U.S. DOT Issues New Air Travel Consumer Protection Rulemaking Initiatives

The U.S. Department of Transportation (DOT) has announced a new round of consumer protection-related rulemaking initiatives affecting U.S. and foreign airlines, ticket agents, and air travel consumers. As part of these initiatives, DOT has issued:

  • a third final rule (PP3) further strengthening airline passenger protection regulations;
  • a final rule amending requirements for airline reporting of mishandled-baggage data and establishing new requirements for airlines to report statistics for mishandled wheelchairs and scooters used by disabled passengers and transported in aircraft cargo compartments;
  • an Advance Notice of Proposed Rulemaking (ANPRM) requesting comments on how airlines should refund checked baggage fees when they fail to deliver passengers’ baggage in a timely manner, as required by the FAA Extension, Safety, and Security Act of 2016; and
  • a request for information regarding airline restrictions on the distribution and display of flight schedules and fare information.

DOT also announced that it plans to issue a Supplemental Notice of Proposed Rulemaking (SNPRM) on the disclosure of ancillary services fees to consumers at all points/channels of sale, including global distribution systems (GDSs). DOT will also issue at a later date a final rule on the definition of “ticket agent,” customer service commitments by large ticket agents, and the prohibition of post-purchase price increases for ancillary services and those relating to “mistaken fares.”

Learn more about these developments here.

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OFAC Issues General License to Authorize US persons to Enter Contingent Contracts for Trade with Cuba

On Friday, October 14, 2016, the Office of Foreign Assets Control (OFAC) of the U.S. Department of the Treasury issued a General License to authorize U.S. persons to enter into certain contingent contracts for trade with Cuba.  All U.S. trade with Cuba is subject to OFAC enforcement and must be authorized by either a specific license focused on an individual transaction or a general license that covers all transactions associated with a trade area.

This change in OFAC policy and regulations is a significant step forward in expanding opportunities for U.S. persons to explore and develop business relationships in Cuba.  Previous authorizations regarding contract negotiations and execution had been limited to specific business sectors or tied directly to licensed transactions.  These new regulations will allow a broad cross-section of U.S. business to move forward with exploring trade with Cuba in a manner previously prohibited.

The General License issued Friday, while allowing U.S. business to negotiate and enter into contracts, requires that the performance of such a contract be “expressly made contingent” upon the prior authorization of the covered transaction by OFAC (e.g., by specific or general license) or upon authorization no longer being required (e.g., the lifting of sanctions).  The General License specifically defines contingent contracts to include executory contracts, executory pro forma invoices, agreements in principle, executory offers capable of acceptance such as bids or proposals in response to public tenders, binding memoranda of understanding, or any other similar agreement.  If the contemplated transaction is subject to licensing by another federal agency, the contract must also be made contingent on obtaining such a license or the removal of those license requirements.  Additionally, OFAC updated existing regulations to authorize travel and transactions that are “ordinarily incident” to the negotiation of and entry into contingent contracts.

It is important to note that the current OFAC licensing regime can be arduous and time consuming for businesses.  We anticipate that as U.S. businesses enter into contingent contracts, there will be increased calls for changes to OFAC licensing requirements and the broader U.S. embargo towards Cuba.

Additional areas impacted by today’s announcement include: FDA approval of Cuban-origin pharmaceuticals; vessel transactions; civil aviation safety; travel; and humanitarian-related transactions. For more information, please see OFAC’s Fact Sheet here and see Cozen O’Connor’s alert here.

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A Turning Point on Substance for Trump?

On August 31, Trump delivered a campaign-defining speech on immigration. In the past, Trump’s speeches and interviews have mostly consisted of easily digestible phrases that leave no room for fleshing out substantive policy proposals. He has boiled complicated issues down to good and bad, tremendous and disastrous. While Clinton is well known for being wonkish almost to a fault, Trump does not have a clear plan for most aspects of foreign or domestic policy.

His speech in Phoenix for the first time laid out specific pieces of legislation and programs that Trump would champion to achieve immigration reform. Secure Community Programs. 287g partnerships. The Davis-Oliver bill. Biometric entry/exit visa tracking programs. During his hour- long speech, Trump appeared somewhat wonkish in a way he never has before, and he slammed Clinton for not having a specific plan herself. While the Washington Post has determined that most of Trump’s solutions were based on faulty research, Trump nevertheless emerged from Phoenix looking like a candidate who had some semblance of knowing what he was talking about.

