WASHINGTON’S LABYRINTHINE WAYS

By Otto J. Hetzel

Otto J. Hetzel is a professor of law emeritus at Wayne State University and practices law in Washington, D.C.

• Compromise Reached on Intelligence Legislation to Implement 9/11 Commission’s Restructuring Recommendations. On December 8, Congress enacted a new Intelligence Reform and Terrorism Prevention Act that creates a Director of National Intelligence (DNI), who once nominated and confirmed, will exercise power over all fifteen federal intelligence agencies, including three housed in the Defense Department. He will head a newly created National Counterterrorism Center that has just become operational in an undisclosed Virginia location. The 600-page Act increases intelligence sharing among agencies, stiffens visa application requirements, and adds thousands of border patrol and customs agents. The Act also creates an independent Privacy and Civil Liberties Oversight Board to protect these rights.

Opposition to the bill by two Republican House Committee chairs, Armed Services and Judiciary, stalled adoption of the bill prior to Thanksgiving. Avoiding an intra-party fight, House Speaker Dennis Hastert (R–Ill.), rather than relying on Democratic votes to enact it, announced a new Republican “majority of the majority” policy: that only measures supported by a majority of Republican members would be brought to the floor. He refused to bring the bill to the House floor for a vote, although the measure had been adopted in the Senate and had bipartisan support of a majority in the House.

Once Congress returned, House Armed Services Committee Chair Duncan Hunter (R–Calif.) accepted compromise language providing limits to the Director’s powers. One was ensuring Defense Department officials could provide combat commanders priority for use of spy satellites and other intelligence equipment in battlefield areas. Another is while the new Director will have a say in hiring the heads of intelligence agencies, he will have no clear authority to fire them. A third restriction added is, while he or she can move money from one agency to another to meet the needs of the U.S. war on terrorism and other challenges, strict limits have now been imposed. Earlier versions of the legislation had unlimited reprogramming authority. “The DNI could take billions from the Department of Defense and move it to the FBI,” Hunter said. “We scaled that way back to $150 million, but not more than 5% of any given program or agency.” Similarly, Hunter said, the Senate version of the bill “had unlimited power to transfer personnel. We moved that back to 100 personnel.”

In some ways, the controversy seemed more an effort to exert prerogatives of two congressional committee chairs whose jurisdictions were affected by the legislation. For instance, use of satellites for specific battlefield applications appears to be rare. In fact, Hunter acknowledged that for him, and other members of the Armed Services Committee, “this was an exercise in control.”
Judiciary Committee Chair James Sensenbrenner (R–Wis.), who had joined Hunter, continued to object to the bill because it failed to resolve issues of immigration, asylum, and border security matters under his jurisdiction that he felt should have been included. Neither issue seemed of sufficient gravity to hold up such a high-priority bill.

• The $388 Billion Consolidated Appropriations Act of 2005 Finally Passes After Senate Forces a Delay Until House Deleted a Provision Permitting Committee Staff Access to Individual Tax Returns. The House voted unanimously, 381 to 0, when it returned from its Thanksgiving holiday break, to rescind a controversial provision empowering Congress’s appropriations committees to examine individual tax returns. Democrats and some Republicans claimed the provision, added to the bill by a mid-level House Appropriations Committee staff member (with drafting help from the Internal Revenue Service), could lead to abuse of taxpayer privacy. Those who had inserted the provision at the last minute in the 3,000-page legislation said it was intended only to ensure effective oversight of IRS operations in visits to the IRS facilities.

The Omnibus Bill funded the federal departments and agencies remaining after earlier measures funded the Defense and Homeland Security Departments and the District of Columbia. The bill restricted overall FY 2005 appropriations to the target of $821.9 billion set by House and Senate Congressional Budget resolutions and called for by the Administration. Overall domestic funding growth was held to just 1 percent over FY 2004. A 0.83 percent across-the-board reduction was imposed on domestic programs, and a number of them also were reduced from amounts provided for 2004.

• The Tax Provision Issue Was Used to Highlight the Dangers and Impropriety in Enacting Lengthy Bills at the Last Minute. Democrats led by Minority Leader Nancy Pelosi (D–Calif.) charged that the offending provision that was deleted from the final bill illustrated the irresponsible practice of consolidating most of the annual appropriation provisions for much of government into one measure, take it or leave it, with no opportunity for members to vote on individual allocations of funds to various programs. Congress has increasingly avoided such votes in recent years by that tactic.

This process allowed for insertion of the tax provision without the knowledge of key lawmakers. IRS Commissioner Mark W. Everson acknowledged that his agency had drafted the language at the request of the House staff and “failed to recognize that the language provided did not include the parallel protections contained in separate law governing taxpayer privacy.”

