Weekly Congressional update

This week (7/20), The House approved separate bills to block parts of a pending Environmental Protection Agency rule on coal ash, put the Food and Drug Administration in charge of labeling standards for genetically-modified foods and withhold federal law enforcement funds from state and local governments that are deemed “sanctuary” areas. The Senate debated and had several votes on legislation replenishing the Highway Trust Fund (the “highway bill”).

Next week (7/27), The House will consider legislation making further reforms to the Department of Veterans Affairs. The Senate will have final votes on funding the highway bill and then move to consider legislation to enhance cybersecurity protections.

Tax Extenders Moving

With strong bipartisan support, the Senate Finance Committee advanced a two-year (2015 and 2016) extension of 52 expired tax provisions. These provisions include, among others, the popular IRA charitable rollover, enhanced conservation easement, bonus depreciation and the more contentious wind production tax credit. Even though the Solar Investment Tax Credit has substantial support, an amendment making changes to the provision was not accepted during the hearing due to procedural issues. There is currently no timetable for the full Senate to vote on this package. This package conflicts with the position of the House, which has selected a handful of the expired provisions and advocated to make those permanent on an individual basis. This will not be resolved until the fall at the earliest and more likely in November or December. The most likely scenario is another short-term (rather than permanent) extension of these expired tax provisions at that time.

House Panel Approves Energy Bill

In what will be the first of many steps towards passing a broad, bipartisan energy reform package, a House subcommittee released and unanimously passed legislation Wednesday (7/22) aimed at modernizing energy infrastructure, improving energy efficiency and taking other steps toward updating energy policies. The initial bill’s provisions are mostly minor, however, and do little to answer the larger, more controversial energy debates. But lawmakers on both sides of the aisle argued it was still important for members to work together in moving forward with the initial bill.

“This committee print before us today is reflective of the accomplishments and compromises agreed upon at this stage,” Rep. Ed Whitfield, chairman of the House Energy and Commerce Committee’s sub panel on energy and power, said at the beginning of the Wednesday meeting. “Some issues that are so important they’ve got to be addressed, but they’re not in this bill yet,” he added. Among other things, the bill section directs the DOE to submit a report on the impact of thermal insulation on both energy and water use systems for potable hot and chilled water in Federal buildings and on the return on investment of installing the insulation. It also expands the definition of “renewable energy” in the Energy Policy Act of 2005 to include thermal energy as opposed to just electrical energy.

The full Energy and Commerce Committee plans to take up the bill after the August recess, where lawmakers will be able to offer amendments. However, the panel’s leaders have agreed that only bipartisan amendments will be considered.

Highway Funding and Taxes

The Senate this week began consideration of a bipartisan, six-year highway bill that has caused some consternation since it provides funding for only three years of projects. Bill proponents want to provide the remaining funding after the 2016 elections, but deficit hawks are skeptical of this commitment. While it is possible this Senate bill will pass next week, it is a vastly different bill than one passed by the House a week ago. The House bill extends highway funding for only five months.

The House goal has been to implement a short-term fix and then put together a long-term highway reauthorization in the fall. Such a longer term bill would likely include a reform of how the international profits of U.S.-based multinational companies are taxed and some form of repatriation. With a July 30 deadline for providing new highway funds looming, the construction industry and state and local officials all nervously watch as the House and Senate quickly try to reconcile their differences and accept one bill or the other. If the House’s short-term approach prevails, some form of tax reform likely will be in play late this year that will have implications for investors.

Ex-Im Verdict Coming

It is likely the Senate highway bill will include a provision to reauthorize the Export Import Bank (Ex-Im), which has operated since July 1 without authority to make new loans or offer new financial assistance to U.S. exporters. Many conservatives have tried to dismantle the Ex-Im because they believe it dispenses corporate welfare (Boeing is by far the top recipient of the agency’s assistance) and its role can be assumed by the private sector at no cost to the taxpayer. Most Members of Congress, however, support the continuation of the Ex-Im. The House-passed highway bill does not include an Ex-Im extension. The future of the agency should be decided by the end of the month, and it is believed it will get an extension after a very contentious showdown in the House that will split Republican members.

Administration Update

Federal Buildings Face Brunt of Senate Spending Cuts

The Government Services Administration (GSA), the agency responsible for fixing crumbling federal buildings would face the brunt of cuts in a spending bill approved by the Senate Appropriations Financial Services and General Government Subcommittee this week (7/20).  Under the measure, the GSA would be authorized to spend from the Federal Buildings Fund $8.3 billion, $934 million less than in fiscal 2015.