In the course of giving this speech, Trump has started to appear as he has co-opted the characteristics that have traditionally been associated with Clinton’s reputation, thereby pushing back against the unpredictable versus measured dichotomy that distinguished the two candidates for most of the campaign. While he will never surpass Clinton on either of those fronts or rid himself of his fiery reputation, Trump’s busy day on immigration has proved that he can move between the spheres of straight-talker, schoolyard bully, representative of America, and thinker-in-chief.

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7 Reasons Why Trump Would Hate Being President [Politico]

In an op-ed “7 Reasons Why Trump Would Hate Being President” published byPolitico MagazineHoward Schweitzer, managing partner of Cozen O’Connor Public Strategies, writes about how Donald Trump may actually feel about the duties and restrictions of being POTUS. There have been various conjectures that Donald Trump may be sabotaging his own campaign and in this piece, Howard writes, “As outlandish as that may seem on its face, there are reasons that it may very well be true. Should he win, Trump will loathe the next 1,460 days of his life.” Before presenting the reasons, Howard said, “As someone who has never worked in Washington, never obtained a security clearance, never received an ethics briefing, and never assembled a team of experienced policy aides, Donald Trump will be in for the shock of his life when he realizes starting January 20, 2017 just how much harder – and different – running a government is from running a private business. The Republican nominee will hate the presidency, so much so that even if he won the White House, he would be sorely tempted to quit before his term even ends.”

In reason number 2 regarding Trump’s potential frustration with Congress, Howard references his own government experience. He writes, “I know from my firsthand experience as the program’s chief operating officer that when it was created in October 2008 the bailout was not simply a matter of executive prerogative. The president and his Treasury secretary couldn’t just snap their fingers and execute – and in this instance the security of the financial system was hanging in the balance.”

To read the full article, please click here.

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Trump and Clinton Continue to Offer Very Differing Approaches to Campaigning

Blake Rutherford joined “Making Money with Charles Payne” on Fox Business News to discuss the presidential campaign and recent developments related to Trump’s social media antics and Hillary Clinton’s campaign approach. Blake commented on the problems that Trump’s Twitter use has caused, saying that his constant presence on Twitter detracts from his ability to concentrate on the actual issues of the campaign that could distinguish him from Hillary Clinton. “Donald Trump is the most undisciplined nominee in the history of presidential politics,” said Blake. “[He] ought to focus on getting Twitter off his mobile phone and instead get focused on the issues that are important in this campaign.”

Blake then discussed Hillary Clinton’s recent $80 million ad buy spend and use of campaign resources. When asked if the campaign’s recent decisions indicate overconfidence, Blake disagreed, asserting that her strategy demonstrates a “concerted effort to not only engage in an effective paid advertising campaign but also a grassroots mobilization campaign and a digital outreach campaign that is going to win this election in November.” Blake also refuted alleged concerns that Hillary Clinton will not raise adequate funds to remain competitive, explaining, “She’s organized in every battleground state; Donald Trump is not. She’s up on the air in every battleground state; Donald Trump is not. What you’re seeing from the Clinton campaign is a commitment to win this race on the ground. My home state of Pennsylvania is a great example of where ground game is going to make a very big difference. Donald Trump is simply not organized there. She’s putting the resources that she raised into the battleground states. Twitter is just not going to be enough for Donald Trump to win.”

View the full clips here and here.

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Pennsylvania Likely Remains a Democratic Stronghold

In a Wall Street Journal article discussing whether Pennsylvania remains a definite win for the Democrats in the 2016 presidential election, I explained what the Hillary Clinton campaign must do in order to secure the state in their favor. Expanding on the notion that the minority vote is key to keeping the state blue, I said, “She’s got to mobilize turnout in Philadelphia County. That’s the key for any Democrat to win Pennsylvania.”

View the full article here.

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Gotham City vs. Reaganesque Optimism

In a US News article by Susan Milligan,”A Tale of Two Countries,” I discussed the different portrayals of the United States as depicted by the Republicans and Democrats during their respective conventions. Noting the stark contrast between the two parties, I explained that Republicans “have radically different views of what this country is, even if they don’t live in the country they present. They present a country from a ‘Batman’ movie, Gotham City with roving bands of criminals and corrupt cops. The citizens are helpless victims, and only a billionaire can save them. That’s not even where they live, let alone how the rest of us live.”

The article also examined voter trends and how turnout at the polls on election day would ultimately make the most significant impact. On this topic, I commented, “Demographically this country cannot elect Donald Trump if every single eligible voter were to show up at the polls. There’s more of us than them. But every single one of them is going to vote, and that’s not true of us. How can he win? He can win by not enough of us showing up.”

Read the full article here.

