April CEO Report

Welcome to the April edition of the CEO Report, POLITICO Pro's high-level outlook on the policy issues driving the month ... and beyond.

TRADE

Tariff time: The White House is expected soon to release the list of Chinese products that could face tariffs as a result of Beijing's intellectual property theft and technology practices, Pro Trade's Megan Cassella writes. That list, expected by Friday, April 6, at the latest, may include duties on automated machine tools and robotics, aerospace and aeronautics equipment, maritime equipment, and modern rail transport equipment. China, meanwhile, on Sunday announced tariffs on U.S. products in response to Trump's tariffs on steel and aluminum imports.

Tough talks: On the NAFTA front, April will kick off with trade negotiators from Canada, Mexico and the United States working toward a new deal. Negotiators are engaging regularly to work through several outstanding issues. No formal dates have been announced yet for an eighth round of talks in the Washington area sometime during the month. It's unclear how President Donald Trump's recent demand that Mexico help stem illegal immigration might affect the talks.

The United States' two NAFTA partners will be eager to make progress on the deal this month to earn a permanent exemption from steel and aluminum tariffs. Canada, Mexico and a handful of other U.S. trading partners were granted temporary relief from the duties until May 1, by which point they must agree to as-yet-uncertain terms - likely involving import quotas - that the White House deems adequate. Import quota agreements are likely to be announced throughout the month as countries work to secure permanent exemptions from the duties.

Western Hemisphere gathering: Trump is headed to the Summit of the Americas, set to begin April 13 in Lima, Peru. Trade will be on the agenda during the president's visit, which could also provide an opportunity for him to meet with Canadian Prime Minister Justin Trudeau and, for the first time since he entered the White House, Mexican President Enrique Peña Nieto.

DATAPOINT

U.S. companies will likely face a lengthy and costly process to apply for exclusions from the steel and aluminum tariffs. The Commerce Department introduced procedures that companies will have to undergo to secure tariff relief and estimates the agency will receive thousands of requests soon. - Cristina Rivero and Taylor Miller Thomas

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BUDGET & APPROPRIATIONS

Delivering the goods: Lawmakers last month approved one of the largest government funding bills in recent history - $1.3 trillion across the federal government. The bill, H.R. 1625 (115), runs through the end of the fiscal year. That puts a squeeze on agencies to spend all the new cash before Sept. 30under the government's current use-it-or-lose-it rules.

Flipping the calendar: Appropriators are now turning their attention to fiscal 2019, which starts in just six months. The Senate Appropriations Committee has yet to hold a single hearing focused on the upcoming fiscal year, though its House counterparts are roughly halfway through their lineup of administration officials. Congress' spending chiefs will use the input from Trump's Cabinet to help shape the fiscal 2019 bills, which can be brought to the floor starting May 15.

Budget watch: On paper, April is the busiest month for the House and Senate budget panels: Congress' budget is supposed to be passed by both chambers byApril 15. But that timetable is nothing but folklore at this point: Last year, the GOP-led budget writers couldn't agree to that fiscal blueprint until July, and it didn't pass the full House until October. The only expected budget action on the floor this month is the House's planned vote on a balanced-budget amendment. GOP leaders promised conservatives a vote on the legislation last fall, in exchange for supporting last year's budget resolution.

New man at the helm: Senate Appropriations Chairman Thad Cochran gave up his gavel April 1 after mounting concerns about his health. Sen. Richard Shelby is the near-certain successor, and will likely get the formal promotion when Congress returns the week of April 9. - Sarah Ferris