Democrats pointed out that the measure would fund one new $181 million construction project, compared with $1.2 billion in new construction the Obama administration wanted. The GSA could spend $357 million for two repair projects, far less than the $1.2 billion Obama administration wanted. However, it was not the only to agency that would face cuts, the Internal Revenue Service would get $10.475 billion under the bill, $470 million less than this year. That reduction would be less severe than the $838 million cut proposed in the House version.

While some Americans may cheer that the IRS would receive less money, opponents to the spending cut note that the funding level would exacerbate customer service delays at the tax-collecting agency. In a written critique of the bill they said the IRS this year is responding to only 37 percent of calls, down from 71 percent in 2014 before the last round of cuts. Disconnected calls rose to 8.8 million from 544,000 the year before.

There is still a long way to go before the GSA and other agencies face these cuts, with time running out to pass spending measures before the end of the government’s fiscal year it appears that a continuing resolution will be necessary. The question remaining is for how long.

Industry Rails Against Obama’s Dishwasher Rules

Companies that make dishwashers are warning that the Obama administration’s latest efficiency standards for their industry would backfire. The Association of Home Appliance Manufacturers is accusing the Department of Energy (DOE) of a politically motivated drive to increase dishwasher efficiency standards, which are so bad that they would cause consumers to re-wash dishes, erasing any efficiency gains.

Rob McAver, an association spokesperson, said regulators are going too far and the new rules will allow only 3.1 gallons to be used to wash each load of dishes. Some of the group’s members, which include companies like GE Appliances & Lighting and Whirlpool Corp., tweaked their models to comply with the DOE’s December proposal to ratchet up standards. They then ran standard tests with food stuck to dishes. “They found some stuff that was pretty disgusting,” McAver said.

The association brought DOE officials to their office recently to show them the results and released photos of it publicly this week hoping that the disgusted reactions to the tests will spur DOE to go back to the drawing board for the standards and work more closely with the industry this time.

When it released the proposal in December, the DOE estimated that it would save 240 billion gallons over a 30-year period and reduce energy consumption by 12 percent. That would shave $2 billion off consumers’ utility bills, the agency said. Following the industry group’s announcement, DOE said it is listening and it hasn’t settled on the rules yet.

“The department has not put a fork in this rule, and has extended the comment period to work closely with manufacturers to test new products and ensure that consumers have the most efficient, highest performing products available,” an agency spokeswoman said.

Industry Update

Residents of California, Other Drought-Stricken States Slow To Adopt Water-Efficient Plumbing Products

Despite the urgent need to save water, consumers and businesses in drought-stricken states have been slow to purchase and install water-efficient toilets, showerheads and bathroom faucets, according to a study conducted by GMP Research, Inc., and commissioned by Plumbing Manufacturers International (PMI).

The study found that only 5.5 percent of California’s 33.5 million installed residential and commercial toilets are high-efficiency toilets using 1.28 gallons per flush – the Environmental Protection Agency’s WaterSense standard for toilets evaluated to be 20 percent more water-efficient than other plumbing products meeting federal standards.

Despite the drought conditions in California, only 21.1 percent of bathroom faucets there meet the WaterSense standard of 1.5 gallons per minute (gpm) and 23.9 percent of showerheads meet the WaterSense standard of 2.0 gpm. Nationally, statistics are not much better. The study further found that, on average, 6.7 percent of the toilets installed nationwide are WaterSense toilets, 25.4 percent of bathroom faucets are WaterSense faucets and 28.7 percent of showerheads are WaterSense showerheads.

Governor outlines planned projects at veterans homes

Speaking at one of Missouri’s seven homes for military veterans this past week, Gov. Jay Nixon Friday outlined $33 million in improvement projects that soon will be underway to improve care provided at veterans homes. The governor, who was joined by veterans, veterans’ groups and staff from the Missouri Veterans Home in St. James, said the projects are possible thanks to bi-partisan funding bills he signed last month.

“We need to ensure our veterans receive the best care we can provide, and today I am here to deliver on our promise to them,” Nixon said. “This past January, I called on legislators to finish the job they started last year by passing the necessary bills to get these projects underway, and I appreciate the bi-partisan action that accomplished this. The men and women who have bravely served in our nation’s defense deserve both our thanks and our continued commitment honoring their service.”

Capital improvements planned with the new funding include replacing sprinkler pipe systems, chillers, water heaters, water softeners, cooling towers, boilers, hot water circulating pumps, backflow devices and making electrical upgrades.

Dain Hansen is vice president of government relations for The IAPMO Group, Washington, D.C. He can be reached at [email protected], 202/414-6177.