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FAA Extension – Signed, Sealed, Delivered

President Obama signed into law the Federal Aviation Administration Extension, Safety, and Security Act of 2016 on July 15, thereby allowing the Administration to continue operating until October 2017. The extension contains safety measures that set new medical screening requirements for pilots and provide guidelines for streamlining the TSA security screening process. It also includes consumer provisions that regulate delayed baggage refunds, family seating, and tarmac delays. The extension also contains guidelines for regulating, certifying, and restricting the use of drones and unmanned aircraft. The final bill does not contain provisions revising the air traffic control system; however, lawmakers have indicated their intent to pass a more comprehensive FAA bill within the next year.

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Speaker Ryan Unveils Republican Health Care Proposal Under the “Better Way” Plan

On June 22, 2016, Speaker Paul Ryan (R-WI) unveiled the Republican Party’s new health care agenda last Wednesday in a speech at the American Enterprise Institute.  This is the first time that Congressional Republicans have proposed specific proposals for their “repeal and replace” effort against the Patient Protection and Affordable Care Act (ACA).  Deemed “A Better Way,” the Ryan paper primarily reflects traditional and familiar Republican ideas about health care, rather than new ideas.  The full proposal can be found here.

As drafted, the white paper is not susceptible to scoring, so the cost of the proposal is unknown.  Notably, Speaker Ryan doesn’t propose the passage of one sweeping replacement law but, instead, the passage of several separate pieces of legislation.  The stated goal of the proposal is to lower health care costs, expand flexibility for patients and providers, delegate greater authority to states on Medicaid and Medicare issues, and support research and innovation in medical research.

More Choices, Lower Costs, Greater Flexibility

HSAs: The Speaker’s framework names several proposals rooted in the premise that the ACA limits patients’ and providers’ ability to make the best economic choices for themselves.  These policies include expanding health savings accounts (HSAs) to allow spouses to make catch up contributions to the same account; to allow certain expenses incurred before coverage begins to become eligible for reimbursement from an HSA account; and allowing participants in the Indian Health Service and TRICARE to qualify for HSAs.

Consumer Choice and Portable Plans: In addition to HSA reforms, the plan advocates for expanding the use of defined contribution methods such as health reimbursement accounts (HRAs); providing financial assistance for insurance plans that can move with individuals between various jobs and into retirement; and offering a refundable tax credit for health expenses to those without employer coverage.

Employer-Sponsored Insurance: The plan suggests three modifications to employer-sponsored insurance (ESI).  Firstly, it suggests capping the amount of insurance costs that individuals can exclude from their gross income.  Second, it omits employee contributions to an HSA that are made on a pre-tax basis from counting towards the cost of coverage that is used to determine the cap.  Finally, it excludes lower income workers and individuals living in areas with high labor costs from the so-called “Cadillac tax,” a 40% excise tax on high end premium plans.

Pooling: Speaker Ryan proposes allowing consumers to find coverage options across state lines and to allow states to enter into interstate pooling compacts.  He suggests creating avenues for small businesses to enter into association health plans (AHPs) to increase their ability to obtain cheaper costs for their employees’ plans.  Under this framework, the AHP pools would be barred from “cherry picking” participants based on their health or from charging different rates for those who are sicker.  Speaker Ryan also advocates for the implementation of individual health pools (IHPs), where individuals would also be able to collectively bargain for better plan rates when buying insurance on their own.

Additional Proposals: Speaker Ryan’s plan would remove restrictions on employee wellness programs that are linked to financial rewards, so long as the incentives do not violate the Americans with Disabilities Act or the Genetic Information Nondiscrimination Act.  It would allow employers to choose between various insurance options including self-insurance and stop-loss protections.  Additionally, Speaker Ryan addresses medical liability reform by proposing a cap on non-economic damage awards and encouraging states to work with professional medical societies to develop laws requiring higher standards of evidence in suits against medical professionals.

Protecting and Strengthening Coverage Options for All Americans

The Republican health care proposal includes provisions prohibiting sudden policy cancelations and barring the denial of coverage based on pre-existing conditions.  It continues to allow dependents to stay on their parents’ plan until the age of 26.  The plan would also modify the current ratio used to determine the cap on the difference between older and younger individuals’ plan costs from three-to-one to five-to-one.

The plan carves out a block of $25 billion for State Innovation Grants, where states would receive funding for innovation programs based on how well they perform on tasks such as reducing premiums and the number of people in that state who are uninsured.  The plan additionally sets aside $25 billion in federal funding for high risk pools consisting of individuals priced out of coverage.

The proposal would also ensure implementation of the Weldon Amendment, which prohibits the use of federal funds towards states that discriminate against those who exercise their conscience.  It would additionally prohibit federal funds from covering abortions.

