Darryl Nirenberg
Partner
Eva Rigamonti
Associate
Ryan McClafferty
Law Clerk
Steptoe & Johnson LLP

Tax Reform and Averting a Government Shutdown

With time running out to notch major legislative victories ahead of the looming 2018 midterm elections, Republicans in Congress spent December working feverishly to pass tax reform legislation. On December 1, the Senate passed its version of a bill to reshape the U.S. tax system by a vote of 51 to 49. On December 6, the Senate decided, by a vote of 51 to 47, to conference the Senate tax reform bill with the House version. The House similarly decided to conference its tax reform bill with the Senate by a vote of 222 to 192 on December 4.

The conference is an opportunity for a temporary committee of House and Senate lawmakers to work out differences in the bills and negotiate a final bill that can be passed by both chambers. The conference committee includes lawmakers from the tax-writing and natural resources committees in both chambers, as the bill to be conferenced contains both tax reform and energy-related provisions, such as opening up the Arctic National Wildlife Refuge in Alaska to oil exploration.

Some of the key issues to be addressed by the conference committee include determining if and how to sunset individual tax cuts, how to consolidate the individual tax brackets, whether to maintain a repeal of the Affordable Care Act’s individual mandate, the effective date of the corporate tax rate cut, how to treat the state and local tax deduction, whether to eliminate or change the alternative minimum tax for corporations, and how to lower tax rates for pass-through entities such as sole proprietorships, partnerships and S-corporations. At the time this issue went to print, many expected a tax reform bill to reach the president’s desk by Christmas.

Also in early December, Congress narrowly averted a government shutdown by passing a two-week continuing resolution (CR), a bill maintaining existing federal government funding levels. The CR will fund the government until December 22, when Congress is expected to pass another short-term CR into January, giving members time to address other impending policy battles on the legislative agenda. Both CRs are intended to buy time for lawmakers to craft an omnibus appropriations bill (a package of spending bills funding all parts of the government).

Lawmakers must decide which separate legislative measures, if any, to include with the next CR. Additional funding for defense spending and disaster aid, an increase in the debt ceiling, a flood insurance extension, reauthorization of NSA spying powers, and children’s health insurance have all been discussed as possible add-ons. Many Democrats insist that a year-end spending bill must include a legislative solution for beneficiaries of the Deferred Action for Childhood Arrivals program.

Federal Government Continues to Focus on Opioid Crisis

On November 29, Attorney General Jeff Sessions announced that the Department of Justice’s Community Oriented Policing Services (COPS) Office is issuing approximately $12 million in grants designed to support law enforcement efforts to crack down on illegal production and distribution of heroin, methamphetamine and pharmaceutical opioids. Specifically, the COPS Office is awarding $7.12 million directly to state and local law enforcement agencies in FY 2017 through the Anti-Heroin Task Force Program (AHTF), which targets funding based on states’ per-capita primary treatment admissions for heroin and other opioids. The COPS Office will also award $5.03 million in FY 2017 to state law enforcement agencies with demonstrated track records of seizing methamphetamine, precursor chemicals, drug labs and drug lab dumps.

Attorney General Sessions also directed all U.S. attorneys to designate opioid coordinators to streamline opioid prosecutions in every district. Each opioid coordinator will assemble and work with a task force of federal, state, local and tribal law enforcement to identify opioid cases for federal prosecution and help districts cooperate with one another in the fight against illicit methamphetamines and opioids.

On December 5, the Senate Appropriations Committee’s Subcommittee on Labor, Health and Human Services, and Education (Chairman Roy Blunt, R-Mo.), held a hearing titled “Addressing the Opioid Crisis in America: Prevention, Treatment and Recovery,” which focused on opioid crisis-related federal funding questions. Subcommittee members heard testimony from Trump administration public health officials and a member of the President’s Commission on Combating Drug Addiction and the Opioid Crisis.

