October Washington D.C. Policy Agenda

BIG PICTURE: The saga of Brett Kavanaugh's Supreme Court nomination will consume the Senate as the FBI conducts a background investigation this week into the judge's alleged history of sexual misconduct. House lawmakers, meanwhile, are home campaigning for the midterms. But policymakers still have a lot on their to-do lists this month:

- New NAFTA. Trade officials have reached a deal to revamp the North American Free Trade Agreement in a new pact being called the U.S.-Mexico-Canada Agreement, or USMCA. The administration submitted to Congress the draft text, and the deal must go through a number of procedural hurdles before it's voted on by Congress some time in 2019.

- Opioid epidemic. Vulnerable incumbents got the chance to show voters they're addressing the opioid crisis when House and Senate negotiators reached agreement on a sweeping bill to address the epidemic killing more than 115 Americans daily. Congressional leaders hope to get President Donald Trump to sign the bipartisan package before the midterm elections. One thing that didn't make the cut was a last-minute attempt by the drug industry to include about $4 billion in relief from a law that raised the share of seniors' drug costs that manufacturers are supposed to cover. The industry request could be revived in the lame duck.

- Affirmative action. A closely watched lawsuit accusing Harvard of discriminating against Asian-American applicants in its race-conscious admissions policy heads to court this month. The trial in a federal court in Boston is expected to last several weeks. It's the first salvo in what will likely be a long battle over the Ivy League school's admissions policy - and college affirmative action policies nationwide.

Here's a deeper dive on the month's policy agenda:

AGRICULTURE

Overtime on the farm bill: The 2014 farm bill expired Oct. 1 with no action by Congress - and top House and Senate negotiators are far from consensus on a new bill. Key lawmakers said extending the 2014 law is not on the table. Instead, Senate Agriculture Chairman Pat Roberts (R-Kan.) said he hopes aconference report will be ready for a vote when Congress returns the first week after the midterm elections. That would require major progress in October, when most members are focused on the campaign trail.

The standoff over House proposals to impose stricter work requirements for millions of Supplemental Nutrition Assistance Program recipients is the most controversial sticking point, but not the only one. Tricky disputes over spending levels, energy and conservation policy, and commodity programs must also be resolved.

Tariff pain: The trade war with China and disputes with other nations have harmed U.S. farmers and ranchers, setting up a major campaign issue in farm states. USDA has stepped in with a trade relief program, and with the harvest in full swing this month, applications will be pouring into USDA. The department has budgeted up to $12 billion for the program, but the first wave of assistance was pegged at $6.3 billion. A key issue to watch is USDA's pledge that it will consider additional aid later this year if trade pain persists. - Ryan McCrimmon

DATAPOINT

World's reaction to Trump's tariffs: Several countries affected by the Trump administration's tariffs have sought remedy through the WTO dispute settlement process. Since the U.S. set tariffs on steel and aluminum, nine countries have filed disputes with the WTO. Twelve countries, including some that have filed their own complaints, have joined these disputes. - Taylor Miller Thomas

Check out the DataPoint graphic here.

TRADE

No end in sight: American companies feeling the brunt of Trump's first set of tariffs on $34 billion in Chinese goods have until Oct. 9 to apply to have certain products excluded from the 25 percent tariff. The administration has not offered a similar exclusion process for the latest list of tariffs on $200 billion worth of Chinese goods, which went into effect on Sept. 24.

Trump has also threatened Beijing with tariffs on another $267 billion worth of Chinese goods in response to China's latest retaliation on $60 billion worth of American goods. There's no scheduled date for talks with the Chinese to resolve these trade tensions.

Negotiations with Japan: The U.S. and Japan have agreed to start talks on a trade deal that would be less comprehensive than the Trans-Pacific Partnership agreement that Trump pulled out of on his third day in office. U.S. Trade Representative Robert Lighthizer will begin the process of notifying Capitol Hill of the administration's intention to negotiate a deal with Japan using Trade Promotion Authority procedures. - Sabrina Rodriguez

TRANSPORTATION

FAA day: October will open with the last major piece of transportation legislation Congress will likely deal with this year: a bill to reauthorize the Federal Aviation Administration for another five years. As the Sept. 30 deadline to reauthorize the agency approached, House and Senate lawmakers struck a deal on a new five-year bill that is expected to be enacted in the early days of October. - Kathryn A. Wolfe

BUDGET & APPROPRIATIONS

Partial credit: In a surprising turn of events, most federal agencies are starting October with fresh funding levels and a whole year of spending certainty, rather than the shutdown that loomed all summer. New funding levels kick in for the departments of Defense, Health and Human Services, Education, Labor, Veterans Affairs and Energy because Congress managed to pass a "minibus," H.R. 5895 (115), and agree to one massive spending bundle, H.R. 6157 (115), in the nick of time. The rest of the federal government will operate under a stopgap measure until Dec. 7.

