Welcome to the February edition of A Capitol View. This edition includes news from Congress, updates from the Department of Energy, critical Department of Defense reports, and updates from SMI’s Jeff Leahey

What’s Going On In Congress: FY23 Appropriations, COMPETES, and Ukrainian Support

On February 9, the House and Senate Appropriation Chairs, Rep. Rosa DeLauro (CT-03) and Sen. Patrick Leahy (VT) announced that they reached a bipartisan agreement on a topline figure for FY 2022 budget. Shortly after, Congress passed another continuing resolution that pushed the government funding deadline to March 11.

The extension of the stop-gap bill for three more weeks will allow the House and Senate Appropriations Committees to negotiate the details under a final omnibus. As of right now, it is expected that the Department of Defense’s FY 2022 appropriations bill will be in line with the $768 billion authorized by this year’s NDAA, approximately $25 to 30 billion more than President Biden’s initial request.

As for FY 2023, Congress is still awaiting President Biden’s budget request. It is expected to arrive at Capitol Hill sometime between March 14 and April 15. It is rumored that President Biden will ask Congress for the largest defense budget yet, exceeding $770 billion, $17.1 billion more than President Trump requested in his final year. The FY 2023 budget would favor modernizing the military, with a specific focus on R&D to combat Russia and China, shipbuilding, new space capabilities in space, better missile warning systems, and an update of nuclear submarine bombers and missiles.

At the end of last month, the House of Representatives were introduced to the America Creating Opportunities for Manufacturing Pre-Eminence in Technology and Economic Strength (COMPETES) Act. This bill is a “companion” bill to the United States Innovation and Competition Act (USICA) passed by the Senate last June. On February 4, the measure was passed along party lines by a margin of 222 – 210 and will now be subject to informal discussions to resolve differences between the chamber’s versions. Formal conferencing of the bills will likely begin in several weeks, according to Senate Majority Leader Schumer and Senate Minority Leader McConnell, after beginning informal discussions two weeks back.

In closing, the White House has requested $6.4 billion from Congress to address Russia’s invasion of Ukraine. $3.5 billion would be for the Department of Defense and another $2.9 billion towards humanitarian assistance for Ukraine and all other countries impacted by the conflict. The funding would address food, energy, cybersecurity concerns, disinformation, and provide economic assistance. This support would be in addition to the $1 billion sovereign loan guarantee, $650 million in security assistance, and $52 million in humanitarian aid that the U.S. already pledged to Ukraine over the last year.

Federal Environmental Justice Compliance Updates

In early February, the White House Council on Environmental Quality released its beta version of the Climate and Economic Justice Screening Tool, an interactive map tool that highlights communities facing socioeconomic and environmental burden. This tool was developed in response to the White House Justice40 initiative, a commitment made within E.O. 14008 to direct 40 percent of net benefits from certain federal investments towards disadvantaged communities. The tool is intended to employ indicators to identify communities facing underinvestment in energy, transit, housing, water quality, pollution, and workforce development. The tool will be used by all federal agencies to guide program investments in these underserved areas, particularly in the distribution of billions of dollars from the 2021 Bipartisan Infrastructure Law. Interim guidance for federal agency compliance with the Justice40 initiative has been released, with each agency later required to report its own Justice40 implementation strategy. Agencies like the Department of Energy have created new offices and roles to meet the goals of Justice40 but have yet to change rules of compliance for program investments and funding opportunity announcements. The Biden administration hopes that the Justice40 initiative and related measures will successfully inject environmental justice into the DNA of the federal government, serving as a permanent lens within consideration of all federal policy.

Department of Energy Clean Energy Initiatives out of the Infrastructure Bill

As part of the Biden administration’s investment in American infrastructure and communities, the Department of Energy’s Office of Energy Efficiency and Renewable Energy (DOE EERE) has released plans for the distribution of $6 billion in battery manufacturing and recycling grants and $9.5 billion for clean hydrogen programs.

The DOE EERE Vehicle Technologies Office released two Notices of Intent (NOIs) on February 11, 2022: the first NOI is intended to upscale the battery supply chain as a whole through improved manufacturing processes and closure of critical domestic battery supply chain gaps. The second NOI focuses on battery recycling processes and battery second-life applications. There is no response required for these NOIs; DOE EERE is expected to release full solicitation for these programs between late April and early May.

