The Road Ahead in 2015: A public policy and regulation roadmap for in-house counsel
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The Road Ahead in 2015: A public policy and regulation roadmap for in-house counsel




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Presentation on theme: "The Road Ahead in 2015: A public policy and regulation roadmap for in-house counsel"— Presentation transcript:

Slide1

The Road Ahead in 2015:

A public policy and regulation roadmap for in-house counsel

Slide2

Presenters

Darry Sragow

Partner

Public Policy and Regulation+ 1 213 892 2925darry.sragow@dentons.com

John RussellPrincipalPublic Policy and Regulation+1 202 408 6392john.russell@dentons.com

Megan Delany

PrincipalPublic Policy and Regulation+1 202 408 9169melanie.delany@dentons.com

2

January 14, 2015

Slide3

California Political Landscape

Registration

Voter Attitudes

Democrat 43.4%

Republican 28.4%Other 28.2% (No Party Preference and Third Parties)3January 14, 2015

Slide4

Electoral Drivers

Term Limits (1990)

Citizens Redistricting Commission (2008, 2010)

Open Primary (2010)4

January 14, 2015

Slide5

CA Policy Focus

5

January 14, 2015

Slide6

Governor's Agenda

Sustainable Budget

Education

Prison Sentencing and ReformTransportation, including High Speed RailClimate ChangeFlat tuition for UC students

6January 14, 2015

Slide7

New

Leadership in Assembly and Senate

Senate President pro Tem

Kevin De Leõn

Minority Leader Bob HuffJanuary 14, 2015

7

Speaker of the Assembly

Toni Atkins

Minority Floor Leader

Kristin Olsen

Slide8

Legislation Introduced / Process & Path to Adoption

January 14, 2015

8

Slide9

California State Government

9

January 14, 2015

Slide10

New Laws in 2015

Mandatory paid sick leave

Privacy/cyber-data breaches

Ban on single-use plastic bagsArbitrationYelp billFilm tax creditsInsurance/ride-sharing companiesProfessional sports teams

Tribal development10January 14, 2015

Slide11

Meanwhile,

In the nation's capital…

11

January 14, 2015

Slide12

Source: National Journal Research; CNN Election Center; Associated Press; NBC News.

Republicans Win Solid Majority in Senate

Analysis

Having won most of this year’

s competitive races, Republicans secured 54 Senate seats, flipping the Senate from blue to red

A GOP win in Louisiana was announced on December 6, 2014

Since Republicans expanded their majority to 54 seats, they will have an easier time passing legislation in the Senate because they will need fewer Democratic defections to overcome filibusters (which require a 60 vote supermajority)

Control of the 113

th

Senate (2012-2014)

Democratic

Republican

Independent

Control of the 114

th

Senate (2014-2016)

Total Seats

Democrats: 44

Republicans: 54

Independents: 2

44

54

Total Seats

Democrats: 53

Republicans: 45

Independents: 2

53

45

2

2

Slide13

Source: National Journal Research; CNN Election Center; New York Times.

Republicans Win Record Majority in House

Analysis

Republicans won a total of at least 246 seats in the House, their largest majority since 1928

An expanded GOP majority in the House means that Speaker Boehner will have an easier time passing legislation in the House without Democratic support, and Republicans will also have an easier time holding on to their majority in future elections

Control of the 113

th

House (2012-2014)

Democratic

Republican

Vacant

Undecided*

Control of the 114

th

House (2014-2016)

AK

Total Seats

Democrats: 188

Republicans: 246

Undecided: 1

188

246

* Refers to AZ-2 race, in recount as of 12/8/2014

1

AK

Total Seats

Democrats: 199

Republicans: 233

Vacancies: 3

199

233

Slide14

Source: National Journal Research, 2014; RealClearPolitics, 2014.

Few 2014 Senate Races Were Decided by a Close Margin

Analysis

Only 5 Senate races (AK, VA, NC, NH, CO) were decided by a margin of 5% or less; all were held by Democratic incumbents, and 3 were Republican gains

These results do not necessarily inform 2016 projections; a

different set of seats will be up for

election, and presidential election turnout is both higher and demographically distinct from turnout in midterm elections

In addition, Senate contests

, although increasingly

nationalized, are still in many ways idiosyncratic, often dependent on local politics and voters’ opinions of specific candidates

28%

1%

37%

2%

16%

8%

30%

16%

13%

10%

10%

12%

27%

40%

31%

19%

11%

3%

55%

18%

21%

9%

17%

23%

100%*

34%

11%

NH 3%

MA 24%

RI 41%

NJ 13%

DE 14%

AK

HI 42%

Margins of Victory in 2014 Senate Elections

3%

Margin of >5%, Dem

Margin of 0-5%, Dem

Margin of 0-5%, Rep

Margin of >5%, Rep

No Election

*Jeff Sessions (R-AL), ran unopposed

Slide15

Source: National Journal Research; AP.

