Capitol View V O L U M E 4 , N U M B E R 4 N O V E M B E R 2 0 - - PDF document

Capitol View

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SUNDOWN ON THE 109TH Election and the New Congress According to most pre-election polls that showed a low level of satisfaction among the electorate over the performance of Congress, it was generally expected that the Democrats would pick up seats in both the Senate and the House in the November 7 election. An analysis of all major polls compiled by Real Clear Politics on October 23 found the current Republican controlled Congress with a 24% approval rating and a 69% disapproval rating. In order to win control of the new 110th Congress, the Democrats needed to pick up 15 seats in the House and 6 seats in the Senate. They more than met that goal by increasing the number of House seats by at least 28 for a likely total of some 230 Democratic seats, and winning the necessary 6 seats in the Senate for a Democratic majority of 51. The Democratic gains in both Chambers exceeded earlier predictions. While the Cook Report on October 24 predicted a loss of 20-25 Republican seats, Real Clear Politics reported that an average of all major polls conducted in early November predicted Democrats picking up 19 seats in the House and 4 in the Senate. Although the Republican losses in the election were significant they were not unprecedented for a President's party in the 6th year of his term during war time. Going back as far as the Civil War, the average loss in this situation was about 30 House seats and 6 Senate seats. What is unprecedented for the 2006 mid term election is that both sides spent a staggering $2.6 billion. The most immediate and important change for the Senate and House, of course, means different party leadership and new Chairs for all Committees and Subcommittees. When the 110th Congress convenes in January of 2007 the new Speaker of the House will be Nancy Pelosi (D-CA). There may be contests for other Democratic Leadership posts so the new Majority Leader could be either Steny Hoyer (D-MD) or John Murtha (D-PA). The Majority Whip will be James Clyburn (D-SC). The current Speaker, Dennis Hastert (R-IL), does not intend to run for Minority Leader in the new Congress so that post could go to either John Boehner (R-OH)

• r Mike Pence (R-IN). The position of Minority Whip will be held by either Roy Blunt (R-MO) or John

Shadegg (R-AZ). In the Senate the new Majority Leader will be Harry Reid (D-NV) and the Majority Whip will be Richard Durbin (D-IL). The Minority Leader will be Mitch McConnell (R-KY) while the Minority Whip will be either Trent Lott (R-MS) or Lamar Alexander (R-TN). The new Committee Chairs will have a profound impact on the subject of hearings to be held and the legislation to be forwarded to the Floor for consideration by the House and Senate.

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The likely Chairs of some major House Committees come January will be:

• Judiciary – John Conyers (D-MI)
• Appropriations – David Obey (D-WI)
• Financial Services – Barney Frank (D-MA)
• Government Reform – Henry Waxman (D-CA)
• Armed Services – Ike Skelton (D-MO)
• Budget – John Spratt (D-SC)
• International Relations – Tom Lantos (D-CA)
• Ways & Means – Charles Rangel (D-NY)
• Transportation – James Oberstar (DFL-MN)
• Agriculture – Collin Peterson (DFL-MN)
• Education – George Miller (D-CA)
• Homeland Security – Bennie Thompson (D-MS)
• Intelligence – Jane Harman (D-CA), Alcee Hastings (D-FL) or Silvestre Reyes (D-TX)
• Resources – Nick Rahall (D-WV)

The probable chairs of the major Senate Committees will be:

• Appropriations – Robert Byrd (D-WV)
• Armed Services – Carl Levin (D-MI)
• Banking – Chris Dodd (D-CT)
• Budget – Kent Conrad (D-ND)
• Commerce – Daniel Inouye (D-HI)
• Energy & Natural Resources – Jeff Bingaman (D-NM)
• Environment & Public Works – Barbara Boxer (D-CA)
• Finance – Max Baucus (D-MT)
• Foreign Relations – Joseph Biden (D-DE)
• Health, Education & Labor – Ted Kennedy (D-MA)
• Homeland Security – Joe Lieberman (I-CT)
• Judiciary – Pat Leahy (D-VT)

The near term agenda for Congressional Democrats includes a review of the policy in Iraq, raising the minimum wage, eliminating some tax subsidies for oil companies, providing assistance for student loans, instituting pay as you go budget rules, increasing incentives for ethanol, authorizing the Federal government to negotiate for lower drug prices in the Medicare program and implementing all of the recommendations of the 9/11

• Commission. The full implementation of the Commission recommendations will have a significant impact on

port and border security. As our Partner Jim Burnley, who served as Secretary of Transportation in the Reagan Administration, has noted, "Companies in the business of moving cargo across our borders, or anywhere by air, will need to be proactive in the debate about how to assure the continuing efficient movement of goods. Draconian inspection demands that don't substantially increase our security could gravely damage our economy." There will also be a significant increase in oversight of Executive Branch agencies by Congressional committees.