TECHNOLOGY

Zuckerberg (probably) heads to the Hill: Facebook CEO Mark Zuckerberg is expected to testify in Congress in the coming weeks as lawmakers work to line up mid-April hearings. Multiple congressional committees have demanded Zuckerberg come to Washington amid reports that the Trump-linked firm Cambridge Analytica secretly obtained and exploited data on 50 million Facebook users. Facebook has confirmed that it knew about the violation in 2015. Lawmakers from the House Energy and Commerce Committee are looking to bring Zuckerberg to Washington for a grilling, potentially on or around April 12. That panel's Senate counterpart has also formally summoned Zuckerberg. The Senate Judiciary Committee has invited him, along with Google CEO Sundar Pichai and Twitter CEO Jack Dorsey, to its own hearing on data privacy on April 10. - Margaret Harding McGill

DEFENSE

Top defense officials hit Capitol Hill: A cavalcade of senior Pentagon officials is scheduled to appear before the Armed Services and Defense Appropriations panels this month to discuss specific elements of the Defense Department's fiscal 2019 budget.

Top civilians and officers in each of the military services, as well as regional combatant commanders, have already testified before various panels, but Defense Secretary Jim Mattis and Joint Chiefs Chairman Joseph Dunford have yet to appear.

New defense policy bill on deck: The House and Senate Armed Services committees are preparing to move their versions of the annual National Defense Authorization Act, giving lawmakers their first chance to put their marks on the massive $716 billion defense budget for the 2019 fiscal year.

In the House, lawmakers are aiming to pass their version of the bill by Memorial Day. House Armed Services plans to hold subcommittee markupsApril 26, with full committee consideration on May 9. Senate Armed Services is expected to follow. - Connor O'Brien

FINANCIAL SERVICES

Banking bill showdown: The coming weeks will determine the fate of the landmark bank deregulation bill, S. 2155 (115), that the Senate passed in March. House Republicans led by Financial Services Chairman Jeb Hensarlingare vowing to sit on the bill until the Senate negotiates ways to expand the legislation. Moderate Senate Democrats, who were critical to passing the bill, won't entertain any changes, saying that additions from the House could damage support for the package. The White House-backed bill, which is mainly intended to boost small and regional lenders, is the most significant attempt since the financial crisis to roll back banking rules.

Quarles makes congressional debut: Federal Reserve regulatory czar Randal Quarles, the nation's top banking regulator, will face Congress for the first time since taking on his new position. He is likely to be showered with questions about how the Fed would implement the bank deregulation bill if it becomes law. The legislation would give the Fed a lot of discretion over how to enact new rules, so the industry will be watching closely. Quarles will appear before the House Financial Services Committee on April 17 and the Senate Banking Committee on April 19.

Mulvaney on the Hill: Mick Mulvaney, the acting director of the Consumer Financial Protection Bureau, will testify April 11 before the House Financial Services Committee on the agency's semiannual report. The panel's Democrats, led by Maxine Waters, are likely to give him a tough time, since Mulvaney has been rolling back consumer bureau initiatives. He will appear before the Senate Banking Committee the next day.

Mulvaney's tenure as interim director is being challenged in court by Deputy Director Leandra English, who was selected by former Director Richard Cordray to take over the bureau when he resigned in November. Trump instead tapped Mulvaney, his budget director, until a permanent director could be named. Oral arguments in the appeal are set for April 12 in U.S. district court in Washington.

Another fiduciary rule: The Securities and Exchange Commission is poised to propose a regulation for brokers and investment advisers that could require them to disclose more information about conflicts of interests. The move has taken on special importance since a U.S. appellate court struck down a Labor Department conflict-of-interest rule for financial brokers that was set to go into effect.

Puerto Rico's future: Puerto Rico's government and the federal oversight board put in place by Congress are facing off over the path forward on theterritory's debt crisis. The governor and the board are clashing over how to cut pensions, overhaul labor policy and curtail spending, among other issues. The board says it wants to approve a new fiscal plan by April 20 and that the governor should submit revisions to his plan by Thursday. - Mark McQuillan

EMPLOYMENT & IMMIGRATION

H-1B is back: Federal immigration officials will begin to accept petitions April 2 for the coming fiscal year's allotment of H-1B visas, which allow businesses to hire specialized foreign workers. H-1B workers are supposed to possess special skills that can't be found in the U.S. workforce, but employers have in recent years exploited a loophole that allows them to replace U.S. workers with cheaper H-1B guest workers employed by contractors.

