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December 15, 2014

Federal Update

I. FY 2015 spending bill heads to President
21st Century Policing Task Force to be formed
Terrorism Risk Insurance Act (TRIA) goes to President
EPA responds to Clean Water Act affordability concerns
EPA releases rule proposal for ozone reduction

Dear Mayor:
A number of recent developments in our nation’s Capital deserve mention. Chief among them is passage in both Houses of the Federal spending for the current Fiscal Year.

I. FY 2015 Continuing Resolution – Omnibus Appropriations Bill Advances

Last Tuesday, the leadership of the House and Senate Appropriations Committees released the compromise fiscal year (FY) 2015 “Continuing Resolution – Omnibus Appropriations” (or CR-Omnibus) bill (H.R. 83). The bill includes $1.013 trillion in discretionary spending for FY 2015, coming under the budget caps imposed by the Ryan-Murray Bipartisan Budget Act of 2103.

For the U.S. Department of Housing and Urban Development (HUD), the bill provides $45.4 billion in gross FY 2015 funding, $104 million less than the fiscal-year 2014 level, and $1.3 billion below the President’s FY 2015 request. The crucial Community Development Block Grant (CDBG) program, however, would be funded at $3 billion, representing a $30 million or 1 percent decrease from FY 2014, but a $200 million increase over the FY 2015 request.

Late Thursday night, the U.S. House passed the spending bill, which will keep the majority of the federal government funded through the end of the fiscal year (September 30, 2015). Lawmakers crossed the aisle in both directions. The final tally was 219-206, with 10 not voting. New Jersey Congressmen Frelinghuysen, Lance, LoBiondo, Norcross and Runyan supported passage. Congressmen Garrett, Holt, Pallone, Pascrell, Payne, Sires and Smith did not.

The major sticking point for many Democrats was a provision that would repeal parts of the financial regulation bill, known as the Dodd-Frank Wall Street Reform and Consumer Protection Act. The White House joined Republican leadership and called on Democrats to support the bill, despite a provision that would lift the limits placed on derivatives following the Great Recession, paving the way for banks to resume investing in these products.

The C-R, or continuing resolution, portion of the bill would fund the Department of Homeland Security, or DHS, only through February. The provision is seen as a protest against President Obama’s recent executive actions on immigration. Despite the temporary funding for DHS, $948 million was allotted to the Department of Health and Human Service for its program for unaccompanied immigrant minors, as well as $14 million for the schools taking them in.

Other controversial provisions of the spending bill include significant cuts to the pensions of current public sector retirees, in order to shore up struggling pension funds, and the denial of the President’s request for $236 million for police body cameras.

Language in the bill also triples the amount of money wealthy individuals can give to national parties. The rule change comes after a bill signed earlier this year by President Obama eliminated the use of public funding for conventions. Proponents of the provision say this donation increase will help to fill that gap.
Funding allotted to other high-dollar line items includes $5.5 billion to combat Ebola, $6 billion to fight the Islamic State and even renewed funding for the Affordable Care Act. Lawmakers reduced the Environmental Protection Agency appropriation by $60 million and slashed funding for President Obama’s “Race to the Top” educational initiative and the Internal Revenue Service.

On Saturday night, by a majority of 56-40, with 4 not voting, the Senate concurred. Senators Booker and Menendez cast ‘nays.’

President Obama is expected to sign the bill this week.

II. President Announces 21st Century Policing Task Force

In response to Ferguson and a number of other instances leading to heightened racial tensions in police-citizen relations, President Obama invited a group of mayors, law enforcement officials and civil rights leaders to the White House, to discuss how communities and law enforcement can work together to build trust to strengthen neighborhoods across the country. During the meeting, the President announced that he will issue an executive order creating a Task Force on 21st Century Policing. The Task Force will include, among others, law enforcement representatives and community leaders and will operate in collaboration with Ron Davis, Director of DOJ's Community Oriented Policing Services (COPS) Office. The aim is to examine, among other issues, how to promote effective crime reduction while building public trust; and will be directed to prepare a report and recommendations within 90 days of its creation. The National League of Cities (NLC) is working closely with the COPS Office to ensure local elected officials have a strong voice in the discussion and final outcome of the report.