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In addition to these agenda items, other Venable attorneys predict some significant changes in policy growing

• ut of the elections.
• Financial Services – "The Democratic majority can be expected to make a concerted effort to tie a

ribbon on the long-pending GSA reforms soon after the 110th Congress convenes in January. The financial services industry should also expect to see much greater emphasis on consumer protection in a number of areas, including data security, predatory lending and in promoting affordable housing initiatives." William Donovan, Partner

• Health Care – "Two of the potential committee chairmen, John Dingell and Henry Waxman, both

experts on using the power of committees to push change are likely to focus some of their energies on health care and the pharmaceutical industry….As for oversight, off-label marketing of drugs, patent litigation settlements, and drug safety will all be on the table, something that pharma companies have not had to worry about under a Republican controlled House." Catherine Bennett, Partner

• Energy Policy – "There will be an extreme shift in attitude towards energy policy, especially in the

House, during the next session under Democratic leadership and it's a pretty safe bet that hearings and inquiries will come. The Democrats are well aware that President Bush is vulnerable on energy issues, especially if gasoline and home heating oil prices spike or portions of our aging electric infrastructure produce power spikes or outages." Richard Powers, Partner

• Taxation – "The big surprise for most people is that Congress could reach a bipartisan compromise on

the estate tax by the end of 2007. Despite the philosophical differences surrounding this issue, there is bipartisan desire to forge a compromise and eliminate the growing uncertainty regarding the fate of the estate tax after 2010. The passing of the election could provide the window of opportunity needed for a consensus to emerge." Sam Olchyk, Partner

• Foreign Policy – "The Democratic party's critique of the Iraq war is in many respects very similar to

what is being articulated by many Republicans. In fact, few Democrats are advocating for an abrupt pull-out from Iraq. Many in both parties feel that more U.S. personnel and money are needed now in

• rder to achieve a successful conclusion to the mission." James Jatras, Partner
• Communication – "Increased scrutiny of ownership consolidation among media, entertainment, and

communications companies may be high on a Democratic Congress' priority list. Democrats will likely subject media and communications industry mergers to increased scrutiny." Erik Huey, Of Counsel Lame Duck Session The 109th Congress returned on November 13 for its post-election lame duck session. Among the priorities for consideration during the session will be the Appropriation bills. To date only the Defense Appropriation bill (P.L.109-646) and the Homeland Security Appropriation bill (P.L. 109-295) have been signed into law. With the exception of the Labor, Health Human Services and Education Appropriation bill (H.R.5647) the House has passed the remaining nine Appropriation bills but the Senate has not. In addition to H.R. 5647, therefore, the Senate will have to decide on the manner in which it will debate and pass the Appropriation bills for Agriculture (H.R.5381), Science, State, Justice and Commerce (H.R.5672), Energy and Water (H.R.5427), Foreign