Rep. David R. Obey (D–Wis.), ranking Democrat on the Appropriations Committee, chided House Republican leaders: “The House has egg on its face because the House leadership has an agenda on appropriations bills that so underfunded some critical services that it was unacceptable to the Senate before the elections.” This, he added, led to a 3,000-page omnibus bill, which few if any lawmakers were given the opportunity to read before voting on it.

In addition, the practice makes a mockery of one of the key theories involved in judicial determination of legislative intent: that before they voted members knew and understood the effects of a vote even for such an extensive measure. Without access and opportunity to read or even be briefed on the legislation, most members are left solely with broad sketched summaries to guide them in deciding whether to support such measures.

House members learned of the provision’s existence early on November 20 and took several steps to limit the political damage. Ways and Means Committee Chair Bill Thomas (R-Calif.) engaged in rationalization using a dialogue on the House floor in which he said he understood the provision was intended to provide access to IRS facilities for oversight purposes but not to tax returns or data. House Democratic leader Nancy Pelosi accused Republicans of abusing House rules requiring a three-day delay so members can read bills before they go to the floor. When Republicans refused to commit to observing that rule, she held up final action on the measure by requesting a roll call vote, even though many members had already left for the holidays, to bring pressure on GOP leaders to stop short-circuiting the rules. Americans “expect and deserve a government that respects their privacy,” Pelosi said.

• Further Domestic Program Cuts Expected for Fiscal Year 2006. The new Congress will be faced with major new funding demands from the Pentagon for military operations in Iraq and Afghanistan. The amount has not been determined, but sources have said it could be in the $75 billion range. Additional tax cuts are also on the agenda for this coming year. This means Congress will likely have even less money next year so further significant domestic program cuts are likely to come with the new organization of Congress.

• Impact of 2005 Appropriations on Housing and Urban Development Programs. The Omnibus Act made significant cuts in housing and urban development programs that were also subject to the across-the-board 0.83 percent reduction. These amounts were below the final levels proposed in each house, in part because of Congress’s unwillingness to substantially reduce “set-asides” for use in member’s districts (often referred to as a Christmas Tree with gifts upon it) while having to operate within overall budget constraints for funding domestic nondiscretionary programs and the increased support required for certain targeted programs, such as NASA and veterans’ health care, that the Administration had deliberately underfunded. According to industry advocate NAHRO’s analysis, the final amounts provided were:

Community Development Funding: HUD’s CDBG program, now going into its thirtieth year, sustained a dramatic $222 million cut, falling by a larger-than-expected 5.1 percent from 2004 levels to $4.109 billion. The CDBG reductions, moreover, must be shared with the seventy new grantees added in 2004 and ten more in 2005. More must share less! Economic Development Initiatives and Neighborhood Initiatives were funded for $260 million and $42 million, respectively. The Administration’s proposed faith-based pilot and “Development Challenge” pilot were denied funding.

Economic Development: Programs targeted for elimination by the Administration managed to obtain funding nearly equal to 2004 levels. Rural Housing and Economic Development got almost $24 million, but funds must now be awarded competitively by September 1, 2005. The Section 108 Community Development Loan Guarantee program was funded at slightly less than $7 million, an amount that will subsidize up to roughly $273 million in loan principal. BEDI grants were funded at $24 million.

Slightly less than $10 million was provided to be split equally among the fifteen Enterprise Zones and Empowerment Communities designated in Round II.

HOME: The HOME Investment Partnerships Program was funded at $1.899 billion, with $50 million carved out for the American Dream Downpayment program. Set-asides include $42 million for housing counseling, $18 million for HOME and CHDO technical assistance, and $2 million as a transfer to the Working Capital Fund to address departmental technology needs. Congress continues to resist the Administration’s proposal to fund housing counseling as a separate, independent account. After accounting for $4 million for insular areas, $1.784 billion is available for the HOME formula distribution, a $70 million decrease compared to its FY 2004 level.

Homeless Funding: Homeless assistance grants were funded at $1.240 billion, a $19 million cut from the FY 2004 level. Up to $11.4 million was designated for a national homeless data analysis project and technical assistance. Another $2.5 million is designated for transfer to the Working Capital Fund. The Act did not provide funding for the Administration’s prisoner reentry proposal.

