Federal Advocacy Update: Week of January 16, 2018

US Capitol
US Capitol

In this issue:

Starting the New Year with New Tax Law

Brian Egan, 202.626.3107

In December, Congress narrowly passed the most substantial changes to the U.S. Tax Code (H.R. 1) in more than three decades. Cities around the nation advocated for municipal priorities, and while we faced some setbacks in the final bill, NLC helped secure and protect many of our priorities, including the tax exemption for municipal bonds and private activity bonds (PABs). Many key tax credits that spur economic development were also preserved by the end of the process.

The tax exemption for advance refunding bonds, however, was eliminated in the final bill. Refunding bonds permit state and local governments to complete a one-time refinance of their debt to save money if lower interest rates can be achieved. NLC will monitor technical correction bills as they move through Congress.

Visit www.nlc.org/TaxReform for a more thorough summary of tax reform and its implications for cities.


New NLC Infrastructure Brief Shows Where Cities are Missing Funding Tools

Brittney Kohler, 202.626.3164

With the infrastructure debate heating up, NLC released a new infrastructure brief, Missing infrastructure Tools for Cities, on January 8. This brief provides a sample of 15 cities across the country and shows their limitations to access the most common “self-help” tools, which include local sales taxes, local income taxes and public-private partnerships.

City Infrastructure Self Help Tools

This research showcases just how many big and small cities are left without tools to fund infrastructure. Cities are financing two out of every three infrastructure projects, but a strong federal partnership is essential to create a seamless, integrated and efficient network of infrastructure that meets our national economy’s needs.

To amplify this message on Capitol Hill, Transportation and Infrastructure Services Federal Advocacy Committee Chair Pam O’Connor, councilmember from Santa Monica, Calif., and Vice Mayor Scott Eudey from Broken Arrow, Okla, spoke at an event with Congressional staff to share their perspective.

To learn more about this brief, visit NLC’s blog CitiesSpeak.


Make Your Voice Heard: Register for NLC’s Capitol Hill Advocacy Day

Ashley Smith, 202.626.3094

Make your time at NLC’s Congressional City Conference count by meeting with your congressional delegation during the final day of the conference. NLC’s Capitol Hill Advocacy Day provides city leaders with an opportunity to build relationships with your federal legislators – allowing you to be an effective advocate for your community and cities nationwide throughout the year. Included in your conference registration, this day on Capitol Hill gives local leaders the opportunity to meet with your Members of Congress and their staff to advocate for city priorities, share your city’s story and how decisions made by Congress impact your community and network with fellow city advocates.

Visit ccc.nlc.org for more information and to register today!

2018 Capitol Hill Advocacy Day


EPA Extends Comment Deadline for CPP Repeal; Solicits Input on Replacement

Carolyn Berndt, 202.626.3101

On January 16, the U.S. Environmental Protection Agency (EPA) extended the comment deadline on the proposed rule to repeal the “Carbon Pollution Emission Guidelines for Existing Stationary Sources: Electric Utility Generating Unites (EGUs),” commonly referred to as the Clean Power Plan (CPP), as promulgated on October 23, 2015. NLC has supported the Clean Power Plan as a means of nationally reducing greenhouse gas emissions and mitigating the growing negative impacts of climate change on cities.

With the extension announcement, EPA also announced dates for three additional public listening sessions in Kansas City, MO (February 21), San Francisco (February 28), and Gillette, WY (March 27). Registration information and more details will be posted on the EPA website.

Additionally, in December, EPA issued an Advance Notice of Proposed Rulemaking (ANPRM) to solicit input as it considers the next regulatory steps to replace the CPP with a new framework for limiting greenhouse gas emissions from existing power plants.

Under the ANPRM, EPA is soliciting information on the roles of the local, state and federal governments in reducing greenhouse gas emissions, as well as information on systems of emission reduction that are applicable at or to an existing power plant, information on compliance measures, and information on state planning requirements under the Clean Air Act.

EPA is accepting comments on the Clean Power Plan repeal through April 26 and on the Advance Notice of Proposed Rulemaking through February 26. NLC plans to submit comments on both proposals, and encourages local governments to consider doing so as well. Please forward a copy of any comments your city submits to Carolyn Berndt at berndt@nlc.org.


Immigration Conversations Continue in Washington

Stephanie Martinez-Ruckman, 202.626.3098

On January 9, President Trump hosted a bipartisan group of congressional leaders at the White House to discuss the path forward on immigration. While the President suggested that he would sign any immigration bill that came before him, and that he was open to fixing DACA and addressing comprehensive immigration reform, he has also continued to emphasize his desire for funding for a southern border wall, increased border security, the elimination of the diversity visa lottery program, as well as reform to the process of chain migration.