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Operations (H.R.5522), Interior and Environment (H.R.5386), Legislative Branch (H.R.5521), Military Construction and Veterans Administration (H.R.5385), as well as Transportation-Treasury-HUD and Judiciary (H.R.5576). It may take up some of these individually and bundle the remaining together in an Omnibus Appropriations bill or through passage of a Continuing Resolution. The Senate will also likely give priority consideration to passage of the United States-India Peaceful Atomic Energy Act (S.3709) which will allow the United States to export nuclear technology to India for the first time in three decades and to early enactment of the United States Vietnam Free Trade Agreement Implementation Act (S.3495). The Administration would like both the Senate and House to take up the Terrorist Surveillance Act (S.2455, H.R.5825) which would establish procedures to govern a National Security Agency surveillance program that sometimes operates without judicially issued warrants. The Senate may also consider legislation to extend favorable tax treatment for expenses involving research and development, state and local sales taxes and college tuition as well as a new reduction in the estate tax (H.R.5970). The Senate is also expected to debate the confirmation of several judicial nominees, the nomination of Robert Gates as the new Secretary of Defense, and possibly the nomination of John Bolton as Ambassador to the United Nations. His recess appointment to that position expires in January of 2007. Both the Senate and the House will also be waiting for various Conference Committees to report their compromises on legislation which the respective chambers have passed with different provisions. These possible Conference Committee Reports include the Child Custody Protection Act (S.403) which would make it a Federal crime to transport minors across state lines to avoid state parental notification laws, the Lobbying Transparency and Accountability Act (S.2349) which would change statutes and rules regulating lobbying, the Gulf of Mexico Energy Security Act (S.3711) which would overhaul coastal off shore drilling policy in that region, and the Foreign Investment and National Security Act (S.3549) which would broaden oversight of foreign ownership of United States companies or other assets whose acquisition might pose national security concerns. President Bush has recently signed into law several significant pieces of legislation Congress passed in the September session. Among those are the Military Commissions Act (P.L.109-366) which amends the Uniform Code of Military Justice to establish procedures concerning the use of administrative commissions to try alien unlawful combatants engaged in hostilities against the United States, the Secure Fence Act (P.L. 109-367) authorizing 700 miles of new fencing on the United States-Mexican border, and the Safe Port Act (P.L. 109- 347) authorizing various programs and policies designed to improve maritime and cargo security. The Safe Port Act also includes provisions designed to curb internet gambling. Kevin Faley is the Editor of Capitol View and a partner in Venable's Legislative Practice Group. Mr. Faley can be reached at 202-344-4706. __________________________________________________________________________________________

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THE EFFECT OF A DEMOCRATIC TAKEOVER ON CAPITOL HILL'S TELECOMMUNICATIONS AGENDA Generally speaking, telecommunications issues tend to be relatively less partisan than other commerce-related issues (such as health care or energy), but the Democrat takeover of both houses of Congress likely will have a material effect on the telecommunications agenda on Capitol Hill. For instance, it is believed that:

• national cable franchise legislation will be highly unlikely to move;
• net neutrality legislation is more likely to move;
• telecommunication industry consolidation, and both recent and future mergers, likely will get more

formal scrutiny on Capitol Hill, along with any deregulatory actions by the Federal Communications Commission (FCC);

• there would be an emphasis on making more unlicensed spectrum available and using spectrum auction

proceeds for telecommunications-related spending programs, particularly public safety interoperable radios;

• fighting both media consolidation and FCC efforts to relax media ownership rules will be in sharper

focus, along with a broadcaster’s public interest obligations; and

• there will be more stringent privacy protections and oversight of purported phone company involvement

in the Bush Administration's electronic surveillance programs. The following provides more detailed analysis of each of these issues. National Cable Franchise Legislation: A priority for the Bell Companies, national cable franchise legislation (to expedite Bell entry into the video/cable marketplace) is the centerpiece of the major telecommunications bill pending in Congress. Known as the COPE Act, this legislation has passed the House, and a Senate version has been reported out of the Senate Commerce Committee, but it is awaiting consideration on the Senate floor. Even had the GOP retained control

• f both houses in the next Congress, the odds were long that, during the “lame duck” session, this legislation

would get approved by the Senate, reconciled in a House/Senate conference committee, and sent to the President for his signature. However, now that the Democrats will be taking control of both houses next congress, the odds of this legislation getting done in the “lame duck” session are virtually nil. If, as anticipated, national franchise legislation does not get done this Congress, there is a diminishing chance that such legislation will move in the next Congress in large part due to waning interest on the part of the key industry stakeholder, i.e., the Bell Companies. Such waning Bell Company interest in national franchise legislation can be attributed to: (1) satisfaction with the number of states which recently have enacted statewide franchise laws (and there are additional states with such laws pending), along with potential FCC action in a current proceeding which may bring about marginal reform to the existing local cable franchise process, and (2)

