At a Politico Pro Energy breakfast this morning in Washington, DC, White House Deputy Assistant for Energy and Climate Change Heather Zichal defended the Administration’s energy record but also provided a window into what a second term energy policy might look like for President Obama.

These comments come after Zichal last week described the failure to pass cap-and-trade legislation in 2010 as “one of (President Obama’s) greatest frustrations.”

At the breakfast, the moderator asked Zichal about her comments on cap-and-trade and what they could mean for a climate policy in a second term for President Obama.

While ideally President Obama would seek a “comprehensive” approach to climate change, Zichal acknowledged that the Administration would likely approach this issue in “chunks.” Specifically, Zichal talked about seeking “tools and policies that can garner bipartisan support.” One example provided by Zichal was extending the production tax credit for renewable production, which is set to expire at the end of this year. The “chunks” mention appears to reinforce the notion that President Obama would be unlikely to pursue cap-and-trade, or some variant, in a second-term.

Following Zichal’s comments, Senator Lamar Alexander (R-TN) spoke – his remarks suggested that there are other “chunks” where consensus is achievable on energy policy between the Administration and Congress. Specifically, Senator Alexander expressed support for the Advanced Research Projects Agency-Energy (ARPA-E), an agency focused on R&D for breakthrough energy technologies, such as small modular reactors, smart grids, carbon capture and electric car batteries. ARPA-E is modeled after the Defense Advanced Research Projects Agency (DARPA), which, among other achievements, helped in inventing the internet. The American Recovery and Reinvestment Act provided the first appropriations for ARPR-E, which has subsequently used that money to fund over 180 projects focused on emerging energy technologies.

In an election year, Republicans and Democrats spend an inordinate amount of time highlighting their differences on energy policy. Yet on ARPA-E, both President Obama and Governor Mitt Romney have expressed support for a continued commitment to the program. Senator Alexander’s comments indicate that an important and achievable “chunk” of climate policy, regardless of the outcome of the election, could be a renewed emphasis on ARPA-E.

Each week, our Health Policy team recaps recent health care developments in two reports, Weekly Health Care Wrap-Up and Health Insurance Exchanges: State of the States.

Weekly Health Care Wrap-Up. Click here for our weekly look at regulatory developments affecting health care at the federal and state level. Last week, CMS released a proposed rule to implement Medicaid payment increases for primary care providers, the House Committee on Energy and Commerce approved drug user fee legislation, and HHS announced millions in available funding as part of the School-Based Health Center Capital Program.

Health Insurance Exchanges: State of the States update. Click here for our weekly State of the States report on Health Insurance Exchange developments. After various states took steps to move forward with exchange legislation, last week we see some states that were moving ahead with exchange legislation have now slowed their pace.

From our Cyber legislation update this week.

The House of Representatives concluded “cyber week” at the end of April with the passage of a number of bills targeted at enhancing the nation’s protections against cyber threats. The Senate is expected to consider proposed legislation in the coming weeks which has both a number of similarities, as well as some essential differences from the bills that passed the House. As evidenced by the scope of the bills themselves, the passage of comprehensive cybersecurity legislation may have a sweeping impact on businesses across industry sectors. As such, this Advisory provides a snapshot of the key similarities and differences between and among the competing legislation so that clients may anticipate and assess the potential legal and regulatory impacts of the proposed legislation.

Click here for our full report.

Each week, our Health Policy team recaps recent health care developments in two reports, Weekly Health Care Wrap-Up and Health Insurance Exchanges: State of the States.

Weekly Health Care Wrap-Up. Click here for our weekly look at regulatory developments affecting health care at the federal and state level. In this week’s edition, HHS announced $728 million in funding for community health centers and legislation to use prevention fund dollars to offset student loan interest rates is still receiving pushback.

Health Insurance Exchanges: State of the States update. Click here for our weekly State of the States report on Health Insurance Exchange developments. It was an interesting week for exchange watchers, with a growing chorus of states considering the merits of moving exchange legislation forward to avoid the federal government establishing an exchange on their behalf.

Each week, our Health Policy team recaps recent health care developments in two reports, Weekly Health Care Wrap-Up and Health Insurance Exchanges: State of the States.

Weekly Health Care Wrap-Up. Click here for our weekly look at regulatory developments affecting health care at the federal and state level. In this week’s edition, we take a look at the $115 billion in cuts to health care programs approved by the House Committee on Energy and Commerce and learn what the Student Loan Bill could mean for the Prevention and Public Health Fund.

Health Insurance Exchanges: State of the States update. Click here for our weekly State of the States report on Health Insurance Exchange developments. The states were unexpectedly busy this week addressing exchange issues.

With the policy debates surrounding cybersecurity heating up and legislation currently making its way through Congress, it is vitally important that businesses stay current on a number of high priority issues that can affect their operations, including data privacy, data security and related liabilities.

To that end, we’re hosting an event in Los Angeles this Wednesday, May 2 together with the White Collar Crime Committee of the American Bar Association entitled ”Navigating The Cyber Maze – Hacking, Compliance & Legislation.”