Only 5% of House Races Were Decided by a Close Margin

Analysis

22 House races were decided by a margin of 5% or less; 14 of those races were won by Democratic candidates, while 8 were won by Republican candidates

California accounted for an unusually high share of competitive races this year: seven House races in California were decided by a margin of 5% or less, and all of them were won by Democrats

Because so few districts produce competitive races, some observers predict that the GOP will retain their majority in the House until districts are redrawn following the 2020 census

Margins of Victory in 2014 House Elections

AK

Margin of >5%, Dem

Margin of 0-5%, Dem

Margin of 0-5%, Rep

Margin of >5%, Rep

Slide16

Republicans Will

Face Budget

Fights

In Early Months of 114th

Congress

16

Source: National Journal Research 2014. For issue-specific sources, see issue-specific slides that follow.

Prospective Items on Legislative Agenda in 114

th

Congress

Immigration

: With the passage of the “

CRomnibus

” in the lame duck, Congress may threaten to shut down DHS over Obama’s executive action

Debt Ceiling

: Watch for confrontation over spending & issues R's could attach to a debt ceiling deal

Fossil Fuel

: GOP is pushing for legislation approving Keystone XL, but is unlikely to override a presidential veto

Online Sales Tax

: Not a high priority, but lobbying efforts from states and small businesses may push GOP to allow for an online sales tax

Affordable Care Act

: Barring more extreme action (full repeal or major overhaul) in the wake of a Supreme Court decision eliminating federal exchange subsidies in

King v. Burwell

, medical device tax repeal and smaller regulatory changes to coverage requirements are possible

Highway Trust Fund

: Republicans will likely change spending levels and attempt to eliminate the gas tax in a Highway Trust Fund renewal

Doc Fix

: Expect another short-term fix or a long-term plan paid for primarily through deficit reduction; conservatives may push to tie

ACA

reforms to a renewal

No Child Left Behind

: GOP Senators want to push for less federal involvement in school performance evaluation and move more responsibility to states

EPA Regulations

: GOP may try repealing EPA regulations on carbon emissions through a budget/debt ceiling vote

Foreign Policy

: A confirmation battle is expected over the nomination of Ashton Carter for Secretary of Defense; Republicans want confrontation with Iran;

President Obama’s actions to normalize relations with Cuba will likely set up battles over confirming an ambassador and/or funding an embassy

International Trade

: The Republican Senate will likely grant Obama Trade Promotion Authority to sign the TPP and TTIP trade agreements

Appropriations

: A regular-order budget is possible, but another CR is a strong possibility; some GOP members have hinted at reconciliation

FCC/Net Neutrality

: Republicans may restrict the FCC’s authority or withhold its funding if it implements more expansive regulations

Export-Import Bank

: Republicans are split on whether the bank should expire; it may or may not be reauthorized

Tax Reform

: Movement on comprehensive tax reform remains unlikely in a Republican Congress, but corporate tax reform is possible

Slide17

Immigration

17

In the 113

th

Congress, the Senate passed immigration reform legislation, but it stalled in the House

Going into the 114

th

Congress, political interest in immigration is high due to President Obama’s memorandum providing deportation relief and access to work authorization to certain undocumented immigrants

USCIS

, the agency responsible for carrying out Obama’s deportation memorandum, is funded primarily by application fees currently outside of the scope of congressional appropriation

When the CR for the Department of Homeland Security expires in March 2015, Republicans plan to attach a provision preventing money collected from application fees from going to President Obama’s deportation relief program

It is unlikely, however, that a filibuster-proof majority in the Senate will support the bill, so it is possible the memo will be upheld with few or no changes

Slide18

Tax Reform

18

Despite the efforts of lawmakers from both sides of the aisle to reform individual and corporate tax codes, fundamental differences between the two parties’ visions of tax reform have prevented a workable compromise from taking shape

Comprehensive tax reform remains unlikely in a Republican Congress; however, more news of corporate tax inversions could put pressure on Congress to reform the tax code in some form

Republicans could use the once-a-year reconciliation process to bypass a filibuster and pass comprehensive tax reform (much like how the