The DOE EERE Hydrogen Fuel Technologies Office has also released two Requests for Information (RFIs) relating to domestic clean hydrogen production. The first RFI focuses on research and development efforts into clean hydrogen and electrolysis processes—responses to this RFI are due no later than 5:00 pm EST on March 29, 2022. The second RFI is intended to collect input from industry, academia, and other stakeholders on the implementation of a regional hydrogen hub network — there is currently $8 billion designated for the planning, building, and operation of these four major hydrogen production hubs. Responses to this RFI are due no later than 5:00 pm EST on March 8, 2022.

The Department of Defense’s Report on Competition within the Defense Industrial Base

On February 22, the Office of the Under Secretary of Defense for Acquisition and Sustainment published a report named, State of Competition within the Defense Industrial Base. E.O. 14036, Promoting Competition in the American Economy, established the White House Competition Council and compelled the Department of Defense to submit a report to this council reviewing the state of competition within the defense industrial base.
According to the report, competition within the defense industrial base and broader defense market is essential to U.S. national security. Competitive markets reap the benefits of improved cost, schedule, and performance for products and services needed to support national defense. Since the 1990s, the defense sector has consolidated substantially, transitioning from 51 aerospace and defense prime contractors, to five. As a result, the Department of Defense must increasingly rely upon a small number of contractors for critical defense capabilities.

The report lays out five broad recommendations to spur increased competition in the defense industrial base. Those include strengthening merger oversight, addressing intellectual property limitations, increasing new entrants, increasing opportunities for small businesses, and implementing sector-specific supply chain resiliency plans.

SMI’s Jeff Leahey Moderates and Participates in Energy Conferences

On February 23, SMI Vice President Jeff Leahey moderated a National Energy Resources Organization (NERO) webinar discussion on the status of the reconciliation bill and the work on the clean energy and climate package. Staff from both the Senate Finance and House Ways and Means committees participated in the event, which was attended by over 70 DC energy sector professionals. NERO is a non-partisan organization whose mission is to engage in dialogue on energy issues, recognize outstanding achievements, and promote public awareness. It is the primary networking organization for energy interests in Washington, DC. Leahey serves on the Board of Directors as the group’s senior vice president.

This past week, Leahey also participated in the Northwest Hydroelectric Association (NWHA) annual conference in Portland, Oregon. He was a featured speaker at the group’s small hydro workshop providing an update on infrastructure bill funding opportunities, as well as potential clean energy tax provisions as part of the reconciliation bill. Leahey also moderated a panel session on federal policy and regulatory updates, which included speakers from industry, the Department of Energy, and the environmental community. Over 300 attendees participated in the conference. NWHA is a trade association providing a regional voice and representing the needs of the northwest hydropower industry since 1981.”

Update: Congress Continues to Confirm Biden’s Defense Nominees

The Senate has continued to hold hearings on President Biden’s Defense Nominations. To date, 32 individuals have been confirmed to politically appointed positions in the Department of Defense.

Below is a list of nominees that have been confirmed since October:

• Carrie Ricci, General counsel of the Army
• John Coffey, General counsel of the Navy
• John Sherman, Chief information officer
• Gabe Camarillo, Undersecretary of the Army
• David Honey, Deputy undersecretary for research and engineering
• Alexandra Baker, Deputy undersecretary of defense policy
• Melissa Dalton, Assistant secretary for international security affairs
• Andrew Hunter, Assistant secretary of the Air Force for acquisition, technology, logistics
• Douglas Bush, Assistant secretary of the Army for acquisition, logistics and technology
• Michael Connor, Assistant secretary of the Army for civil works
• Nickolas Guertin, Director for operational test and evaluation

Below is a list of nominees pending confirmation since October:

• Peter Beshar, General counsel of the Air Force
• William LaPlante, Undersecretary for acquisition and sustainment
• Erik K. Raven, Undersecretary of the Navy
• Ashish Vazirani, Principal deputy undersecretary for personnel and readiness
• Lester Martinez-Lopez, Assistant secretary for health affairs
• Brenda Sue Fulton, Assistant secretary for manpower and reserve affairs
• Christopher Lowman, Assistant secretary for sustainment
• Kristyn E. Jones, Assistant secretary of the Air Force for financial management and comptroller
• Ravi Chaudhary, Assistant secretary of the Air Force for installations, environment, and energy
• Frank Calvelli, Assistant secretary of the Air Force for space acquisition and integration
• Agnes G. Schaefer, Assistant secretary of the Army for manpower and reserve affairs
• Franklin Parker, Assistant secretary of the Navy for manpower and reserve affairs
• John Plumb, Assistant secretary for space policy
• Robert Storch, Inspector general