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unwillingness to risk onerous net neutrality (more on net neutrality below) provisions getting added onto a national franchise legislative vehicle. Moreover, Democrat committee leaders likely remain skeptical of the premise that the local franchise process is in need of replacement with a national franchise or that the local franchise authorities are primarily responsible for the lack of competitive entrants in the cable marketplace. Net Neutrality: Odds of moving legislation imposing a pervasive net neutrality regulatory regime have been increased with the Democrats taking over the majority in both the House and the Senate. Content aggregators, such as Yahoo!, Google, and e-Bay, in concert with liberal interest groups, most notably Moveon.org, have made net neutrality their top telecommunications priority. While amendments which would have imposed a pervasive net neutrality regulatory regime were defeated at every stage during House Energy and Commerce and House floor consideration of the COPE Act this year, House Energy and Commerce Committee Ranking Member John Dingell (D-MI) (who will take over the chairmanship of the full Committee next Congress) and Telecommunications Subcommittee Ranking Member Ed Markey (D-MA) (who may take over the chairmanship of the Subcommittee next year) supported such amendments, along with the vast majority of Democrats on the Committee. Moreover, a similar amendment (offered by Senators Dorgan (D-ND) and Snowe (R-ME)) was only narrowly defeated (11-11) in the Senate Commerce Committee, and controversy over net neutrality hampered efforts to secure cloture on the COPE Act in the Senate. Moreover, the House Judiciary Committee expressed bipartisan support for a more pervasive net neutrality regime (via antitrust laws), although some of the House Judiciary Committee’s expression had to do with jurisdictional fights with the House Energy and Commerce Committee. Nevertheless, such support for net neutrality likely will increase under a Democrat- controlled House Judiciary Committee. Broadcast/Media Consolidation: Democrats are more likely to push legislative or regulatory action on enhanced public interest obligations for broadcasters, such as restoration of more pervasive localism requirements. Moreover, a Democratic-controlled agenda will likely focus more on fighting both media consolidation and FCC efforts to relax existing media

• wnership regulations.

Other Issues: Under Democrat control, telecommunication industry consolidation (wireline telephony, wireless telephony, and cable) and both recent and future mergers (and FCC and DOJ merger reviews) likely will get more scrutiny, along with any deregulatory actions (such as those achieved through Commission inaction on industry forebearance petitions) by the FCC. Also, there likely will be an effort to make more unlicensed spectrum

• available. Moreover, there would be increased likelihood of further earmarking of future spectrum auction

proceeds for things such as digital education, digital training, and digital humanities programs and/or public safety interoperable communications capabilities. Also, there likely will be more public oversight of, and hostility toward, the phone companies' purported involvement in the Bush Administration's electronic surveillance/homeland security programs. Moreover, pretexting legislation and other privacy-related measures may be more likely to become law under a Democratic controlled Congress. William R. Nordwind is a partner in Venable's Legislative Practice Group. Mr. Nordwind can be reached at 202-344-4964 or at wrnordwind@venable.com __________________________________________________________________________________________

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New Venable Partners Catherine P. Bennett has joined Venable's Legislative Practice Group as a Partner in the Washington, D.C.

• ffice. Before joining Venable, Catherine served as Vice President for Government Relations for Pfizer Inc.

where she was directly responsible for framing Pfizer's positions on taxation, international trade, international property, patent law, drug importation, FDA regulations and policy, international price controls and judicial

• reform. Before joining Pfizer, Catherine served on the staff of the National Security Agency at the White

House. William R. Nordwind has joined Venable's Legislative Practice Group as a Partner in the Washington, D.C.

• ffice with a concentration in telecommunications policy matters. Before joining Venable, Will spent more

than 15 years in various positions on Capitol Hill, most recently as Counsel and Policy Coordinator to the U.S. House Energy and Commerce Subcommittee on Telecommunications and the Internet. In that capacity he coordinated all of the Subcommittee's legislative activities on telecommunications policy as well as oversight of Federal agencies within the jurisdiction of the Subcommittee including the Federal Communications Commission and the Department of Commerce's National Telecommunications and Information Agency. Venable in the News Former Senator Birch Bayh, a partner in the Legislative Practice Group, was Honorary Lecture Chair of The 2006 Robert W. Kastenmeier Lecture, "The Law in Action: The Impact of the Bayh-Dole Act on University Research and Economic Development", at the University of Wisconsin Law School in Madison. Senator Bayh gave his personal recollections of the Bayh-Dole Act and discussed current challenges to the legislation. __________________________________________________________________________________________ Capitol View is published by the Legislative Practice Group of the law firm Venable LLP, 575 7th Street, N.W., Washington, D.C. 20004-1601. Internet address: http://www.venable.com. It is not intended to provide legal advice or opinion. Such advice may only be given when related to specific fact situations. Editor: Kevin O. Faley Associate Editor: Barbara Reres Questions and comments concerning materials in the newsletter should be directed to Kevin Faley at kofaley@venable.com. Please direct address changes to Barbara Reres at breres@venable.com