ACA

was passed), but this would likely prompt a veto threat from the White House

Comprehensive reform efforts are unlikely to succeed due to divergent priorities among the parties; for instance, while both sides generally agree on simplification of the tax code and some reduction of corporate tax rates, Democrats have advocated for a minimum tax burden on high earners, while Republicans have maintained a push for reduction of individual rates on top earners

If Congress passes a legislative fix to inversions, expect Republicans to tie it to other GOP priorities, e.g. lower corporate rates

House Ways and Means Chairman Paul Ryan (R-WI) and Senate Majority Leader Mitch McConnell (R-KY) have suggested corporate-only tax reform as a compromise position

Slide19

International Trade

19

Sources:

Vicki Needham, “House Republicans Opposed Fast-Track Authority,” The Hill, November 12, 2013; Zach Carter, “Trans-Pacific Partnership Talks Stir Bipartisan Opposition,” Huffington Post, November 11, 2013; Vicki Needham and Laura Barron-Lopez, “McConnell Says Obama ‘Born Again’ on Trade Agenda,” The Hill, January 7, 2014.

Two trade agreements, the Trans-Pacific Partnership (TPP) and the Transatlantic Trade and Investment Partnership (TTIP), need authorization from Congress in order to move forward

The administration is seeking Trade Promotion Authority (TPA) to negotiate and sign trade agreements with limited allowance for Congressional intervention

Top Republicans, including Senate Majority Leader Mitch McConnell (R-KY) and Senate Finance Committee Chairman Orrin Hatch (R-UT), have voiced their support for

TPA

; both highlighted the issue as an area for cooperation with the White House

Neither the White House nor McConnell have indicated when they would push for a vote on

TPA

, but such a measure is nonetheless widely expected to pass some time in 2015

Congressional Democrats are divided over

TPA

and a minority of Republicans oppose

TPA

because they are uncomfortable with granting the administration additional powers, but they are unlikely to prevent

TPA

passage

Slide20

No Child Left Behind

20

In the more than a decade since the law’s passage, the bill’s testing provisions have drawn both favor (civil rights groups, for example, support the tests’ highlighting of racial and class disparities in achievement) and ire (from teachers’ unions, who feel that sanctions harm teacher job security and that standardized test preparation limits their curricula)

T

he bill is likely to see a reform effort in the 114

th

Congress

Rep. John Kline (R-MN) and Sen. Lamar Alexander (R-TN), the chairmen of the House and Senate committees responsible for education issues, are in the process of drafting a reauthorization of

NCLB

with a focus on allowing states to opt in to taking federal education money and allowing states to determine evaluative criteria for their own education systems

Democrats have indicated a willingness to reform the law, favoring changes that would lead to less frequent testing and monitoring and less onerous sanctions on underperforming programs

President Obama has said that he is open to reform, but will veto a bill that rolls back federal testing completely

Slide21

Doc Fix

21

In 1997, Congress created the Medicare Sustainable Growth Rate (SGR) to tie the Medicare budget to the economy’s growth

However, health care spending soon outpaced the economy, and since 2003, Congress has passed 16 short-term “doc fixes” to stabilize provider payments; the current fix expires on

April 1, 2015

Short-term doc fixes are temporarily cheaper and, as a result, more politically palatable than a permanent fix

If Congress cannot pass a permanent fix, expect another year-long patch in March

The Republican plan for a permanent doc fix would be paid for mostly by deficit reduction, rather than revenue increases

It is possible that a temporary doc fix extension may spark a political fight; Republican leadership used a procedural vote to pass the last doc fix bill by voice vote with primarily Democratic support, but conservative anger over this strategy in the 113

th

will likely mean passage of a short-term fix won’t happen again without significant conservative backing or a floor vote with Democratic support

In order to gain conservative support, a permanent or temporary doc fix extension, which Obama may see as too critical to veto, may be used as a vehicle for

ACA

reform

Slide22

Highway Trust Fund

22

Source:

Sid Salter, “Highway funding can kicked down the road, but not very far,” Gulf Live, September 3, 2014; Michael Doyle, “Local California officials look for aid on Capitol Hill,” Hilton Head Island Packet, September 10, 2014; Keith Laing, “Boxer to GOP: Focus on Highway Bill, Not Keystone,” The Hill, January 7, 2014; Amy Harder, “Senate Republicans: Higher Gas Taxes Are On The Table,” The Wall Street Journal, January 8, 2014.