Public Housing: The Public Housing Capital Fund received $2.5 billion, a $196 million decrease from FY 2004; the Public Housing Operating Fund received $2.6 billion, a $979 million decrease from FY 2004. This reduction reflects a provision that requires HUD to convert its Operating Fund accounting from a PHA fiscal year to a calendar year basis in FY 2005. This accounting change is expected to yield savings of $1 billion. The bill continues the “budget-based” approach to funding state and local housing agencies that HUD implemented last year, but with some modifications. Section 8 vouchers were split into a tenant-based rental assistance account and a project-based rental assistance account, with $14.9 billion for tenant-based assistance (Section 8 vouchers) and $5.3 billion for project-based assistance. The HOPE VI program, funded at $144 million, was cut by $5 million from FY 2004.

Housing Assistance Programs: The Section 202 elderly housing program, funded at $747 million, was cut by $27 million. The Section 811 disability program funding was provided $240 million, a $9 million decrease. HOPWA was funded at $284 million. Initial language in the bill that prohibited housing authorities from participating in any political or elections activity was changed to forbid “partisan” political activity so as not to exclude activities such as voter registration.

• Dilution of Community Reinvestment Act (CRA) Requirements for Banks Proposed. The Office of Thrift Supervision (OTS) proposed new rules for CRA in late November that would allow less stringent examinations of almost 6,000 lending institutions regarding compliance with CRA requirements by permitting them to create their own CRA exam and to adjust the weighting for lending, investments, and services. Unless changed on the basis of comments received during the period allowed for them, an important incentive for these financial institutions to invest in Low Income Housing Tax Credits (LIHTC) in low- and moderate-income communities would be lost. The proposed changes would also change the CRA definition of “community development” to include community services targeted to individuals in rural areas, whether or not low or moderate income, and to activities that revitalize or stabilize rural areas.

• Congress Re-imposes Ban for Three Years on States and Local Governments from Taxing Fees That Internet Providers Charge Consumers. While a restriction on taxing of the Internet was first enacted in 1998, it expired in 2003. Disputes in Congress as to the scope of a new restriction on taxing it were finally resolved this fall. The new measure prohibits taxing broadband Internet services to allow for the growth of Internet commerce. The only exception is telephone services that are increasingly migrating to the Internet. Loss of as much as $10 billion in revenues for states if they lost the ability to tax telephone services was a critical element holding up the more general moratorium.

• Bush Replaces U.S. Civil Rights Commission Leadership. The President announced in early December that Commission Chair Mary Frances Berry and Vice-Chair Cruz Reynoso had been replaced. Ms. Berry had held that post since her original appointment in the Carter Administration. She complained that her six-year term did not end until January 21, 2005, but the White House considered the transition completed. Bush nominated Gerald A. Reynolds, who formerly headed Civil Rights in the Department of Education, and promoted Abigail Themstrom, currently a commissioner, to vice chair.

• District Court Can Exercise Broad Authority to Fashion Equitable Remedy in Indian Trust Fund Case But Should Have Held Evidentiary Hearing Before Cutting Off Internet Access at Interior Department. In the latest ruling of this long-running fractious case involving billions of dollars of Indian Trust Funds representing royalties from Indian lands being managed by the Interior Department, the D.C. Circuit Court of Appeals affirmed exercise of broad powers by Judge Royce C. Lamberth who has been extremely critical of the Department’s failings in safeguarding trust funds of more than 300,000 Indians. Concerned that computer security was vulnerable to access data in the funds, Judge Lamberth had ordered curtailment of Internet access by portions of Interior that had failed to demonstrate adequate security. The appeals court, however, stayed his order when Interior appealed and faulted the judge for not holding an evidentiary hearing before imposing the restrictions on Interior, which claimed it had addressed his concerns.

• Are Cable Lines Subject to Same Access Requirements as Telephone Lines? The Supreme Court accepted an appeal in December from a Ninth Circuit Court of Appeals ruling that cable operators must share their Internet lines with competitors providing communications services. The Federal Communications Commission (FCC) had sought to exempt cable companies from requirements applicable to fiberoptic cables of telecommunications providers such as telephone companies. Its hard to distinguish the lines, however, now that telephone companies are converting to fiberoptics as well. The FCC’s rationale, based upon defining cable companies as providers of information services, was rejected by the court. Costs to consumers are at issue since the FCC’s deregulation of cable systems would limit competition for services in accessing the Internet through cable as contrasted to requirements that phone lines be available (for a price) to others with competitive DSL services thereby offering consumers wider options and price competition. The cases being reviewed are National Cable & Telecommunications Ass’n v. Brand X Internet Servs. and FCC v. Brand X Internet Servs., Nos. 04–277 and 04–281.