III. House Passes TRIA

Last Wednesday, on a vote of 417-7, the House moved to reauthorize the Terrorism Risk Insurance Act (TRIA) before it expires on December 31, 2014. The Senate passed the Terrorism Risk Insurance Program Reauthorization Act of 2014 (S.2244) on July 17, 2014 on a vote of 93-4. The House Committee on Financial Services approved the TRIA Reform Act of 2014 (H.R. 4871) on June 20, 2014, by a vote of 32-27, but the bill stalled on the House floor due to intraparty disagreements. Bipartisan discussions led to last week’s timely action, with no significant changes to the essential components of the program.

IV. EPA Responds to Local Clean Water Act Affordability Concerns

After nearly two years of discussion with NLC, the U.S. Conference of Mayors, and the National Association of Counties, the U.S. Environmental Protection Agency (EPA) has released a new Financial Capability Framework for developing schedules for municipal projects necessary to meet Clean Water Act (CWA) obligations. The Framework builds on existing efforts by EPA to recognize the challenges local governments face in balancing environmental protection with economic feasibility.

The dialogue between local officials and EPA stemmed from growing concerns that costly water and wastewater mandates were dramatically impacting low and fixed income residents. The consensus of the local officials was that the current reliance on two percent of median household income for wastewater and combined sewer overflows controls is a misleading indicator of a community's ability to pay, and often places a particularly high burden on residents at the lower end of the economic scale.

The Framework is intended to clarify how the financial capability of a community will be considered when developing schedules for permits and consent decrees, and "provide examples of additional information that may help some communities provide a ‘more accurate and complete picture' of their financial capability."
Examples of additional information that may be relevant in negotiating schedules for permits or consent decrees includes residential indicators such as income distribution, poverty rates and trends, and sewer and water usage. Examples of additional information related to community financial capability includes population trends, unemployment data, and dedicated revenue streams or limitations.

V. EPA Releases Proposed Rule for Ozone Reduction

The U.S. Environmental Protection Agency released a proposed rule on the National Ambient Air Quality Standards for Ozone, proposing to reduce both the primary and secondary standard to within a range of 65-70 parts per billion (ppb) over an 8-hour average down from the current standard of 75ppb. Under the proposed standards, some areas that are currently designated as in "attainment" would no longer meet EPA ozone requirements, and be subject to certain obligations. EPA held a briefing on the proposed rule with information for local and state government groups.

EPA would designate areas as in "attainment" or "nonattainment" by October 2017, based on 2014-2016 air quality data. For areas that are found to be in nonattainment, the state must submit to EPA a state implementation plan for how it will reduce ozone levels to reach attainment by a target date between 2020 and 2037. The state or local authority will be responsible for implementing the plan and demonstrating that progress is being made to improve the air quality in the nonattainment area.

While states ultimately decide what measures to implement to meet the standard, EPA has developed illustrative measures in order to estimate costs. Those estimates are $3.9 billion in 2025 for a standard of 70 ppb, and $15 billion for a standard at 65 ppb, nationwide except for California. EPA analyzed costs and benefits for California separately because a number of California counties would have longer to meet the proposed standard based on their ozone levels, with likely attainment dates ranging from 2032 to 2037.
EPA will seek public comment on the proposal for 90 days following publication in the Federal Register and plans to issue final ozone standards by October 1, 2015. NLC is currently reviewing the proposal and will likely submit comments. We will keep you posted.

Contact Jon Moran at 609-695-3481, ext. 121 or with any questions.

Very truly yours,

William G. Dressel, Jr.
Executive Director


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