Following this first meeting, the President later met with a smaller group of congressional members who have been negotiating towards a bipartisan package for passage, led by Senators Graham (R-SC) and Durbin (D-IL). At this meeting, the President’s words regarding immigration sparked controversy that has complicated the path towards a compromise. However, leaders on both sides of the aisle remain optimistic that the plan offered in this meeting will likely be the starting point for compromise with the White House. Comprehensive reform seems now off the table and may be tackled as a “phase two”.

Also on January 9, a federal judge temporarily blocked the administration from ending DACA.  Judge William Alsup found that the program must remain in place while litigation continues. This means that those people who currently have DACA status, but failed to renew before the deadline set by the administration will now have the opportunity to renew. This decision does not, however, apply to new applicants for the program.

Through an executive order earlier this year, the Deferred Action for Childhood Arrivals (DACA) program is set to expire on March 5, requiring congressional action to keep protections for 800,000 Dreamers. Democrats in Congress are pushing to have a legislative fix to DACA attached to the Fiscal Year 2018 spending bill, which must be passed by January 19 in order to avoid a government shutdown. For cities, the impact of these Dreamers, who are vital members of our communities, leaving communities will be deeply felt from the loss of spending revenue generated by Dreamers, to the potential jobs void left by these immigrants, which may not be filled by others at the current level, to higher rates of foreclosure.


Supreme Court Agrees to Hear Online Sales Tax Case

Brian Egan, 202.626.3107

On January 12, the U.S. Supreme Court agreed to hear a case that would have major implications for the ability of state governments to require out-of-state retailers to collect sales taxes. In Quill Corp. v. North Dakota (1992), the Supreme Court ruled that states could only require retailers to collect sales tax only if the retailer had a physical presence in the state.

The ruling opened the door for what has become known as the online sales tax loophole, which is estimated to cost state and local governments billions of dollars in lost revenue each year and provides a major disadvantage to traditional brick-and-mortar stores. Since 1992, the growth of online retail has only further underscored the need for a legislative solution to the loophole, or for the courts to reexamine the Quill decision. 

Last September, the South Dakota Supreme Court deemed a state law, requiring the collection of sales tax on remote sales, to be unconstitutional. South Dakota will now get the chance to make its case before the Supreme Court to overturn a precedent the same body created more than 25 years ago in its Quill decision.

NLC filed an amicus brief in favor of the State alongside other members of the Big 7. Justice Kennedy has previously criticized the Quill decision, which leads us to believe the Courts could finally provide a solution to the online sales tax. If taken up this term, the Court could issue its decision as early as June 2018.


DOJ Issues Memo Rescinding Guidance on Enforcement of Federal Marijuana Laws

Yucel Ors, 202.626.3124

On January 4, Attorney General Jeff Sessions issued a memo that rescinds the previous administration’s guidance related to the prosecution of federal marijuana laws. The Obama Administration guidance allowed states and cities to develop and experiment with safe, federally-compliant marijuana industries.

Sessions’ recent decision to scrap these existing rules significantly adds to the conflict between federal and state laws related to the manufacturing, distribution and sale of medical and recreational marijuana. While the memo will likely have little implications for the average marijuana user, it may impact the distribution businesses and tax bases that have flourished in states and cities under the previous administration’s guidance.

While NLC does not endorse the use of marijuana, we do support efforts to resolve conflicts between state and federal marijuana laws, including providing guidance to financial institutions. The memo will do little to change the consumption of marijuana in America, but it will, unfortunately, contribute to more inconsistencies in the law.

To learn more about the impact of Sessions’ memo, visit NLC’s blog CitiesSpeak.


FCC Begins Challenge Process for Mobility Fund Subsidy Areas

Angelina Panettieri, 202.626.3196

The Federal Communications Commission (FCC) recently released the locations which will be eligible for subsidized mobile broadband service in the second phase of the Connect America Fund Phase II auction process, which will provide $4.5 billion over ten years to mobile providers for buildout in underserved areas. This mapping process, and the ensuing reverse auction, will shape federal mobile broadband investment for the next decade. Local governments can now verify and challenge this data, which was submitted by cellular providers to the FCC over the last several months. Only those areas which currently lack unsubsidized 4G service will be eligible for subsidized service under the program.