Trump has been ambivalent about getting tough on guest-worker programs because businesses rely on them. He signed an executive order last year demanding steps to ensure that H-1B visas go to "the most-skilled or highest-paid petition beneficiaries." U.S. Citizenship and Immigration Services followed through in February by tightening monitoring at third-party worksites, a move that targeted outsourcers. It also plans to revise what qualifies as an H-1B occupation later this year to focus on the "the best and the brightest." - Ted Hesson

TAX

IRS alterations on tap: Republicans and Democrats are joining hands toadvance plans to reshape how the IRS interacts with taxpayers, recently rolling out draft legislation with a series of provisions meant to make the revenue agency more user-friendly. It would change the taxpayer appeals process, limit IRS powers to seize assets and modernize IRS technology to better handle taxpayer inquiries and combat identity theft and fraud, among other ideas. Lawmakers are seeking stakeholder input on their draft by April 6.

Rules watch continues: Companies are still seeking a clearer picture on tax changes they're facing from Republicans' Tax Cuts and Jobs Act, H.R. 1 (115), which was enacted at the end of last year - though implementing parts of the new law will take much of this year and even beyond in some cases.

Rule-writers at the IRS and Treasury Department have started the regulatory process, and they're soon expected to further refine some guidelines on taxing foreign income through repatriation and interest deductions. In addition to those international tax items, non-corporate companies called pass-throughs are continuing to keep watch for clarity on rules affecting how they're taxed, which regulators are also still developing. Pass-throughts are businesses whose owners pay taxes on their profits through the individual side of the tax code.

Issuing new rules on international taxes, pass-throughs and other areas of the tax overhaul could take longer than initially expected, though, as the White House's Office of Management and Budget gets more involved than it has in decades on tax rules, which have largely enjoyed an exemption from OMB's centralized review process since the early 1980s.

Trimming temporary tax breaks: House Republicans are also driving toward cutbacks in the various targeted tax breaks known as extenders, which are often renewed for a year or two at a time in order to benefit certain business sectors of the economy. But given reduced tax rates for most businesses following the Tax Cuts and Jobs Act, critics say many of these provisions, known as extenders, aren't needed anymore. Ways and Means Republicans in particular are continuing to press beneficiaries to make their best case for further extensions. - Aaron Lorenzo

CYBERSECURITY

States beef up election security: State election officials are finally getting their hands on some much-needed money to help upgrade flawed and aging voting equipment - and Congress might take even more action in the coming weeks.

Tucked away in the recent $1.3 trillion spending bill was $380 million in election security grants for states, which the Election Assistance Commission began doling out in late March. State officials told POLITICO they plan to use the money to replace outdated voting machines and pay for extensive "penetration testing," in which cybersecurity professionals launch fake attacks on systems.

But election security experts argued that much more needs to be done to reduce risks to the voting process. They say the funding is not nearly enough to cover the costs of replacing all paperless touchscreen voting machines. With no paper backup, cyber experts say it's almost impossible to definitively prove there was no digital vote tampering.

These advocates may get their wish, as senior Republicans and Democrats have coalesced around one election security bill, the Secure Elections Act, S. 2261 . The measure would codify the Election Assistance Commission's security grant program, while also aiming to streamline the exchange of cyber threat intelligence between Washington and the states, long a sore spot for local officials who say they've been kept out of the loop on vital information about Russian hackers. Several prominent Republicans have vowed to tackle the bill once Congress returns from its recess the second week of April.

The cyber hawk descends: On April 9, John Bolton will take over as the president's national security adviser, putting a noted cyber hawk in the Oval Office on a regular basis. For years, Bolton has implored the U.S. to go on the attack in cyberspace, arguing in op-eds, speeches and appearances on panels and TV that America should deploy its "muscular cyber capabilities" to strike back against digital adversaries like China, Russia, Iran and North Korea. The point, he wrote in one op-ed, would be to impose costs "so high that they will simply consign all their cyber warfare plans to their computer memories to gather electronic dust."

