Interior.  Committee Chair, Lisa Murkowski (R-AK), praised Bernhardt for his work on energy and natural resources policy matters, expressing her commitment to move swiftly to secure a Senate vote on Bernhardt’s nomination. Ranking Member Democrat Maria Cantwell (WA) stated that Bernhardt has an inherent conflict of interest due to his representation, as a lobbyist, for oil, natural gas and agricultural interests.  Cantwell stressed his representation of Cadiz and Westlands Water District is of particular concern.  In addition, Cantwell highlighted a series of controversies that occurred during Bernhardt’s previous service as Solicitor at the Department of the Interior.  This concern was rebutted when he noted, in response to Cantwell, that the Department’s Inspector General had praised his ethic reform efforts.  Going further, Bernhardt pledged to ensure that once he assumes his duties his only priority was to address the needs of the American people and not his past legal clients and that he had agreed to recuse himself from any potential decisions impacting his prior client interests.

In his formal statement, Bernhardt noted his past work as Solicitor for the department and his achievement in bringing about enhanced ethics, provision of legal services related minerals management policy, and ensuring that legal expertise was part of the decision making process within the department to make certain any decisions were legally defensible.  He also highlighted his priority to remedy deficiencies in department defenses of policy decisions that were reversed or overturned to ensure alternatives for future decision making efforts.  In citing his past work, he summarized his interest in “…understanding of the parameters of the law as it existed not what I wished the law said.”  Looking to the future, he noted that if confirmed, he would work to carryout Secretary Zinke’s priority to reform the Department: “ …empower the front lines; cut the waste, fraud and abuse; hold people accountable; make efficient use of limited resources and make investments where necessary and important.”  A committee vote on the nomination could come within weeks with a Senate floor vote likely shortly after the committee approves the nomination.

House Hearing on Forest Health and Management Options

The development of comprehensive legislation to address the needs of federal forest lands management took an important step forward when the House Committee on Natural Resources, Subcommittee on Federal Lands convened an Oversight Hearing on Seeking Better Management of America’s Overgrown, Fire-Prone National Forests. According to Subcommittee staff, they are preparing legislation for introduction prior to the August recess.  Testifying at the hearing were: Dr. John Ball, Professor, Forest Health Specialist South Dakota State University; Steven Brink, Vice President of Public Resources, California Forestry Association; James Cummins, Executive Director, Wildlife Mississippi; and, Dr. Tania Schoennagel, Dept. of Geography and Institute of Arctic and Alpine Research/University of Colorado Boulder.

Subcommittee Chairman Tom McClintock (R-CA) opened the hearing quoting a U.S. Forest Service report that identified that 60 to 80 million acres of National Forest lands as overstocked with at risk trees because of the risk of infestation, disease and catastrophic wildfire threats. McClintock called for a dramatic change in forest management.  Among the priorities, he stated would be increased thinning of dead and dying trees that serve as fuel for wild fire. Ranking Democrat Colleen Hanabusa (D-HI), acknowledged the explosion of catastrophic wildfire and disease and insect infestation.  This poses a massive threat to the health and sustainability of federal forests, she noted.  Hanabusa expressed a view that much of the challenges to forestry stem from global warming impacts as presented in testimony by Tania Schoennagel, a forest ecologist at the University of Colorado.

Steven Brink, representing the California Forestry Association, testified that the overly dense forest conditions in national forests amplifies the risk of wildfire, insect, and disease. Brink highlighted the 2014 King Fire in the El Dorado National Forest during which 40,000 acres of high-severity burn occurred in the Rubicon River watershed in just six hours. Brink noted that statutory and regulatory burdens restrict the ability to actively manage critical watersheds and reduce the threat of catastrophic wildfire.

Transportation Secretary Chao Hints at Administration’s Infrastructure Proposal

In support of a week-long national effort to elevate infrastructure as a national issue of importance, the Senate Committee on Environment and Public Works (SEPW) invited U.S. Department of Transportation Secretary Elaine Chao to testify before the committee as it considered options to invest in the nation’s infrastructure

Chairman John Barrasso (R-WY), announced that SEPW is developing an infrastructure bill.  As part of this effort, he stated that highways and roads must be a central component to any infrastructure package that moves through Congress.  Barrasso emphasized that he believes funding for infrastructure projects should be accomplished using existing funding mechanisms like grants and loans. Barrasso expressed that private-public partnerships do not work for rural areas because of regulatory and financing burdens placed upon rural transportation entities.  Ranking Member Tom Carper (R-DE) highlighted the need for steady, long-term investments in our country’s outdated transportation systems.

Secretary Chao testified that the Administration will propose to provide $200 billion in federal infrastructure funds to augment, not replace, state and other nonfederal sources of infrastructure funds. In setting up a possible policy clash with the committee, Chao specified that the $200 billion translates into over $1 trillion in potential project investment and that the Office of Management and Budget is working to identify offsets.  Chao stated that leveraging/incentivizing private investment is a central element of the Administration’s infrastructure policy approach.  She hinted that President Trump will share “principles” of his infrastructure plan before the end of May, presumably as part of the budget transmittal next week.