To participate in the challenge process, interested local governments should contact FCC staff as soon as possible to gain access to the data submission portal. Participating cities will be required to use a variety of handsets to test coverage in the challenged locations and submit that data to the portal. For more information, the FCC prepared a webinar covering the agency’s development of a map of eligible areas, the data submission process, and the challenge process.


Stephanie Martinez-Ruckman, 202.626.3098

On January 9, the Senate Finance Committee held a hearing to consider President Trump's nominee to head the U.S. Department of Health and Human Services (HHS), Alex Michael Azar II.  Mr. Azar, if confirmed, will fill the cabinet position left vacant by Tom Price in September.

Mr. Azar previously served as general counsel and deputy secretary at HHS under President George W. Bush, as well as an executive at the pharmaceutical company Eli Lilly.

At the hearing, Mr. Azar received strong questioning about drug pricing, discussed the idea of converting Medicaid to a block grant program and fielded questions about his perspective on whether "able-bodied" individuals should be required to work, or to be on a pathway towards work, to receive Medicaid.  He previously testified before the Senate Health, Education, Labor and Pensions Committee (HELP) in November


EPA Seeks Input on Lead and Copper Rule Revisions

Carolyn Berndt, 202.626.3101

On January 8, the U.S. Environmental Protection Agency (EPA) held a Federalism Consultation with state and local government organizations on the Agency’s forthcoming proposed regulatory revisions to the Lead and Copper Rule.

Established in 1991, the Lead and Copper Rule intends to reduce exposure to lead and copper through drinking water, whether from corrosion control measures for lead service lines or transparency and public education. The rule is applicable to all 68,000 public water systems, requiring them to sample water from households with plumbing materials that contain lead or copper and take action to reduce exposure to these harmful metals in drinking water.

EPA is considering five key areas for potential rule revisions, including:

  • Lead Service Line Replacement
    • Require systems to create an inventory of lead service lines
    • Require proactive full lead service line replacement on a specified schedule (e.g., 10, 15, 25, 35 years from promulgation)
  • Corrosion Control Treatment
    • Require systems with lead service lines (regardless of population served) to install and maintain corrosion control treatment
    • Prescribe a default corrosion control treatment that must be maintained unless a system can demonstrate equivalent corrosion control treatment to the state
  • Tap Sampling
    • Change where water systems are required to collect tap samples
    • Change the way samples are collected to be more representative of exposure
  • Public Education and Transparency
  • Require water systems to provide on-going targeted outreach with a special emphasis on all customers with lead service lines
  • Copper Requirements
    • Establish a screen to determine if water systems have water aggressive to copper
    • Modify tap sampling to require separate sampling sites for copper

While the EPA has not fully developed the cost analysis, the Agency noted that based on preliminary estimates, replacing a full lead service line would cost on average $4,700 per line replaced, with an estimated 6-10 million services lines in communities across the country.

EPA is seeking any information and specific data, as well as additional information or concerns, from local governments with regard to these potential revisions. Comments are due on March 8 and can be submitted to LCRConsultation@epa.gov or via www.regulations.gov to Docket ID No. EPA-HQ-OW-2018-0007. NLC plans to submit comments, and encourages local governments to consider doing so as well. Please forward a copy of any comments your city submits Carolyn Berndt at berndt@nlc.org.


Update on Reforms to Welfare Programs

Stephanie Martinez-Ruckman, 202.626.3098

On January 11, the Centers for Medicare and Medicaid Services (CMS) announced a new policy that allows states to apply for waivers to “incentivizing work and community engagement among non-elderly, non-pregnant adult Medicaid beneficiaries who are eligible for Medicaid on a basis other than disability.” The next day, the first waiver approval was made to the State of Kentucky, which was one of ten states expected to apply for the waiver.

This move represents the first time in the program's history where work requirements may be allowed. Under the program, states can designate job training, education or caregiving to satisfy the work requirement but, ultimately, it is up to each state to design and propose programs in their waiver application. While cities remain committed to expanding economic mobility and opportunity, there is concern that the new policy will make it harder for individuals to successfully return to work due to their loss of health coverage.

Reforms to welfare programs have been championed by House Speaker Paul Ryan (R-WI) as one of his top priorities, however last week he noted that he doesn’t expect Congress to make reforms to Medicare or Social Security this year. The vote margins in the Senate make reforming Medicare or Medicaid through reconciliation and uphill battle. His focus, instead, will be on closing the skills gap to ensure more individuals can enter the labor market. This messaging is in line with the recent action taken by the administration through CMS last week.

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