While officials and cyber specialists agree with Bolton's push for a clearly articulated digital strike policy, the government has hesitated to dive headlong into what Bolton calls "a retaliatory cyber campaign," wary of blowback on American businesses and infrastructure, the lack of global rules for online warfare and the debatable effectiveness of digital strikes.

Bolton will arrive in the White House at an opportune moment to implement his ideas. U.S. Cyber Command, the Pentagon's digital warfighting division, will hit full operational capacity this fall for the first time in its nine-year history. And the Trump administration is in the middle of a heated public debate over how to combat the Russian hackers that intelligence leaders have said will be back in force during election season. - Cory Bennett

AGRICULTURE

Farm bill expected to land: April promises to be big for the farm bill, which governs farm and food issues and usually covers a five-year period. With farmers struggling amid a sustained period of slumping commodity prices, this year's effort carries extra importance. Senate Agriculture Chairman Pat Roberts (R-Kan.) indicated in March he was nearing the home stretch for unveiling his committee's version of the bill, sharing legislative language with minority staff and planning a meeting with ranking member Debbie Stabenow(D-Mich.).

But in the House, tensions between Agriculture Chairman Mike Conaway (R-Texas) and Democrats have reached new heights, potentially imperiling the farm bill's prospects. Democrats are incensed by proposed changes to the food stamp program and have pressured ranking member Collin Peterson (D-Minn.) to walk away from the negotiating table. Publicly, Conaway remains optimistic he'll be able to gather the votes he needs to get the bill passed in the House, even without Democratic support.

Hog waste case heads to trial: A North Carolina jury will be asked to decide whether pork production plants owned by Smithfield create a nuisance for neighbors because of massive amounts of animal waste that emit odor and could potentially damage health. Hundreds of residents living in the eastern part of the state where hog farms reign have filed a lawsuit against Murphy-Brown, a subsidiary of Smithfield. The cases have been split into groups. The first of several trials scheduled to last an entire year starts today.

Ag summits and meetings: USDA economists will gather at a conferenceApril 10-11 to discuss rural infrastructure investment. Agriculture Secretary Sonny Perdue recently told lawmakers that upgrades to roadways, railways and the nation's inland waterways system are needed to speed shipments of commodities to world markets. He also stressed that rural communities need assistance to provide residents with clean drinking water, affordable electricity and broadband service. The Trump administration's infrastructure plan would set aside $50 billion of the total $200 billion package for projects in rural areas with populations of 50,000 or less.

On April 25-27 the National Organic Standards Board will hold its semi-annual meeting in Tucson, Ariz., to hear from the public and develop guidance on organic policies. (The deadline to sign up to submit oral or written comments is April 4.)

And BIO, the trade association representing biotechnology companies, will host a legislative fly-in April 17-18 for biotechnology executives to meet with members of Congress and their staff to discuss policy issues. - Liz Crampton

ENERGY

All eyes on Trump for RFS call: Trump is set to make a decision on whether to make regulatory changes to the Renewable Fuel Standard - which requires a certain amount of renewable fuels to be blended into gasoline - or let Congress take the lead. Trump has invested a surprising amount of personal capital into the issue, hosting four meetings with oil interests, corn interests or both. While the president has a menu of options, including capping compliance costs and granting a waiver for year-round sale of 15 percent ethanol, he seems more likely to punt the discussion to Congress. Trump's advisers appear to prefer that he avoid angering one or both key constituencies - Iowa corn farmers and Pennsylvania refiners can both claim they boosted him to his electoral college victory. Senate Majority Whip John Cornyn (R-Texas) and Rep. John Shimkus(R-Ill.) have been leading a discussions around changing the program for over a year.