Chao testified that the administration’s plan may go beyond highways, transit, rail, inland waterway and port infrastructure to also include energy, water, broadband and veterans’ hospitals.  She repeated earlier statements that the administration’s proposal will include provisions aimed at accelerating project approvals and streamlining the permitting process for infrastructure projects.

Secretary Chao indicated that the Administration’s infrastructure plan will include “a few special projects” that would receive direct federal assistance.  Chao stated that applicants for this special category would target projects that have the potential to significantly increase GDP growth or to lift the American spirit.  In response to a question from Senator Joni Ernst (R-IA), regarding these special projects, Chao clarified that the administration “will not specify any list of projects” in an infrastructure plan.

Senate Hearing on Transportation Financing Options

On May 16, the Senate Committee on Environment and Public Works, Subcommittee on Transportation and Infrastructure held a hearing on leveraging federal funding for innovative solutions for transportation infrastructure.  Testifying at the hearing were: Eric Garcetti, Mayor, City of Los Angeles: Tim Gatz, Executive Director, Oklahoma Turnpike Authority; Geoffrey Yarema, Nossaman LLP, Los Angeles, CA; Kevin DeGood, Director of Infrastructure Policy Center for American Progress; and Aubrey Layne Jr., Secretary of Transportation for the Commonwealth of Virginia.

Chairman Jim Inhofe (R-OK) stated the hearing, focusing largely on the advantages and disadvantages of private-public partnerships (P3’s), would help the Subcommittee identify infrastructure financing options, especially ways to incentivize non-federal partners.

Senator Kamala Harris (D-CA) introduced Los Angeles Mayor Eric Garcetti and expressed the need for direct federal infrastructure funding for multimodal transportation needs.  Garcetti, testifying on behalf of the U.S. Conference of Mayors’ Infrastructure Task Force, voiced support for a federal infrastructure program that incentivizes localities to pass local revenue measures that can be leveraged with state, federal and P3’s to complete projects.  Aubrey Layne Jr., Secretary of Transportation, Commonwealth of Virginia, testified that P3’s are complex business transactions and getting these deals wrong can be very costly for taxpayers. Layne and Garcetti both cautioned the Subcommittee, that as it considers potential infrastructure legislation, to avoid incentives for P3’s that might undercut a local government’s ability to negotiate reasonable projects that protect the taxpayer.

Kevin DeGood, Director of Infrastructure Policy, Center for American Progress, was pessimistic about P3’s beyond funding of urban mega projects.  He explained that because P3’s relies on post-construction revenue stream, they have little use or impact for rural states that lack a reliable revenue stream.  DeGood praised municipal bonds as a viable funding mechanism.  This is because the municipal bond market is robust and constantly looking for new projects.  He testified that the current interest rate for a project, with a AAA credit rating, over 30 years is only 3%, while a P3’s interest rate over the same period is 10-15%. DeGood stressed the need for the federal government to provide direct funding that is targeted to the places with the greatest need and economic hardship.

Infrastructure Financing Authority Legislation Reintroduced in Senate

The Building and Renewing Infrastructure for Development and Growth in Employment (BRIDGE) Act was introduced by Senators Mark Warner (D-VA) and Roy Blunt (R-MO).  The legislation is similar to legislation that Warner introduced last Congress.  This time the bi-partisan bill is drawing increased attention as Congress and the administration consider options to address the need for a comprehensive infrastructure policy for the nation. The Bridge Act would create an independent financing authority to provide loans and other forms of financial assistant to help states fund road, bridge, rail, port, water, sewer and other infrastructure projects.

Bill Introduced to Support Clean Water SRF Program

Representatives Peter DeFazio (D-OR), Grace Napolitano (D-CA) and Jimmy Duncan (R-TN), introduced the Water Quality Protection and Job Creation Act (H.R. 2510), that would boost funding for clean water infrastructure programs at USEPA by $25 billion over the next five years.   The legislation is notable for its bipartisan support, something that proved elusive last Congress when similar legislation was introduced.  Under the measure, the Clean Water State Revolving Loan Fund program would receive $20 billion over the next five years.  Another $600 million would be provided to support stormwater control efforts.  H.R. 2510 would commit $375 million to support water recycling projects and provide incentives to support the use of technologies and processes to enhance the use of efficient water use, reuse, and conservation as well as energy conservation in the treatment of water.

House Democrats Unveil $85 Billion Infrastructure Bill

Democrats on the House Committee on Energy and Commerce unveiled legislation that would provide more than $85 billion for drinking water, renewable energy, resilient electric grid, brownfields, broadband and medical facility infrastructure.  Sponsored by the Ranking Democrat, Frank Pallone (D-NJ), H.R. 2479, the Leading Infrastructure for Tomorrow’s America Act (LIFT), would boost USEPA’s Safe Drinking Water Act’s State Revolving Loan Fund program by $21 billion over five years.  Additionally, sustainable infrastructure would be an identified program priority.  Requirements for Buy America, are addressed by provisions that would memorialize the current temporary mandate.  Under the bill, the mandate to purchase only American iron and steel would apply to any funded project unless it could be demonstrated that a waiver is appropriate.

