Dear Mayor:

Here is where things stood in Congress at the end of last week, as reported by the National League of Cities (NLC). NLC will produce similar updates on a bi-weekly basis, whenever Congress is in session and dealing with issues important to local government. We will pass along those updates important to New Jersey municipalities.

1. House Financial Services Committee Passes Comprehensive Federal Housing Administration Reform.
On May 3, the House Committee on Financial Services passed a bill aimed at restoring a degree of stability to the sub-prime housing market. The bill, H.R. 1852, the "Expanding American Homeownership Act", permits the Federal Housing Administration (FHA) to provide home loans in higher-cost housing markets and to individuals with less-than-perfect credit. The bill also allows the agency to vary the premiums it charges borrowers and divert some surplus FHA funds to pay for housing counseling and for the yet-to-be-authorized Affordable Housing Fund. Similar legislation passed the House last year but stalled in the Senate.

The House Leadership has not yet indicated if and when H.R. 1582 will be brought up for full consideration by the House.

2. Senator Schumer Breaks from Senate Banking Committee Chairman Dodd and Introduces Predatory Lending Bill.
On May 3, Senator Chuck Schumer (D-NY) introduced a bill that would significantly tighten regulation of the mortgage industry and asked appropriators to provide $300 million to help struggling borrowers.

The bill, S. 1299, addresses current regulatory shortfalls by making all brokers and lenders subject to existing federal laws governing lending practices, as opposed to the current patchwork of state and federal oversight. The bill also creates a "fiduciary duty" for mortgage brokers and non-bank lenders to ensure that sub-prime borrowers, typically those with patchy credit histories, have a reasonable ability to repay the loans they are taking out. Moreover, lenders would be held legally liable for certain violations committed by brokers or appraisers they do business with.

S. 1299 is the first major piece of legislation in either chamber aimed specifically at predatory lending. Because it represents a departure from the House strategy led by Financial Services Chairman Barney Frank (D-MA) and the strategy of Senate Banking Chairman Chris Dodd (D-CT), its future is uncertain. Thus far, the House is taking a deliberately slow approach to developing a predatory lending bill, and Senator Dodd has been encouraging the mortgage industry to develop non-legislative, voluntary solutions.

3. Comprehensive Immigration Reform Legislation.
The House Judiciary Subcommittee on Immigration, Citizenship, Refugees, Border Security, and International Law has been holding a series of hearings on immigration issues in anticipation of working on legislation next month. At last week’s hearing on the impact of immigration on workforce issues, the Congressional Budget Office presented testimony based on the role of immigrants in the US labor market and plans to release a report shortly on the impact on state and local governments. Later this month, the Subcommittee will hold a hearing on the impact of immigrants on state and local governments at which NLC expects to testify.

Senate leadership continues to seek consensus on a bill that will be considered in the next few weeks.

4. Community Oriented Policing Services, COPS, Headed to Full House for a Vote.
Next week, the House will consider HR 1700, to increase the authorized funding levels for COPS, Community Oriented Policing Services program, to $1.15 billion in each year between fiscal years 2008 and 2013. Earlier this month, the Judiciary Committee approved the bill by voice vote. The bill adopted by the committee includes up to $600 million annually over six years for “officers hired to perform intelligence, anti-terror, or homeland security duties”; $350 million per year for technology grants; and up to $200 million annually to help local district attorneys hire community prosecutors. The legislation also would authorize funding for a recruiting program for military veterans to pursue law enforcement as a profession. The committee added an amendment requiring a study of the program’s effectiveness. The Senate Judiciary Committee approved a companion bill (S 368) on March 15.

5. Proposed Energy Legislation Includes Block Grant Program for Cities and Towns.
The Senate Energy and Natural Resources Committee adopted a wide ranging energy bill, S 1115, which includes a new block grant program for local governments that is modeled after the Community Development Block Grant program. The provision, sponsored by Senator Bernie Sanders (I-VT) and our own Senator Robert Menendez, would authorize funds for municipalities to reduce energy use and curb greenhouse gas emissions. S 1115 includes a number of other provisions including the expansion of research, updating appliance standards, reduction of energy use in federal buildings and fleets to reduce energy use and increase efficiency.

Although Energy Committee sponsors hoped to bring the bill to the full Senate quickly, major divisions over the other energy provisions in the bill likely will delay consideration until later in the summer.

6. Reauthorization of Federal Aviation Programs Moving Forward.
Federal aviation programs and the taxes that fund them expire at the end of the fiscal year. The Federal Aviation Administration offered a highly controversial proposal that was rejected by both the House and Senate authorizing committees.

The Senate Commerce Committee has introduced a reauthorization proposal that the Committee intends to mark up on May 16. The proposal does not contain one of the key provisions identified as important to municipal airports, the authority to raise the Passenger Facility Charge (PFC) from the current ceiling of $4.50 to $7.50. The airlines strongly oppose any increase in the PFC and it will not be proposed in the Senate. Prospects are better in the House, which has been holding a series of hearings on aviation issues since March.

NLC will cosign a letter with municipal aviation groups and others supporting an increase in the PFC.

7. Clinton and Inhofe Set to Block EPA Program that will Increase Fees for NPDES.
Last year, EPA proposed a new incentive program for states to charge higher fees for NPDES permits to local governments. The program was strongly opposed by both state and local government groups. Under intense pressure, EPA extended the comment period for several additional months. Several members of Congress expressed their disapproval of the proposed rule change, seen as part of the Administration’s effort to gradually end funding for clean water programs. Senators Hillary Clinton (DNY) and James Inhofe (R-OK) intend to offer an amendment when EPA appropriations comes to the Senate Appropriations Committee that will prevent EPA from implementing the program.

8. Proposed Changes in the Definition of Clean Water Act May Pose Burden for Locals
Recent Supreme Court decisions concerning the scope of federal regulation of water under the Clean Water Act have resulted in confusion over the regulation of water and the need for federal permits. A coalition of farm, utility, government and contracting groups warn that soon-to-be proposed legislation to fix the problem will make it worse.

House Transportation and Infrastructure Committee Chair James Oberstar (D-MN) and Senator Russ Feingold (D-WS) intend to offer legislation soon that would clarify the jurisdictional scope of the Clean Water Act and eliminate the word “navigable”, replacing it with a new definition of the term “waters of the United States.” According to critics, including the National Association of Counties, the proposed legislation would expand the regulatory authority of the U.S. Environmental Protection Agency (EPA) and the U.S. Army Corps of Engineers to include all “intrastate waters” – essentially all wet areas within a state including impoundments, groundwater, ditches, pipes, streets, gutters, and desert features NLC is evaluating the impact of the proposed rule change on cities and towns.

9. Head Start Reauthorization Heads to House Floor.
Next week the House will consider HR 1429 to reauthorize the Head Start program. A highly controversial amendment that would allow providers to hire employees based on religious preferences will not be allowed under a rule limiting amendments despite strong support from the White House.

Representatives will be able to vote on a proposed pilot project for eight states to take over their local Head Start programs, another controversy that prevented passage of the authorization previously. The last Head Start reauthorization, enacted in 1998 (PL 105-285), expired in 2003. It has been extended by annual appropriations since then. The program received $6.9 billion under the fiscal 2007 spending law (PL 110-5).

For more information on Federal issues, contact Jon Moran at 609-695-3481, ext. 121.