In the 113

th

Congress, conservative opposition to the federal government’s role in road construction raised the possibility that the Highway Trust Fund would go unfunded

However, a short-term funding compromise pushed this issue into 2015

When the Highway Trust Fund is depleted again in May 2015, expect Republicans to propose eliminating the gas tax and to negotiate new funding mechanisms and levels

Some transportation advocates have suggested that falling gas prices could make it easier to increase the gas tax because consumers would be less likely to notice the tax amid falling prices

Conservative critics argue that consumers should be allowed to keep the savings generated by lower gas prices; Senate Environment and Public Works Chairman Jim Inhofe (R-OK) indicated that a gas tax increase was on the table, but did not endorse this approach

Some conservative lawmakers and interest groups would prefer to end the program and turn over responsibility for highway infrastructure to state and local governments

Nonetheless, the Highway Trust Fund enjoys bipartisan support, and lawmakers are more likely to renegotiate funding mechanisms or offer cost offsets than scrap the program altogether

Slide23

Affordable Care Act

23

Source: Sam Stein, “Rob Portman: GOP-Run Senate Would Vote on Obamacare Repeal,” Huffington Post, September 11, 2014; Daniel Newhauser, “McCarthy Says Sept. Agenda Will Confront Obama, Senate Democrats,” National Journal, September 4, 2014; Terry Connelly, “Obamacare Dominoes: If Federal Subsidies Fall at the Supreme Court, so Do the Individual and Employer Mandates – Game Over!” The Huffington Post, November 18, 2014; Roger Parloff, “Supreme Court’s New Obamacare case could be the next Bush v. Gore,” Fortune, November 10, 2014.

The Affordable Care Act (ACA) has been a political lightning rod since its introduction in 2009

Since then, many Republicans have been elected on a platform of amending or repealing the law

Public opinion of the law has improved since its implementation, however, and the issue been less politically prominent as a result

House Majority leader Kevin McCarthy (R-CA) outlined several conservative legislative ideas for

ACA

reform in a memo in August 2014, such as changing the definition of full-time worker and giving insurance policy holders more options to “keep the plan they have”

These options that could action in the 114

th

, but will likely face a presidential veto if passed

The outcome of a Supreme Court case,

King v. Burwell,

may throw the Affordable Care Act in jeopardy; if the plaintiffs win, then subsidies that allow low-income individuals to buy insurance in states that use the federally-established exchange will no longer be available, which will set off a chain of policy impacts that may make the law at best unenforceable and at worst make health care costs prohibitively expensive

A ruling for the plaintiffs would give Republicans a massive bargaining chip in repeal or reform negotiations with the White House; a ruling on the case is expected in June

Even without a court ruling, a symbolic full repeal bill is possible; however, it is unlikely that Republican leadership would make either the debt ceiling or the budget conditional on a full repeal in absence of a ruling in

King

Sen. Rob Portman (R-OH) has suggested a separate repeal of the medical device tax, a proposal with bipartisan support

Slide24

Sources: National Journal Research; GovTrack.us; StateNet.com.

Every State Legislature Is More Productive Than Congress

Analysis

As measured by the percentage of bills introduced that were enacted as law, every state legislature was more productive than Congress in 2014

The least productive state legislature, Minnesota, enacted 5% of all introduced bills, which was still higher than Congress’ 3% rate

Although comparisons are difficult because not all bills are of equal importance, these percentages illustrate the relative ease with which state legislatures pass laws compared to Congress

Whereas Congress has experienced years of gridlock and divided government, many state governments are unified under one party and have simpler procedures for drafting and passing legislation

OH

WV

VA

PA

NY

ME

NC

SC

GA

TN

KY

IN

MI

WI

MN

IL

LA

TX

OK

ID

NV

OR

WA

CA

AZ

NM

CO

WY

MT

ND

SD

IA

UT

FL

AR

MO

MS

AL

NE

KS

VT

NH

MA

RI

CT

NJ

DE

MD

AK

HI

Percentage of Bills Enacted as Law in Most Recent Legislative Session

AK

0-10%

10-25%

25-50%

>50%

Congress Enacted 3%

of Bills Introduced

in the 113

th

Congress

Legend

Slide25

2016 Presidential Hopefuls

Month Day Year

25

Slide26

26

Slide27

27

Slide28

Priority Issues on the Hill - Republican Governance not Gridlock

Cybersecurity

Limited Immigration Reform

Tax ReformBudget DealTransportationDebt LimitTrade Deals - TPP and TTIP

January 14, 201528

Slide29

The Future

Boxer seat

Feinstein seat

PresidentJanuary 14, 2015

29

Slide30