House Republican and Democratic Efforts to Reauthorize Safe Drinking Water State Revolving Loan Fund Generates Partisan Infighting

House Committee on Energy and Commerce, Subcommittee on Environment Chairman John Shimkus (R-IL) distributed draft legislation to reauthorize the Drinking Water State Revolving Loan Fund (DWSRF) as part of a congressional hearing to renew the program.  The seven-page draft promotes the expansion of asset-based management and provides states with greater flexibility to allocate loans to disadvantaged communities.  The draft does not include funding levels.  Shimkus state at the hearing a preference to discuss policy issue first and then move to funding issues.

Democrats on the Subcommittee expressed concern over the lack of specific funding pointing to Ranking Committee Democrat Pallone’s bill (see above).  They also criticized the draft for failing to address the needs of local communities’ contaminated water supplies in addition to traditional drinking water needs.  While the hearing illustrated vast differences on how to proceed, it demonstrated support on both sides of the aisle to ensure that drinking water infrastructure needs should be part of the overall infrastructure policy debate.

Senate Marks Up Regulatory Reform Bills

On May 17, the Senate Committee on Homeland Security and Governmental Affairs approved several regulatory reform measures.  The Regulations from the Executive in Need of Scrutiny Act (REINS  S. 21) would require that Congress affirmatively approve every new major rule proposed by the Executive Branch.  Under the bill, a major rule is defined as any federal rule or regulation that may result in an annual economic impact of $100 million or more; a major increase in costs or prices for American consumers; or have significant adverse effects on the economy.  The House approved a similar version of the bill, H.R. 26, in January.  Passage of REINS in the Senate faces a major hurdle as many Democrats and environmental stakeholder groups strongly oppose the bill.  Among the other measures approved by the committee and reported to the Senate for floor debate:

  • S. 951 – The Regulatory Accountability Act would require regulatory agencies issuing major rules, including independent commissions, to consider a reasonable number of regulatory alternatives, least costly version of rules, require early public meetings and input into potential regulations and mandate additional economic analyses.
  • S. 34 – Midnight Rules Relief Act to allow multiple rules to be repealed under one Congressional Review Act resolution of disapproval.
  • S. 577 – Providing Accountability Through Transparency Act to require a 100-word, plain-language summary of proposed regulations.
  • S. 584 – Small Business Regulatory Flexibility Improvements Act to modify the procedures for participation by small entities in the promulgation of a proposed rule.
  • S. 579 – Early Participation in Regulations Act to require agencies to publish advance notice of proposed rulemaking at least 90 days before any rulemaking.

U.S. Environmental Protection Agency Identifies Downsizing Strategy

To conform with FY 2017 funding reductions and management guidance from the Office of Management and Budget to reduce the federal workforce, the U.S. Environmental Protection Agency (USEPA) is allocating $12 million in incentive payments to encourage employees to leave the agency.  According to an internal memorandum (PDF), the incentives are in the form of voluntary buyouts and voluntary early retirements.  A similar program was offered under the Obama administration, resulting in the departure of over 465 USEPA employees at the cost of approximately $16.2 million.

Legislation/Regulations/Reports/Studies

S. 1036 – Senator Wyden (D-OR) – the Marine Energy Act to promote research, development, and demonstration of marine and hydrokinetic renewable energy technologies, and for other purposes. Senator Wyden issued a one-page summary explaining the measure.

New USEPA Website – Waters of the United States Rulemaking

Upcoming Hearings

May 19

House Committee on Energy and Commerce, Subcommittee on Environment hearing on the “Drinking Water System Improvement Act” and “Related Issues of Funding, Management, and Compliance Assistance under the Safe Drinking Water Act.”

May 23

House Committee on Science Subcommittee on Environment hearing on “Expanding the Role of States in EPA Rulemaking.”

May 24

House Committee on Appropriations, Subcommittee on Energy and Water Development and Related Agencies hearing on “Corps of Engineers (Civil Works) and the Bureau of Reclamation FY2018 Budget Request.”

House Committee on Natural Resources, Subcommittee on Oversight and Investigations Subcommittee hearing on “Examining Impacts of Federal Natural Resources Laws Gone Astray.”

May 25

House Committee on Appropriations, Subcommittee on Interior, Environment, and Related Agencies hearing on the U.S. Forest Service budget.

Senate Committee on Energy and Natural Resources – Hearing to consider the nominations of Dan Brouillette to be Deputy Secretary of Energy, and Neil Chatterjee and Robert Powelson to be Members of the Federal Energy Regulatory Commission.