Fix for dysfunction: Capitol Hill budget aides this month are hammering out the details of legislation aimed at "fixing" the way Congress goes about setting a budget and doling out federal funding, with an eye toward a November markup. House Budget Chairman Steve Womack (R-Ark.) says Speaker Paul Ryan has been receptive to advancing the plan, which could include a switch to every-other-year budgets and rules to keep lawmakers around each year until they finish their fiscal work. - Jennifer Scholtes

ENERGY

Carbon rule re-do: EPA hosts its one and only public hearingOct. 1 on its proposed replacement carbon rule for power plants, aka the Affordable Clean Energy rule. The speakers list includes industry names such as National Rural Electric Cooperative Association CEO Jim Matheson and representatives from the American Petroleum Institute, Murray Energy and the National Mining Association. But most of the voices will be those of environmental and public health advocates, as often happens at EPA hearings. EPA has said it plans to finish the rule in the "first part" of 2019, although it's not clear what that means. The agency will also have to respond to the myriad comments environmentalists are expected to submit.

The hearing is Oct. 1 at the Ralph Metcalfe Federal Building in Chicago and runs from 9 a.m. to 8 p.m. local time. Comments will be accepted through Oct. 31.

E15 all the time: After numerous promises, the president seems ready to deliver on his promise to expand ethanol sales, a major policy victory for corn farmers and ethanol producers. Trump is tentatively scheduled to visit Council Bluffs, Iowa, on Oct. 9 to announce that he will direct EPA to produce a rule allowing year-round sales of 15 percent ethanol blends of gasoline. EPA currently bans the higher ethanol blend, called E15, during summer because of concerns that it contributes to smog - a concern biofuels advocates say is unfounded. The oil industry is furious, and it's stepped up a multimedia ad campaign. The American Petroleum Institute said the industry will keep all options open, including a legal challenge.

EPA has said in previous administrations that it cannot issue an E15 waiver to allow biofuel sales yearound under the Clean Air Act, but Trump seems ready to roll the dice. - Alex Guillen and Eric Wolff

TAX

New IRS leadership: Newly confirmed IRS Commissioner Charles Rettig could be sworn in Oct. 1. He'll face a variety of challenges, from prepping for the next tax-filing season to beefing up IRS staff, training, information technology and funding for the agency. New and updated tax regulations will also flow through Rettig, as well as the nominee to be IRS general counsel, Michael Desmond, who still awaits a Senate vote.

Reshaping IRS operations: As the new IRS leadership comes aboard, Congress is getting closer to reshaping some agency operations and taxpayer protections. A lawmaker spearheading legislation to alter the IRS, Rep. Lynn Jenkins (R-Kan.), said House and Senate staffers were close to finding a compromise on multiple versions of bills on IRS operations. Various provisions deal with taxpayers appeals processes, identity theft and fraud protections, and oversight of the agency. Jenkins, who has advanced IRS legislation this year as chair of the Ways and Means Oversight Subcommittee, predicted a final bill could pass in the lame-duck session, possibly attached to must-pass spending legislation.

Tax rules watch: Among tax regulations expected soon are rules on deducting the cost of certain meals and entertainment. The pending regulation should clarify - for businesses, accountants and other tax professionals - whether companies can still access a 50 percent deduction for meals with customers, or whether regulators will view that as entertainment that can't be written off. Recent media reports indicate the deduction for meals will continue.

Other guidance is expected soon about investing in the new tax-advantaged Opportunity Zone program, which is meant to spur increased property development in otherwise neglected urban and rural areas. - Aaron Lorenzo

FINANCIAL SERVICES

Calling regulators to account: Banks' crowning moment of the year was passage of the first comprehensive rollback of financial regulations since 2010's landmark Dodd-Frank law. But the lenders and their Republican allies in Congress have groused ever since about how slowly the Federal Reserve and other regulators have implemented the new law, S 2155. On Oct. 2, lawmakers will get their chance to press for answers when top bank and credit union regulators appear before the Senate Banking Committee. Witnesses include Fed Vice Chairman for Supervision Randal Quarles, FDIC Chairwoman Jelena McWilliams, Comptroller of the Currency Joseph Otting and National Credit Union Administration Chairman Mark McWatters. The biggest question is how regulators plan to execute provisions that allow banks with $100 billion to $250 billion in assets - including regional lenders and major credit card companies - to escape stricter oversight.

Charter creep: The Mortgage Bankers Association holds its annual convention in Washington in mid-October. Expect plenty of discussion about so-called charter creep at Fannie Mae and Freddie Mac, the two government-run companies that increasingly dominate the mortgage-financing market even after they almost collapsed a decade ago. That debate is taking place as the White House considers nominees to lead the Federal Housing Finance Agency, Fannie and Freddie's overseer, when current Director Mel Watt steps down in January.