I’ll be speaking on the event’s panel about the changing policy landscape in Washington, DC that will likely change cybersecurity-related reporting requirements, compliance obligations and liability.

Click here to register to attend the event.

Today, at a luncheon hosted by the New Democrat Network (NDN), Department of the Interior Secretary Ken Salazar offered a strong defense of the Obama Administration’s record on energy policy.

The timing of Secretary Salazar’s speech was not lost on the audience.  For instance, The Hill reporter Ben Geman asked Secretary Salazar why he was making two relatively high-profile energy speeches in as many days. Yesterday, Secretary Salazar had accused Republicans of living in an “energy fairytale” in another speech. Of course, Mitt Romney all but secured the Republican Presidential nomination with victories yesterday in five primary contests and Romney and other Republicans are sharply criticizing the Administration’s energy record. According to Secretary Salazar though, his speeches are an attempt to provide an “honest appraisal” of the Administration’s energy record.

In discussing gasoline prices, Secretary Salazar acknowledged that there is no “silver bullet” to insulate the U.S. from oil shocks like the country is currently experiencing.  Consequently, Secretary Salazar spoke of the Administration’s long-term “all-of-the above” energy strategy. Secretary Salazar touted increased domestic oil and gas development, stating that natural gas production is at an all-time high. Anticipating critics’ responses, he argued that the increase is due to development on both federal and private lands. With regard to renewable energy, he noted that Interior has permitted 29 solar, geothermal and wind projects on federal lands that total approximately 10,000 MW in new power.

Despite the looming elections, Secretary Salazar urged Congress to take action on what he described as three non-controversial measures. First, he called on Congress to codify reforms Interior made following the Deepwater Horizon accident. Second, he requested that Congress approve the trans-boundary agreement with Mexico related to offshore development in the Gulf of Mexico. Finally, he called on Congress to extend the production tax credits for renewable energy production, which are set to expire at the end of this year.

The Secretary speech today is unlikely to quell Republican criticism of the Administration’s energy policy. Nonetheless, it does demonstrate that the Administration is intent on forcefully defending its record on energy policy over the next several months.

Each week, our Health Policy team recaps recent health care developments in two reports, Weekly Health Care Wrap-Up and Health Insurance Exchanges: State of the States.

Weekly Health Care Wrap-Up. Click here for our weekly look at regulatory developments affecting health care at the federal and state level. In this week’s edition, we take a look at the Bowles-Simpson deficit reduction plan, the CMS Durable Medical Equipment (DME) competitive bidding program, and more “unreasonable” rate increases by insurers.

Health Insurance Exchanges: State of the States update. Click here for our weekly State of the States report on Health Insurance Exchange developments. This was an interesting week for exchange activity, with Alabama advancing exchange legislation and Congress revisiting issues surrounding exchange subsidies.

On Monday, Judge James Boasberg of the U.S. District Court for the District of Columbia denied a motion for preliminary injunction challenging a 70-year old federal ban on campaign contributions from government contractors in Wagner v. FEC, No. 11-cv-1841. Key to the 26-page opinion was the judge’s finding that the three plaintiffs were unlikely to succeed in arguing that the ban violates the Constitution.

The ban, found at 2 U.S.C. § 441c(a) and instituted in 1940 as part of the Federal Election Campaign Act (“FECA”), bars individuals holding government contracts from making contributions to candidates, committees or political parties in connection with federal elections. The ban has received increased attention in the recent election cycle in the wake of the 2010 Citizens United decision, which recognized the right of corporations and unions to make certain political expenditures and struck down a broad ban on such spending similar to that in Wagner.  Presidential hopeful Mitt Romney received attention recently when his campaign accepted a donation from super PAC Restore Our Future, a combined $890,000 of which came from companies holding government contracts.

Whether the FEC will bring an enforcement action is not clear, as the Commission struggles with determining the constitutionality of an FEC regulation (11 C.F.R. § 115.2) passed in the 1970s that extended the ban to all campaign expenditures. One of the federal contractors has stated that it is confident the contribution was legal under Citizens United, another plans to ask for its donation back, and the commission appears to be split on the issue. As the L.A. Times reports: “The current confusion shows how a deadlocked FEC has been unable to keep up with tens of millions of dollars of outside money that has flooded the system since the Citizens United ruling legalized political spending by corporations and unions.”

For the time being, however, the FEC is steadfastly defending the 1940 ban in the Wagner litigation. The Wagner plaintiffs are three individuals holding small personal services contracts with the Administrative Conference of the U.S. (“ACUS”) and the U.S. Agency for International Development (“USAID”). Their complaint challenges the law on Equal Protection and 1^st Amendment grounds:

• Equal Protection Claim: The thrust of the equal protection argument is that the ban unfairly discriminates against individual government contractors, since federal employees (alongside whom plaintiffs work), corporate government contractor PACs and even officers, employees and stockholders of corporations with government contracts may make contributions within certain limits.
• First Amendment Claim: The plaintiffs argue that any interest in preventing corruption is not addressed by the ban on individual contributions because it bans contributions to elected officials (i.e. the President and Congress), not the actual individuals that negotiate with plaintiffs, sign their contracts and ensure their performance on such contracts

The FEC insists that Citizens United did not affect the ban, as it was not at issue in that case and involves contributions, not expenditures (e.g., “electioneering communications” broadly protected under Citizens United). The judge in Wagner seemed to agree, pointing to a string of scandals in the 1930s that prompted the ban in the first place. The possibility of such corruption provided the judge with sufficient justification for upholding the ban:

“There can…be no doubt that preventing ‘pay-to-play’ deals or pressure on contractors to give – or the appearance of either occurring – is sufficiently important to warrant restrictions on political contributions by federal contractors.”