• Among the Items on Bush’s 2005 Legislative Agenda: Tax Reductions. Tax Code overhaul is a major initiative being discussed, in the context of slogans such as “income should only be taxed once.” This, of course, increases the tax load on wage earners while reducing or eliminating taxes on wealthier investors. To free up funds to cover lost revenues from these sources, elimination of deductions for state and local taxes and for employer-sponsored health benefits have been targeted. This means that taxpayers will be paying federal taxes on sums they have already paid to state and local government taxing authorities. The consequences for these other governmental levels could be catastrophic. State taxing provisions would quickly come under fire and the loss of deductions for health care would mean employers no longer would have much financial incentive to provide health insurance. Along with the pressures being experienced because some major retailers have avoided paying health benefits, wage earners may quickly find that support of their health care expenses will no longer be a provided benefit. Beware of unintended consequences that may be triggered in these cases.

• Baltimore Sun Sues Maryland Governor over Instruction Prohibiting Administration Officials from Speaking with Its Reporters. In a lawsuit raising First Amendment issues, the Sun is contesting a restriction Maryland Governor Robert L. Ehrlich, Jr., (R) has imposed on state employees, on which reporters they may speak to based upon whether the governor approves of the reporter’s views. Oh to be so easily rid of those pesky reporters who can criticize. Just don’t give them any facts or information to talk about.

• D.C. Mayor Anthony A. Williams Elected President of the National League of Cities. Having just successfully delivered major league baseball back to D.C. and getting city council support for a publicly financed stadium, Mayor Williams will head an organization that lobbies for the interests of its membership that represents more than 18,000 cities and towns. This may be a difficult time for local governments given increasing pressures to reduce federal funds that have supported many urban programs involving community development and housing. In its just enacted budget, the future was foretold when Congress imposed specific program cuts along with a 0.83 percent across-the-board reduction on domestic program expenditures to support tax reductions and funding for military and homeland security.

• Ethics Restrictions on Federal Lobbying Fortuitously Lifted Just as Senior Administration Officials Are Departing. Just a few weeks after the election, as the exodus of top Administration officials started, the Office of Government Ethics announced it was relaxing a major restriction on former government officials: the rule that restricts senior officials from lobbying former colleagues for a full year after leaving office. A former senior official “who served in a ‘parent’ department or agency is not barred . . . from making communications to or appearances before any employee of that designated component of that parent.” For instance, the twenty-two agencies merged into DHS would be separate entities. The “urgency” of resolving these issues required the Ethics Office to dispense with notice of proposed rule-making, receipt of public comments, or any delay in implementation of the new standards.

• Third Circuit Rules 2–1 Universities, Although Receiving Federal Funds, May Exclude Military Recruiters from Campus. The court decision prohibits government funding agencies from withholding funds to schools that refuse to cooperate with military recruiters. In 1996, Congress enacted the “Solomon Amendment” authorizing government agencies to withhold funds to institutions that do so. In 2001, the Pentagon sent a letter to twenty law schools threatening them and their parent universities with loss of their defense research funds. The law schools challenged the law on First Amendment grounds so they could uphold their nondiscrimination policies on the basis of sexual orientation imposed on recruiters, specifically because of the military’s “don’t ask, don’t tell” policies. The court found the government action was forcing schools to act in a way incompatible with their educational objectives. Never underestimate the power of law professors acting en masse.

• City’s Arrest and Dispersion of Sleeping Homeless Persons on the Steps and Landing of a Downtown Church Held Unconstitutional. The Fifth Avenue Presbyterian Church had opened its property to the homeless as part of its religious ministry. A federal district court in New York granted summary judgment and a permanent injunction against the city on the basis of First Amendment considerations, noting that the city had adopted a group approach to individual violations of public nuisance laws, a fact that was “constitutionally problematic.”

• Illinois Supreme Court Rejects Chicago’s Attempt to Hold Gun Manufacturers and Retailers Liable for Gun-Related Costs Incurred by the City. In City of Chicago v. Beretta U.S.A. Corp. and Young v. Bryco Arms, the city and relatives of murder victims had alleged defendants, thirteen manufacturers, two distributors, and eight dealers, contributed substantially to creation of a public nuisance by designing, manufacturing, marketing, and selling guns that were intended to appeal to criminals in general, and to juvenile gang members in particular. The city sought compensation for the costs of emergency medical services, law enforcement efforts, the prosecution of violations of gun control ordinances, and other related expenses. The county asked for compensation for the costs of treatment of victims of gun violence and for prosecutions for criminal use of firearms, including the expenses associated with providing defense counsel to those accused of gun crimes. Both sought punitive damages and permanent injunctive relief to abate the alleged public nuisance.

The court held that manufacturers and distributors did not owe a duty to the public at large to prevent firearms from ending up in the hands of persons who might use and possess the weapons illegally, noting, among other things, that it was not reasonably foreseeable that the activity of criminals who illegally took firearms into a particular community would result in a public nuisance.

Your correspondent.