FirstEnergy's plea to Perry: FirstEnergy Solutions, a subsidiary of utility company FirstEnergy Corp., wants Energy Secretary Rick Perry to force the company's grid operator to grant higher rates to coal and nuclear power plants operating in the mid-Atlantic. The utility, which faces a $99 million bond payment in early April that may prefigure a bankruptcy filing, says both FERC and power grid manager PJM Interconnection have failed to recognize a brewing emergency of coal and nuclear plant retirements. It argues that DOE should use its emergency authority under the Federal Power Act to prop up not just the company's own five nuclear and coal power plants, but also as many as 80 additional plants operating in the PJM Interconnection.

ButPJM, which is responsible for making sure the lights stay on in Ohio and Pennsylvania, where First Energy's plants are, says there's plenty of juice to absorb the loss of the plants. "We repeatedly disagree with them on the fundamental assertion that there is an emergency," said Vincent Duane, PJM's senior vice president and general counsel. He added, "None of our evidence suggests that's correct." - Eric Wolff

HEALTH CARE

Drug price plan in the works: Trump's top health official said he'll put forward a new plan to fight high drug prices, one of Trump's major campaign promises - though details are still vague. HHS Secretary Alex Azar last month suggested the Trump administration will go after pharmacy benefit managers, which have been increasingly criticized for keeping too much of the savings they negotiate with drug makers. Two national health insurers in the past month announced they'll begin sharing drug discounts directly with some customers, hoping to reduce the financial pressures of paying for pricey drugs. Medicare is exploring a similar idea. - Jason Millman

EDUCATION

A school safety plan? The White House school safety commission led by Education Secretary Betsy DeVos will continue its work, which DeVos has said will include traveling the country to "meet with those who have ideas and solutions to how to ensure our students' and teachers' safety." Keep an eye on the Hill, as well, where Democrats have called for hearings on the issue. -Benjamin Wermund

For-profit accreditor looks for revival: The Trump administration over the next month will weigh the fate of a controversial accreditor of for-profit colleges that the Obama administration terminated. Education Department officials were already expected to make an initial decision soon on an application for reinstatement made by the Accrediting Council for Independent Colleges and Universities. But a federal judge's ruling last month that the Obama administration illegally failed to consider relevant evidencein its initial decision paves the way for DeVos to undo the termination without having to go through a full review. The Trump administration is in the process of deciding how to respond to the court's decision.

The coming months are crunch time for the accreditor and the hundreds of colleges that relied on its stamp of approval to receive federal funding. The ACICS schools, absent any intervention from the Trump administration, have until mid-June to obtain new accreditation elsewhere or lose access to federal student loans and grants. - Michael Stratford

TRANSPORTATION

Punt on FAA, again: Lawmakers bought themselves another six months to reauthorize the FAA, passing an extension of the agency's authority as part of the omnibus spending bill. That effectively gives Congress until the end of September to finish up work on a four-year FAA reauthorization. But that's still a tight timeframe for both chambers to pass their bills - S. 1405, H.R. 2997- and go to conference, even without the controversial House provision to spin off air traffic control that has sidelined the measure. And in the Senate, the spat over whether to change the training regime for co-pilots on commercial airliners is still active and may well force that language to be dropped, as well, in the interest of moving a bill at all.

Lawmakers in both chambers are also continuing to polish ideas for how to realize the president's $200 billion infrastructure dream, but most don't expect to see any real movement soon. - Kathryn Wolfe

EHEALTH

Health records rule: HHS' Office of the National Coordinator for Health IT will be bustling in April with the release of a new certification rule for electronic health records. Software certified under the office's program is eligible for use in the meaningful use program, which adjusts providers' Medicare payments depending on how well they show they are using the software to improve care for patients.

Another possible move from the office: a long-expected "information blocking" rule, which would delineate when software vendors or doctors can and can't withhold patients' clinical information. Withholding information purely for competitive advantage is expected to be punished.

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