CFPB under new management?: The Senate could move to confirm Kathy Kraninger, the Trump administration's nominee to lead the divisive Consumer Financial Protection Bureau, in a vote that's likely to be close. The nomination of Michael Bright to be president of Ginnie Mae, which passed the committee on a voice vote, could also be included in a package of nominations in October. - Mark McQuillan

DEFENSE

Mattis on the way out?: At the Pentagon, Defense Secretary Jim Mattis is being dogged by reports he could step down or be pushed out after this fall's midterm elections over conflicts with Trump. Mattis has pushed back on those reports, and Trump has said he's "very happy" with his Defense secretary and he'll remain on the job.

On Capitol Hill, the retired four-star Marine general still enjoys a deep reservoir of support among lawmakers of both parties who see him as a steady hand. House Armed Services Chairman Mac Thornberry, for one, says Trump should keep Mattis on as long as he can.

"I think he's done a really great job, and I would do everything I could to keep him there as long as possible," the Texas Republican told reporters. - Connor O'Brien

EMPLOYMENT & IMMIGRATION

Joint employer revisited: The NLRB is taking comments through November on its much-anticipated joint employer rulemaking that would reverse the Obama-era standard and constitute a major win to business. The proposed rule, released in September, would make it harder for franchisors to be held liable for labor violations committed by franchisees and contractors, reverting to a precedent that preceded the Obama standard. Recent reports indicate the Labor Department is considering wading into the issue as well.

Labor cases in court: On Oct. 1 the Supreme Court will hear oral arguments in Mount Lemmon Fire District v. Guido , about whether state and local government employers with fewer than 20 employees can be held liable for age discrimination claims. The Age Discrimination and Employment Act usually defines an employer as an entity with 20 employees or more, but circuit courts have split over whether that includes state and local employers.

On Oct. 3 the court will hear New Prime Inc. v. Oliveira, in which the justices will decide whether truckers who are "independent contractors" are exempt from arbitration requirements under the Federal Arbitration Act, or if the exemption applies only to "contracts of employment." Read the SCOTUS calendar here. - Rebecca Rainey

EDUCATION

Treasury rule draws school choice ire: The public comment period closes this month on a proposed Treasury Department rule that seeks to limit the federal deductibility of contributions to charitable organizations. The rule has incensed supporters of private school vouchers and tax credit scholarship programs, with advocates flooding the Treasury Department with comments.

The proposed rule, aimed at preventing efforts by some blue states to get around a new limit on state and local tax deductions, would prevent donorswho contribute to state tax credit scholarship programs from reaping such a benefit. School choice advocates worry the rule will make taxpayers less likely to donate to organizations that award private school scholarships because of the reduced tax benefit, ultimately hurting students, many of whom come from low-income families. The public comment period closes Oct. 11. - Caitlin Emma

TECHNOLOGY

HQ2 Watch: The Washington, D.C., region is eagerly awaiting Amazon's announcement about where it will put its second headquarters. Three D.C.-area locales - northern Virginia, the District of Columbia, and Montgomery County, Md. - are on the short list of 20 metropolitan areas that Amazon is considering, and local political and economic leaders think this region has the edge, given Amazon CEO Jeff Bezos' ownership of The Washington Post. The fevered local speculation reached new heights last month, when Bezos came to Washington for a visit, accompanied by Amazon's board of directors. But Bezos, speaking at an Economic Club of Washington event, didn't announce the decision.

The stakes are high: The e-commerce giant has pledged that its HQ2 will bring 50,000 jobs and $5 billion in investment to the winning city. And Bezos, if he chooses to put down corporate roots in the D.C. area, will be more than ever on the radar of the president, who has a well-publicized beef with The Washington Post and Amazon. - Eric Engelman

CYBERSECURITY

Solarium 2.0 - This year's defense policy bill revived a post-World War II idea from President Dwight Eisenhower's administration: The Solarium Project, created to counter Soviet aggression. The new Solarium project will confront foreign aggression in the digital age. The defense bill, signed into law in mid-August, stipulated all members be appointed no later than 45 days after enactment.

House Minority Leader Nancy Pelosi (D-Calif.) appointed the first two: Rep. Jim Langevin (D-R.I.) and former Florida Democratic Rep. Patrick Murphy. The panel will have 14 members total, including the FBI director and deputies from the Office of the Director of National Intelligence, Homeland Security and the Pentagon. Others will be members of Congress or cybersecurity experts. Even though Washington incubated this new Cyberspace Solarium, businesses will have a seat - and probably an influential one - at the table. - Mike Farrell

EHEALTH

Data sharing moving forward: Two federal actions that could move in October will be key to promoting more patient data-sharing by doctors, hospitals and health systems. Two rules moved last month to the White House, meaning they could be released any time - though the Office of Management and Budget legally has three months to review them.

The first, from the Centers for Medicare and Medicaid Services, would require health plans to allow patients to see claims data. That would fit with the agency's Blue Button 2.0 initiative, supported by Jared Kushner, which aims to get app developers to help patients obtain usable versions of Medicare claims information.

The second rule, from the Office of National Coordinator of Health IT, is required by the 21st Century Cures medical innovation law and will define illegal information blocking by defining what aspects of it are legal. - Arthur Allen

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