The plaintiffs have pointed out that elected officials (i.e. U.S. Representatives, Senators, the President and Vice President) are not tied in any meaningful way to the government officers who actually make contract award decisions, but this rationale did not sway the court. The judge held that the ban was “closely drawn” to the government’s interest in anticorruption, however stretched this possibility may be in reality.

Alan Morrison, co-counsel for plaintiffs and a George Washington University law professor, has indicated that the judge’s denial of the preliminary injunction was “not the last word” in the matter.

The judge’s decision may be appealed to the D.C. Circuit.

Yesterday, the National Governors Association (NGA) released its summary of the nation’s Governors’ annual State of the State addresses covering the major issues of focus by governors in 47 states and territories.

Clearly, job creation and competitiveness sit atop most gubernatorial agendas. As the report indicates, “although no governors were enthusiastic about the revenue outlook, they appeared to feel less pressure than last year, and 17 governors had surpluses in their state, were able to increase money held in reserve or rainy day funds, or had positive cash balances after overcoming last year’s shortfalls.” As Hawaii Governor Neil Abercrombie said, “we now have the luxury of weighing solutions…on their own merits. We can ask ourselves what will be most effective…without the distraction of having to balance the budget.”

The report gives an in-depth look into what governors are focusing their attention on for the year.

Job Creation:  Virtually all governors will focus on job creation as their top priority for 2012. Thirty-three governors pointed to low taxes as an important factor in providing direct support to businesses and increasing consumer spending. There were 22 proposals to increase spending or coordinate and develop new workforce training programs. Michigan Governor Rick Snyder said that 2012 “will be different from last year, which focused on dramatic policy improvements over the broken model of the past. This year is all about finishing the work left over from 2011, tackling unaddressed challenges.”

Education:  In 26 speeches, governors said that education is the basis of their jobs plan, and 19 governors emphasized college and career readiness as an education goal. Seventeen governors are proposing to either increase funding for education or to maintain funding despite low revenues. Governors also are focused on accountability measures for teachers, principals and districts; early childhood and ensuring children learn to read by third grade; and increasing local control and school choice. Georgia Governor Nathan Deal said, “we must clarify the mission of our schools…I believe students graduating from our high schools…those young men and women who have done everything asked of them by our k-12 system…should be fully ready for postsecondary study or a job!” New Jersey Governor Chris Christie said, “…replacing underperforming teachers with even an average teacher raises each classroom’s lifetime earnings by over a quarter of a million dollars” and proposed reforming tenure “by measuring teacher effectiveness, both with professional observation and objective, quantifiable measures of student achievement.”

Health and Human Services:  Governors discussed health in 32 speeches, including 17 governors who proposed reducing costs, 11 who proposed increasing access to care and 10 who proposed initiatives focusing on specific issues such as obesity or infant mortality. Twenty-six governors mentioned human services—such as child protection and anti-poverty programs—but in most cases the governors did not propose large-scale changes to these programs. Kansas Governor Sam Brownback announced long-term care coordinators for people with disabilities, a consolidated Department of Aging and Disability Services to efficiently administer Medicaid programs, and increasing the number of medical professionals in areas with shortages through tax incentives.

Public Safety:  Thirty governors discussed measures focused on criminal justice issues. Oklahoma Governor Mary Fallin said she would commit funds to “alternate sentencing for nonviolent offenders with substance abuse issues, as well as to ‘crisis centers’ provided by the Department of Mental Health. These initiatives are smart, effective at reducing repeat offenders, and will save the state money by treating addicts and helping them to once again become productive citizens, parents and taxpayers.”

Energy and Environment:  Governors discussed energy in 22 speeches. Those governors almost always mentioned job creation as a benefit of increasing domestic energy production and several of the innovation or industry clusters discussed earlier were focused on energy technology. Governors mentioned environmental goals in 19 speeches. For example, California Governor Jerry Brown proposed investing in renewable energy infrastructure and specifically cited the economic and health cost of imported oil.

While each state is unique, this report shows that governors do tend to address similar challenges and opportunities. As the country continues to rebuild, keep an eye on states and expect governors to take the lead on building centers of innovation within their boundaries. It is not uncommon for governors to participate in healthy competition with their neighbors, particularly as they compete for jobs and investment, both foreign and domestic. In order to remain an attractive destination for investment, governors understand that leading on these issues is critical to their success.

Click here for the full NGA report.