Medicaid Reform: Empowering States and Increasing Flexibility

Per Capita Allotment: Speaker Ryan’s plan proposes providing states with a choice between per capita Medicaid allotments or block grants.  Under the per capita funding system, states would receive federal allotments beginning in 2019, where the amount of the funds distributed would be determined by that state’s per capita allotment for the aged, the blind and disabled, children, and adults, as well as the number of individuals enrolled in each of those categories.  Federal funding would be capped based on the category, independent of how much the state actually spends per enrollee so as to encourage efficient use of the grant.

Also beginning in 2019, states with ACA expanded Medicaid programs would continue to receive the same amount of funding, but would be able to reallocate those funds between participant groups wherever the need is greatest.  Additionally, the enhanced Federal Medical Assistance Percentages (FMAP) for the expanded adult population would be incrementally lowered each year until it reaches the state’s normal FMAP level.  The Children’s Health Insurance Program (CHIP) would return to a joint federal-state financing system.

Under the proposed per capita allotment system, states would be permitted to set their premiums and to require able-bodied adults be employed, seeking employment, or enrolled in an approved educational program.  States would also gain the ability to charge premiums on benefits and populations whose coverage is optional.  Medicaid demonstration waivers would be required to be budget-neutral for the federal government.  Finally, states would be able to decide their own laws regarding Medicaid participation in elective abortions.

Block Grants: States that do not opt for a per capita allotment would automatically be enrolled in a federal block grant program, where funding is determined on the assumption that individuals enrolled in the state program under the ACA expansion would be transitioned into other plans.  Aside from funding required services for legally mandatory populations, states would have flexibility in determining how the block grant is spent.

Protecting and Preserving Medicare

The proposal lays out several propositions for modifying Medicare.  It suggests repealing the benchmark cap system for Medicare Advantage (MA) plans, limiting negative payment adjustments for MA coding that were created by the ACA, and expanding the open enrollment window for MA.  The proposal also aims to repeal the Independent Payment Advisory Board, to repeal the Center for Medicare and Medicaid Innovation by January 2020, and to repeal the ACA provision allowing CMS to adjust payments to different states in a manner that is budget neutral.  The plan also seeks to repeal the ACA ban on physician owned hospitals.

Speaker Ryan also suggests structural reforms to Medicare, such as introducing a value based insurance design for MA and reforming Medigap plans.  His plan proposes combing Medicare Parts A and B, creating a unified deductible, and combing all existing Medicare Savings Programs into one singular program.  Speaker Ryan suggests creating a personalized care demonstration program where beneficiaries and providers can agree to enter into arrangements for non-Medicare services and allowing providers to choose which health plans they participate in without the possibility of losing their medical license.

The health care plan recommends creating one national pool of uncompensated care (UCC) funds that are distributed to Disproportionate Share Hospitals base on federally collected data; creating a Medicare Compare website; and increasing the Medicare retirement age beginning in 2020 until it corresponds with the Social Security retirement age.

Promoting Innovation in Health Care

The Republicans’ proposal aims to keep medical and health regulations up to date with current scientific practices.  It therefore suggests providing the National Institutes of Health with a robust level of discretionary funding, supporting young scientists who are working on medical innovations, streamlining clinical trials, modernizing data collection, moving forward on precision medicine, and advancing the use of electronic health records.

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Will Firing His Campaign Manager Help or Hurt the Trump Campaign?

Mark Alderman and Jim Schultz discussed presidential polling and a change up in the Trump campaign on NBC10 news on June 20. Trump recently fired his campaign manager, which Jim says “helps the campaign” and isn’t “as big of an issue as some  are making it.” Jim added that, “We saw Paul Manafort getting more involved in the campaign throughout the end of the primary cycle. Corey Lewandowski did a great job in the primary cycle, didn’t have to spend a lot of money, got his candidate elected, there were 17 candidates across the board and his guy won. But for the general election cycle it’s a different game and he’s going to put together a different team to get it done.” Conversely, Mark says, “Trump’s ship is taking on water and the question is whether firing Lewandowski is going to right that sinking ship or just blow another hole in hull. We’ve seen very little evidence that Donald Trump is mature enough to run a responsible campaign. I don’t see this helping much but I do not underestimate Donald Trump’s tenacity. He’s going to lie to the American people until the last vote is counted.”

To watch the full clip, click here.

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About The Hot Button Blog
For many businesses, nothing seems more remote than the maneuvering of Beltway insiders. But what happens in Washington and in state and local government is critically important to your company and your industry. With government more involved in business than at any time since the 1930s, organizations that can negotiate the government labyrinth of politics, policy, and process will come out on top.
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