Despite declaring the opioid crisis a public health emergency in October, the Trump administration has not sent lawmakers a formal supplemental funding request. Instead, White House officials have said they are leaving it up to Congress to determine whether additional funds are needed to boost opioid-related law enforcement and public health initiatives. Likewise, Trump administration witnesses at the December 5 hearing refused to give specific answers when panel members asked how much funding their agencies would need.

Subcommittee Democrats argued that the lack of guidance from the administration on funding is evidence that President Trump is not taking the opioid crisis seriously. As of December 8, Congressional Republicans have been hesitant to commit extra funding in a continuing resolution, saying they would prefer to include opioid crisis funds in a larger year-end budget agreement. Senate appropriations bills for FY 2018 currently include approximately $1.5 billion in total federal funding addressing drug abuse, including about $500 million in state grants for opioid epidemic response. Whether or not funds are ultimately provided for state grants will depend on the outcome of ongoing negotiations over a long-term spending bill.

On December 7, PORAC filed comments in response to a request for information issued by the FDA’s newly formed Opioid Policy Steering Committee (OPSC), which is tasked with evaluating ways the FDA can use its regulatory authority to address the opioid epidemic. PORAC’s comments urged FDA to (1) limit unnecessary access to opioids through tighter regulation of prescribing practices and (2) issue guidance aimed at public safety personnel that explains the risks of exposure to fentanyl and outlines best practices first responders can use to minimize those risks.

House Passes Concealed Carry Reciprocity Bill

On December 6, the House voted 231 to 198 to pass H.R. 38, the Concealed Carry Reciprocity Act. The bill would permit any individual authorized to carry a concealed handgun in his or her home state to also do so in any other state that allows concealed carry. The legislation would also require certain federal and state agencies to certify that all information regarding individuals ineligible to purchase firearms is uploaded to the National Instant Criminal Background Check System.

The bill, a top priority of the National Rifle Association, has been denounced by gun-control groups and some law enforcement associations, such as the Major Cities Chiefs Association, the Police Foundation and the International Association of Chiefs of Police. These groups argue that H.R. 38 would force states to accept weaker concealed carry laws of other states (which may have less stringent training requirements, or no permitting requirement at all).

A Senate counterpart to the House-passed bill, the Constitutional Concealed Carry Reciprocity Act of 2017 (S. 446), has been referred to the Senate Judiciary Committee.

Supreme Court Hears Arguments in Cellphone Data Search-and-Seizure Case

On November 27, the U.S. Supreme Court heard oral arguments in Carpenter v. United States, which concerns the legal standard that law enforcement must meet to obtain cellphone location data covering an extended period of time. The Court has been asked to determine whether federal law enforcement officials investigating a robbery must use a probable cause warrant — rather than just orders issued under the less stringent Stored Communications Act (SCA) — to obtain cellphone location data. Like other Fourth Amendment search-and-seizure cases involving personal data, Carpenter hinges on a tension between two important policy goals: preserving citizens’ personal privacy rights and ensuring that law enforcement has the investigative tools needed to protect citizens from crime.

The petitioner, Timothy Carpenter, is challenging his conviction on the basis that cellphone location records introduced as evidence by prosecutors at his trial were improperly admitted. The cellphone records (which included over 100 days of location data) were inadmissible, Carpenter argues, because he had a reasonable expectation of privacy in the records, and FBI investigators violated his Fourth Amendment rights when they did not secure a probable cause warrant to obtain the records from his cell service provider — instead, they relied on a court order under the SCA, which uses a less stringent legal standard. Under existing case law, the government argues that Carpenter had no reasonable expectation of privacy in the cellphone data, because by using his service provider’s network, he had provided the data voluntarily to his service provider, a third party.

The court’s eventual ruling in Carpenter could have significant implications for investigative techniques involving the collection of communications data from third parties, such as telephone and internet service providers. Some justices, including Justice Sonia Sotomayor, have suggested that changes in the way people use cellphones since earlier cases were decided may justify finding an expectation of privacy in cellphone data, especially data that is collected on a continuous basis and could be easily exploited for surveillance purposes, such as location data.